UBS study: A contribution to the debate on a more sustainable Swiss retirement system

Zurich, 24 June 2026 – The UBS study addresses the current retirement system’s challenges and outlines a potential shift towards a model with a stronger capital-funded component. The approach aims to increase cost transparency and provide stronger support for lower-income groups.

The study proposes a strengthened first pillar that, over the long term, evolves into a capital-funded defined-benefit system to make it more resilient to demographic changes resulting from low birth rates. Financing would be based on a contribution rate of 20% on annual incomes of up to CHF 50,000, supplemented by federal contributions. The retirement age would be partially linked to life expectancy. In return, earlier retirement options would become available and pension levels would be increased. The proposed model would improve coverage particularly for individuals with low incomes and uninterrupted employment histories, enabling full income replacement in retirement for this group.

In the second pillar, the study envisages a transition to a defined-contribution system with market-based returns, combined with age-independent contribution rates for annual incomes above CHF 50,000 and up to a maximum of CHF 150,000. Contribution rates on higher-income components would be lower, and there would be free provider choice and individual investment strategies. Benefits would become more flexible than today and, on average, offer higher return potential on contributions.

Tax incentives and voluntary contributions should be reviewed to enhance tax fairness. The study also proposes a more targeted use of tax advantages. For example, voluntary contributions to pillar 3a or pension funds could generate greater tax savings for lower-income groups. In addition, the introduction of mandatory long-term care insurance is proposed to systematically cover costs arising in old age.

The transition to a new system would be gradual and would require additional financing through higher taxes and new public debt, in order to distribute the costs across several generations. At the same time, Switzerland’s currently high level of implicit debt could be reduced, thereby strengthening public finances in the long term. Existing entitlements would remain protected.

Compared with the current system, the proposed model would enhance intergenerational fairness and financial sustainability – two key pillars for maintaining public trust in the retirement system. A new balance between financial security, flexibility, individual responsibility and solidarity would enable people to shape their retirement provision in a more tailored way.

The new study and further information can be found at ubs.com/retirementforum.

UBS Switzerland AG