Sustainable, high-performance Pillar 2 solutions are in demand. Thanks to semi-autonomous pension fund solutions, SMEs and their staff can expect to see much higher pensions over the long term.
The first and second pillars are intended to guarantee a retirement income of around 60% of an individual's final earnings, thereby safeguarding their customary standard of living. However, rising life expectancy, the challenging interest environment, and the political framework are making it increasingly difficult to achieve this figure, especially in the second pillar.
AXA aims to offer Swiss SMEs and their staff sustainable, high-performance Pillar 2 solutions.
With this in mind, it switched to offering only semi-autonomous pension fund solutions rather than full-value insurance at the start of 2019. This is because the "third contributor", i.e. interest, has a far bigger impact in semi-autonomous solutions with broadly diversified asset allocations than in full-value insurance, where investment options are heavily restricted by strict regulations.
The amount of future retirement benefits depends mainly on the interest earned on the retirement capital. It thus makes a big difference whether it earns interest at the statutory minimum rate of 1%, which normally applies with full-value insurance, or 2%, which is possible over the long term with a semi-autonomous solution. Doubling the rate of interest can increase a person's pension by up to 20% over the course of their working life up to retirement thanks to compound interest. This could mean several hundred francs more a month for some people.
In the first three years following the change to semi-autonomy, staff insured with AXA's semi-autonomous solutions have received a total of CHF 1.8 billion more in interest income than would have been possible with the previous full-value insurance model.
AXA's collective foundations are also very sound both financially and structurally, with low technical interest rates, a good age structure, a high share of extra-mandatory retirement assets, and a very low percentage of pensioners. Their low pension obligations have a significant impact in terms of reducing the redistribution of funds from active insured persons to pensioners.
AXA also cares about helping the environment and society at large with its investments and firmly believes that responsible, sustainable use of all resources adds value over the long term.
In addition, it believes that motivated, healthy staff are the key to an SME's success, which is why it offers its corporate customers attractive additional services for fringe benefits and a comprehensive program to promote employee health.