ABSTRACT
This chapter offers an introduction into the generational accounting method and describes the institutional set-up of the Swiss old age pension system. It presents the result of both scenarios on the social security’s implicit public debt and the inter-generational distribution as given by the simulations. Old age security in Switzerland is generally referred to as the ‘three-tier-system’. The 1st tier, introduced in the early 1960s is state-run and works according to the pay-as-you-go method. The 2nd tier has been in operation since 1985. The 3rd tier is the tax-deductible form of savings, either via tied benefit schemes (tier 3a) or via untied saving (tier 3b). The inter-generational transfer induced by health insurance is assumed to be less pronounced in Switzerland than in Germany because health care is financed through per-capita-premiums rather than wage taxes. The generational accounts of citizens born between 1920 and 1940 show the largest balance.
