"I have recently retired and my wife is planning to withdraw a substantial lump sum from a tax-sheltered fund. We have decided against an annuity but are wondering about a Swiss franc retirement plan. Can you help?" M.S.
As you have discovered, fixed annuities do not work in a highly inflationary period. The Swiss annuity plan, on the other hand, has worked rather well because of Switzerland's minimal inflation until recently. Swiss inflation was maintained in the 1-2 percent range for years despite importing all of its oil through planned governmental action and tight control of the Swiss franc money supply. When you buy a Swiss annuity, regular payments are made in Swiss francs. As the dollar has declined against the Swiss franc, annuity payments offset a part of the inflation in the US by converting into more dollars.
Lately, however, Swiss attempts to encourage economic activity have boosted their inflation rate, and the dollar has gained relative to the Swiss franc. Whether this is temporary remains to be seen. In effect, you are speculating on the future value of Swiss francs vs. US dollars by investing in a Swiss annuity.
For more information you might study "The Complete Guide to Swiss Protection" available at $15 from Librex Publishing Company, Box 480428, Los Angeles, Calif. 90048. An agent for Swiss annuities that is willing to work with US residents is Assurex, SA, Volkmarstrasse 10, PO Box 209-V, 8033 Zurich, Switzerland.