Increase your second pillar coverage
The term “second pillar” refers to occupational pension provision, which supplements AHV/IV benefits and is income-dependent. If you are not employed, then you are not insured under the second pillar. If you stop working temporarily or permanently, your pension fund capital will be deposited in what is known as a vested benefits account. As interest rates on vested benefits accounts have fallen to very low levels in recent years, it may be advisable to invest all or part of your vested benefits assets in retirement funds. Here, too, an investment in a retirement fund will enable you to benefit from a higher return on average over the long term than you would get with a standard vested benefits account. If you choose this option, however, you must be prepared to accept price fluctuations and, depending on market performance, bear the risk of loss.
Do you work but earn a low salary, or is your job part-time? If the answer is “Yes”, then the coordination deduction will put you at a disadvantage. For women, this often results in gaps in their occupational pension coverage – and leaves them with little for their retirement. You can close the gap in your pension fund by purchasing additional second pillar benefits. This option depends on the balance you have accumulated and the provisions of your pension fund.
Another way of increasing your assets in your pension fund is to continue working beyond the age of 64.
The safest option is to ask yourself the following question at an early stage: If I work part-time or take a complete break from work in order to devote time to my child and my family, what implications will this have? Find out more about occupational retirement planning in our article “Pension fund – what you need to know”.