At 50 get an overall perspective of the situation

The optimal time to assess the overall situation and to put things in place:

• What about your assets? Gather documents for a comprehensive assessment of your financial situation. This includes the tax return, pension fund statement, life insurance policies, the AHV statement and the latest extracts from all accounts.
• Assess your current budget situation.
• Identify any income shortfalls from retirement age and define a strategy to cover them (e.g. paying into the pillar 3a via an account solution, retirement funds or life insurance or the purchase of additional pension benefits).

At 55 review your strategy

Regularly assess and critically examine the strategy you’re pursuing:

• Do your retirement goals still apply?
• Has my financial situation changed?

At 60 set out the specific details

This is the right time to determine the specific details of retirement.

• It’s the moment to think about when you’ll finish work.
• Decide when and how to inform your employer.
• Choose how you wish to receive your pension fund assets – in the form of a pension, capital or a mixture of both?
• Consider how you could stagger any capital withdrawals to reduce your tax liability.

7 to 8 months before retirement put your plan into action

Starting the retirement process:

• Register with the AHV compensation fund for receipt of pension benefits six to four months before retirement.
• Start the inflow of future additional income (pension fund, private pension, savings deposits).
• Decide how you wish to invest assets you won’t initially need in retirement.

Pension fund: decide how you wish to withdraw capital

You can have the capital accrued paid out as a life-long pension or a capital sum. Lots of pension funds also offer a combination of the two variants. There are pros and cons to withdrawing your pension as capital which have to be carefully weighed up.

Pension shortfalls: ensure they are covered as soon as possible

Capital from the 1st and 2nd pillars generally only covers around 60% of previous income. There are various ways of covering any shortfalls – from saving with fixed or flexible retirement planning as part of the 3rd pillar to purchasing additional pension fund benefits or restricting your personal standard of living. People who plan ahead, make provisions and put money aside have greater financial flexibility later on.

Tax optimization: stagger the withdrawal of your assets

The withdrawal of capital from the 2nd and 3rd pillars is subject to progressive taxation. This means that the tax liability increases at a disproportionately high rate above a certain amount of capital. It’s therefore wise to stagger the withdrawal of these assets. It’s worth opening another account in addition to the retirement savings account 3a for amounts over CHF 50,000. However, find out about the tax policy on capital withdrawal in the canton where you live.

For whom is paying into the pillar 3a worthwhile?

Paying into the pillar 3a is an attractive option for anyone wishing to provide for old age while at the same time reducing their tax liability. If you make regular payments over a long period of time, you can achieve attractive returns thanks to the compound interest effect and tax benefits.

Do I have to pay tax when making withdrawals from my 3a account or from my pension fund capital?

Anyone who withdraws capital from the pillar 3a or pension fund has to pay tax on it known as capital withdrawal tax. The tax is calculated separately to income but bear in mind that withdrawals from the pension fund and pillar 3a in the same year are added together on the tax bill.

How much AHV pension will I receive when I retire?

A pension forecast provides you with details on the old-age pension you can expect to receive from the 1st pillar upon retirement and helps you to plan your financial future. This can be obtained from the AHV branch office in the place where you live or from the compensation office concerned.