Retirement planning is something everyone needs to think about. After all, these are decisions that will determine your standard of living when you’re older and which dreams you will be able to fulfil. In Switzerland, there is a system for retirement planning known as the three-pillar system. It works like this:
- The first pillar (state pension) consists of old-age and survivors’ insurance (AHV), invalidity insurance (IV), supplementary benefits and a fund for loss of earned income. The idea behind these provisions is to ensure that pensioners, disabled people and surviving dependants have enough money to live on and are not impoverished. This is why it is mandatory.
- The second pillar (occupational pension) allows you to continue enjoying your usual standard of living when you retire. It consists of your occupational pension (under the Occupational Pensions Act (OPA)) and accident insurance (under the Accident Insurance Act (AIA)) and is mandatory for people in employment.
- The third pillar (private pension) consists of optional savings. The payments you make into the third pillar supplement the provisions of the first and second pillars so that, even when you’re older, you can still do the things you want or guarantee yourself a standard of living that meets your own personal needs. If you pay into the fixed pension plan (pillar 3a), you can save on taxes or optimize how much tax you pay. Find out more about this in our article “Retirement savings 3a: you can still save on taxes this year”. You can also calculate your potential tax saving with the PostFinance retirement fund calculator.
Let’s take a closer look at the pension fund in the context of the second pillar – as this is a vital part of your personal retirement funds.