10 tips on how to have your occupational pension paid out

1. Enquire in good time about the deadline for requesting the payout of your pension

If you want a lump-sum payout, the notice period can be up to three years, depending on the pension fund. If you miss the deadline, you can no longer insist on a lump-sum payout.

2. Expect a lower pension than stated in your current pension statement

Many pension funds will continue to reduce their conversion rates due to low interest rates and higher life expectancies. Draw up a budget and use it to check whether the potential conversion rate at the time of your retirement will allow you to maintain your standard of living.

3. Create a financial plan with different inflation scenarios

Compare the development of income and assets over a longer period of time depending on how you draw your pension. Assume realistic investment returns and take inflation into account. As well as inflation, health insurance costs will also inevitably lead to an increase in your living costs over the years.

In the past, pension funds have offset inflation to some degree. In the future, this will probably no longer be the case. Did you know that, over a period of 15 years, the purchasing power of a pension worth 5,000 francs today will drop to around 4,300 francs if annual inflation is 1%, and to 3,700 francs if inflation is 2%?

4. A lump-sum payout is more attractive from a tax perspective in the medium term

If you draw a monthly pension, this is taxable as income. A lump-sum payment, on the other hand, is taxed once at a lower rate.

5. Advantages and disadvantages of a lump-sum payout and monthly pension

Factors that are just as important as tax are flexibility, the amount of retirement assets, other income (rent), providing for surviving family members and, increasingly, the likelihood of a high life expectancy.

6. Don't be guided by short-term market trends

When stock market prices are rising, prospective pensioners tend to opt for a lump-sum payout. When the stock market is weak, many find a monthly pension the safer choice. This is a sign of short-term thinking. However, the investment horizon of a newly retired person is around 20 years. The aim of their investment is therefore to achieve long-term growth. A balanced diversification of investments is important.

7. Consider a combination of lump-sum payout and monthly pension

For many retirees, the combination of lump-sum payout and monthly pension is the best solution. A monthly pension will cover the basic cost of living until well into old age. The lump-sum payout is subject to a lower tax rate. If something unforeseen should happen later, you have the lump sum to fall back on and can use it as you wish. In the case of married couples, one partner often receives the pension and the other the lump sum.

8. Invest the lump sum in a similar way to a pension

Those who have their pension assets paid out as a lump sum are then responsible for ensuring that the money lasts into old age. Invest the money professionally – by structuring your portfolio in the same way as the pension funds, for example. Pension funds consistently strive for long-term capital growth in their investment strategy.

9. Ensure any surviving partner is provided for in your estate plan

Provide for your partner as far as possible in your will or by means of an inheritance contract. Above all, consider the spouse's housing situation after your death. In the case of inheritance, your children are entitled to one quarter of the assets. In the worst-case scenario, the surviving spouse may have to sell their home to pay the children. If you are a cohabiting couple and have children, the children are entitled to half of the inheritance.

10. Discuss your personal situation with an independent professional

Getting an independent point of view can help you assess the situation and weigh up options better than you can on your own.