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Healthcare and pensionsPensionsRetirement: decision time
Pension tips for every life situation

Retirement: decision time

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If you were regularly employed for many years and possibly even made additional payments into your occupational pension fund, it is likely you will have accumulated several hundred thousand francs by the time you reach retirement age. You now need to decide whether to withdraw this capital as a lump sum or have it paid out in the form of a lifelong pension, which you will still collect even if your capital is actually used up. 
You are entitled to have a portion of the capital from your occupational pension (BVG/LPP) paid out to you, but not less than 25%. With a lump-sum withdrawal of the capital, you are essentially choosing to take responsibility for managing your income yourself in old age. In this case, you will need to find investment vehicles that offer you the right balance between security and returns. While this involves an element of risk, it also of course represents an opportunity. If you choose to have your retirement savings paid out as a monthly pension, you will receive guaranteed regular payments
for as long as you live. This will also provide some protection for your partner, who will receive 60% of your pension in the event of your death.  Here is a short comparison of the two types: 

Drawing a pension
If you decide to draw a monthly pension, you will know from the conversion factor used how much your annual pension income will be. Having this fixed income allows you to plan ahead. You are basically delegating liquidity planning and investment decisions to the pension fund. The following also applies:

  • The entire pension capital is taxed as income.
  • If the insured person dies, the spouse generally receives a reduced pension, totalling 60% of the pension amount.
  • An increasing number of pension funds provide cohabiting partners with the same benefits as spouses or registered partners.
  • Whether a pension increases due to inflation depends on the pension fund’s regulations and its financial situation.

Lump-sum withdrawal
If you withdraw your entire pension assets as a lump sum, you have more flexibility. You can attempt to achieve higher returns than the one offered by your pension fund by making your own investment decisions. This allows you to preserve or even expand your assets. The following also applies:

  • The "lump sum or pension" decision is final. It cannot be reversed.
  • The law states that every insured person must be able to withdraw at least 25% of their occupational pension balance. It is often possible to withdraw more as a lump sum.
  • If you have your capital paid out, it is only taxed once and at a reduced rate. This tax usually ranges between 5% and 15%, depending on your marital status and place of residence. Depending on the amount of pension capital withdrawn, this rate may also exceed 20%.
  • The payout will increase the assets you own, which means that you will have to pay wealth tax.
  • If you withdraw your capital, you no longer have a guaranteed lifelong pension.
  • Should you pass away, your surviving relatives will inherit 100% of the remaining capital.

The subject of pensions is complex. There is often not enough time to research everything in detail. If you wish, you can seek advice from our partner service Optimatis. Our experts have the information that you may spend a long time searching for. Benefit from their expertise by arranging a no-obligation consultation.

The independent partner service Optimatis and its qualified staff will work with you to establish a clear overview and produce a snapshot of your current situation. Optimatis can offer you the solution that best fits your needs from the wide range available on the market – a good reason to seek advice from an independent expert.

You just need to request an appointment and a specialist advisor will be in touch with you. During the meeting, you can decide how and whether you wish to proceed with the solutions proposed.

Request no-obligation advice

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The earlier the better.
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