If you are 50 or older, we recommend you start actively planning your finances for the time after you stop working. This way you will have plenty of time to plan and take the necessary steps.
Retirement age marks the start of an exciting time with lots of new opportunities. You will finally have more time to do what you want – vacations, traveling, hobbies, sports, grand-children, friendships, and the list goes on. So there are plenty of reasons to look forward to retirement. But you need to make sure you don’t put off making the important decisions. By carefully planning your financial future, you can look forward to a carefree retirement.
Once you retire, your income will come from several different sources:
If you want to retire early, your pension will be considerably smaller. Until now, you could draw your OASI pension one or two years prior to the regular retirement age. The introduction of the OASI Reform 21 will give you more flexible pension options in the future. You will be able to draw your OASI pension between the ages of 63 and 70. Women in the transitional age group will be able to draw their pension starting at age 62.
The reference age (formerly: normal retirement age) for both men and women is 65. For women born in 1961 or later (transitional age group), the reference age will be gradually raised by three months every year. In general, you can make a full or partial withdrawal two years before you reach the reference age (formerly: normal retirement age). You should also consult the rules of your pension fund.
When and how you take out your retirement savings from the pension fund or your 3a accounts makes a tremendous difference, because taxation varies greatly depending on the time and amount of the withdrawal. So, if you gradually take your OPA savings out of your 2nd Pillar account over a longer period of time, you could easily save several thousands of francs in taxes. You can make withdrawals starting five years before and up to five years after the regular retirement age. This same principle applies to withdrawing your funds from your 3rd Pillar pension over multiple tax years.
The minimum and maximum retirement pension for individuals and married couples can vary from year to year. The pension you receive will depend on your average income as well as whether you have been paying your OASI contributions from age 21 without any gaps up to the reference age. Since calculating your pension is complicated, starting at age 40, OASI lets you request a pension forecast from them free of charge every five years. You can use the online pension estimate to give you a rough idea of your future retirement pension.
If you want to maintain your accustomed standard of living, you will need around 80% of your most recent gross salary every month. If the amount paid out after retirement is less than this, this is what is known as a pension gap. Pension gaps can be avoided by making financial preparations for the period after retirement with suitable retirement solutions. Incidentally, this is also a smart way to save on taxes and achieve your individual savings goals.
The introduction of the OASI Reform 21, which enters into force on January 1, 2024, will replace the normal retirement age that has been used up to now with the reference age. The reference age defines the time from when it is possible to start drawing a full pension without any reductions. The reference age for both men and women is now 65. To this end, the reference age for women will be gradually raised from 64 to 65 starting in 2025 (the transitional age group).
The OASI Reform 21 means that the OASI pension can now be drawn anytime between the ages of 63 and 70. Women in the transitional age group will have the option of drawing their pension starting at age 62.
You should also consult the rules of your pension fund, which explain what options your occupational retirement plan offers you. Generally, occupational retirement plans let you retire at age 59, although there may be exceptions. You should consult the rules for your pension fund to be sure.
Drawing retirement benefits impacts both the amount of your OASI pension and your pension from your pension fund. If you retire early, both pensions will be lower than if you retired at the reference age. You can go online to calculate the estimated pension benefits you will receive from OASI and your pension fund on the date you want to start drawing them.
Swiss law lets you defer drawing your pension up to the age of 70 (i.e. up to five years after you have reached the reference age).
In contrast to early withdrawals, deferring your OASI pension means you will receive more due to supplements. Contributions that you pay into OASI after you have reached the reference age will also be taken into account in the calculation of your retirement pension. Pensions from a pension fund depend on the provisions of the relevant pension fund regulations. Deferrals result in a higher conversion rate and hence a bigger pension.
All pensions must be declared as income; retirement capital, on the other hand, is subject to a reduced rate depending on which canton you live in. We recommend that you contact your local tax office.
Do you have any questions, or would you like a no-obligation pension consultation? Our experts are there for you.