Working after retirement: What you should know

Reaching ordinary retirement age does not mean that you have to give up gainful employment. More and more people in Switzerland continue to work beyond the reference age. There are many reasons for doing so. We show you what it means for your finances and your pension provision if you work longer.

If you continue to work after retirement or start a new job, you make a decision that has a direct impact on your personal pension provision. Early planning will help you shape this phase of your life in the best possible way.

What are the reasons for working after retirement?

Those who continue to work after reaching ordinary retirement age usually have a good reason for doing so. Some retirees want to improve their income by working after retirement, others are looking for more structure in their daily lives, and still others want to pass on their knowledge and experience.

Financial reasons

• Building a financial cushion: Additional income creates more scope and helps you set money aside.
• Increase in pensions: The OASI pension can be deferred by at least one year and at most five years. In return, you receive a pension supplement. In many cases, pensions from the pension fund can also be deferred until age 70, which also leads to higher benefits.
• Strengthening private pension provision: As long as you are gainfully employed, you can continue paying into Pillar 3a until age 70 and build up additional pension capital for retirement. A positive side effect: The amounts paid in can be deducted from your taxable income. You can find out more in the article “Tax deductions: What you should know.”

The following table shows how much the OASI pension increases depending on the deferral period:

Personal reasons

• Social exchange and structure: The work keeps social contacts alive and gives your daily life a clear structure. This can have a positive impact on your well-being in old age.
• Mental fitness and self-fulfillment: Those who continue to work after retirement remain mentally active, can pass on their knowledge and experience, and have the feeling that they continue to be needed.
• Enjoyment: When you love what you do, it’s not easy to just stop working. For many people, professional enjoyment is the most important reason why they continue to work after retirement.

Practical reasons

• Flexible work models: Whether full-time, part-time, or self-employed – after retirement, you can flexibly adapt the scope and type of employment in line with your personal circumstances and needs.
• High demand for experience: Due to the shortage of skilled workers, experienced employees are in greater demand than ever and sometimes benefit from attractive advantages such as flexible working hours or reduced hours as desired.

Do you still have to pay OASI contributions after retirement?

That depends on whether you continue to work after the reference age – and if so, how much you earn.

A monthly allowance of CHF 1,400 (CHF 16,800 per year) applies per employment relationship after regular retirement age. This means: If your income is less than this amount, you do not pay any contributions to OASI, IV, or LEC. If you earn more, you will have to pay a tax of 10.6% on the amount in excess.

Important: The exempt amount may also be waived voluntarily. This allows you to close any previous contribution gaps and increase your pension up to the statutory maximum.

Can you draw an OASI pension and still work?

Yes, and you have more flexibility than many people think. You can draw your OASI pension from age 63 and continue working. You yourself can choose the exact time when you want to start drawing your pension. You must start taking the pension at the latest when you reach age 70.

You have three options:

• Full withdrawal: You draw the full pension from the date you have chosen.
• Partial withdrawal: You draw part of the pension – at least 20%, at most 80% of the full retirement pension. You withdraw the rest at a later date.
• Deferral: You postpone pension payments entirely. This could be an option for you if your income is sufficient: A deferral increases your future pension with a lifelong supplement.

It is not possible to change from a partial deferral to a full deferral. You should therefore review this decision carefully.

Can you continue paying into the pension fund after you reach the reference age?

Yes – in many cases this is possible. If you continue to work beyond the reference age, you can continue to make voluntary contributions into Pillar 2, depending on your pension fund regulations. This way, you can continue to grow your retirement assets and take advantage of higher benefits later. You should discuss this with your employer early on.

It’s important to remember: Are you working past the regular retirement age and still earning a salary? Then – provided your pension fund regulations allow it and there is a pension gap – you can continue to make additional purchases in the pension fund, up to the age of 70. Once you retire and no longer earn an income, this option is no longer available.

Can you draw a pension from your pension fund and continue working at the same time?

Yes. In Switzerland, you can draw a pension from your pension fund while remaining gainfully employed at the same time.

How can I save on taxes after retirement?

If you work after retirement, you should not forget about tax planning. With the right measures, you can reduce your tax burden and save money:

• Deferring your OASI pension: If you continue to earn a high income after retirement, you can defer drawing your OASI pension until you reach age 70 or draw only a part of your pension. This can reduce your current tax burden and at the same time lead to a higher OASI pension in the future. However, it should be noted that a higher pension can in turn lead to higher taxable income and thus higher taxes later on.
• Deferring your pension fund annuity: If you do not draw your salary and pension at the same time, you avoid a higher tax progression.
• Choose a lump sum withdrawal instead of an annuity: A one-time lump sum withdrawal from the pension fund and a regular annuity are taxed differently. You can find detailed information on this in the blog article “Annuity or lump sum withdrawal: Which is better?.”
• Pay into Pillar 3a: As long as you remain in employment, you can continue contributing to pillar 3a – up to the age of 70. These contributions can be deducted from taxable income and reduce your tax burden.

Frequently asked questions about working after retirement