Counts early retirement as income

Early retirement. useful information

Published in Central Switzerland on Sunday in the Vorsorgekompass - Author: Adrian Bienz & Silvia Steiner - WHP

If you want to fulfill your dream of early retirement, you should consider a few aspects. Here are the most important questions and answers about pensions.

Around every second employed person would like to take early retirement - this is the result of surveys among various employees. The reasons for this are different: work stress, forced retirement, too little freedom or poor health. However, the plan for early retirement often fails due to the financial conditions. So it is all the more important to deal with the consequences of this important step as early and comprehensively as possible. The following questions need to be clarified, among others.

Do voluntary pension fund purchases make sense to finance early retirement?
Missing contribution years or wage increases in the pension fund can be compensated for by making purchases into the pension fund. People who retire early can pre-finance the resulting reduction in benefits from the Pension Fund, provided that the regulations allow this option. However, if you buy into early retirement and still work longer, you may lose your voluntarily paid purchases. Clarifications with the pension fund and planning of purchases as well as coordination with other preparatory measures are definitely recommended. Purchases may be deducted from taxable income. In order to break the tax progression optimally, spread the purchase over several years. If purchases have been made, the resulting benefits may not be drawn in the form of capital for the next three years. This blocking period is not relevant for a full pension payment.

Can I postpone the PK pension if I take early retirement?
Most pension funds do not allow this option. Normally, when leaving the pension fund after reaching the earliest possible retirement age, the savings capital or the retirement pension must be withdrawn.

Should I receive a pension or a lump-sum benefit?
This is probably the most frequently asked question about retirement. The insured person can have a minimum of a quarter of the existing BVG retirement savings paid out as a lump sum. The pension funds are free to go beyond this share and to allow a lump-sum withdrawal up to the amount of the entire retirement savings. However, this is a voluntary benefit that must be provided for in the pension fund regulations. Despite the possibility of having the pension fund benefit paid out as a lump sum, the pension fund is still the most frequently chosen option in occupational pensions. The decision as to whether you will receive a lifelong annuity or a one-off lump-sum benefit is a major one, in which your personal family and financial situation and your goals and wishes play an important role. There are no patent solutions. In many cases, neither a pure pension nor a pure lump-sum withdrawal, but a combination of both, is the best solution. Basically, the pension is recommended for retirees who have to cover most of their future income through the AHV and the pension fund. The lump-sum withdrawal makes more sense if additional funds are available and sufficient experience is available in capital investments.

What happens to my PK pension if I return to work after taking early retirement?
After early retirement, it is possible for the pension fund to re-employ it without stopping pension payments.

How high are the AHV contributions for people who are not gainfully employed?
The amount of the assets and that of the annual pension income determine the AHV contributions for inactive persons. They range between CHF 482 (minimum) and CHF 24,100 (maximum) per person. The cantonal tax assessment serves as the basis. In any case, register at your AHV branch and fill out a registration for people who are not gainfully employed. Do not forget to deduct the AHV contributions from your taxable income in your tax return. Early retirees do not have to pay their own AHV contributions if their spouse is employed within the meaning of the AHV and pays at least 964 francs (double the minimum contribution) per year into the AHV together with the employer. Married couples can take advantage of this rule: If one of the two partners continues to work part-time of more than 50 percent, he can release his partner from the obligation to pay contributions. The AHV only recognizes part-time employees with a workload of less than 50 percent as gainfully employed if the contributions they and their employer make are higher than half of the contributions they would owe as an inactive person. An early retired person with a small part-time workload who fulfills this condition therefore pays AHV contributions only on his part-time income and not on the basis of his pension income and assets.

Can I continue to pay contributions to pillar 3a?
Yes, if you still have a part-time job, you can continue to use this income to make contributions to the 3a tied pension - men up to the age of 70 and women up to 69 years of age.