So that early retirement does not represent a financial risk

Optimization of own retirement provision

A pension analysis by an expert provides the necessary basis for decision-making. The analysis lists all benefits from the three pension pillars and provides optimization suggestions on how the benefits can be improved. Company owners and members of the management have greater freedom to shape the plan, as they can directly influence the various solutions. Possible areas of optimization are:

• Insured salary in the pension fund: In the mandatory part of the BVG, the maximum insured salary is currently CHF 59,925. This is calculated from your current salary minus the so-called coordination deduction of currently CHF 24,675. Thus, wages up to around CHF 84,600 are compulsorily insured. Wages above this amount are either not insured at all or insured voluntarily. Thus, additional retirement savings can be saved by insuring wages above CHF 84,240 voluntarily and the entire annual salary without coordination deduction.
• Above-mandatory and extra-mandatory BVG: Salaries above CHF 84,600 and above CHF 126,900, respectively, can often be insured at better conditions (higher savings contributions, better interest rates), depending on the pension fund.
• Paying into the pension fund: It is often forgotten that there is a purchase potential into the pension fund due to salary increases. This should be closed, provided that liquidity is available. On the one hand, payments into the PF have the advantage that they improve benefits upon retirement and the amount paid in can be deducted in full from taxable income.
• Choice of pension foundation and investment of pension capital: There are very large differences here in terms of flexibility, costs and returns, and their impact on retirement savings can be quite significant.
• Pillar 3a: It is important here that the annual maximum amount, assuming liquidity, is paid in every year. A comparison of the costs and returns of the various providers is also useful here.

By taking advantage of these opportunities, you can substantially improve the benefits available at retirement. And the earlier you start optimizing, the longer you have to improve your benefits.

Consequences of early retirement. Once the decision has been made to take early retirement, you should consider the consequences of early retirement. They come into play in all three pillars and are briefly listed below:

1st pillar

• AHV pensions can be drawn earlier. However, due to a lifelong reduction, this is not advisable.
• However, despite early retirement, you remain liable for AHV contributions. Early retirees are subject to the obligation to pay contributions for persons not in gainful employment. The amount depends on the assets and pension income. A sideline reduces the contributions to be paid in certain cases, because the early retiree is then not declared as "not gainfully employed". In the case of wealthy persons, it makes sense to have a secondary income so that their income and not their assets serve as the basis for assessment.

Pillar 2

• The entire BVG capital can be drawn upon early retirement or paid out as an annuity. Since no more savings contributions are paid in for the remaining years until ordinary retirement and due to the compound interest effect, the benefits are substantially reduced.
• If you draw your retirement benefits in lump-sum form, your pension foundation must observe special regulations regarding purchases into the PF. The following often applies: "If purchases have been made, the resulting benefits may not be withdrawn in capital form within the next three years.
• The entire retirement savings capital can be withdrawn upon early retirement. As a result, taxes have to be paid on the entire capital on the one hand and the private assets increase on the other. Higher private assets result in higher AHV liability. Both points can be mitigated by a further payment of the capital and splitting on two vested benefit foundations. In this way, the capital remains in the pension circuit until ordinary retirement and is therefore tax-free. Splitting the capital between two vested benefits foundations has the effect of breaking the tax progression when the capital is paid out, leaving more net capital.

Pillar 3

• You can only pay into pillar 3a if you earn a salary that is subject to AHV contributions. Thus, under certain circumstances, your early retirement means that you may no longer pay into pillar 3a in the years up to your regular retirement. You can pay into pillar 3a up to a maximum of 70 if you have a sideline job.
• Make sure that you draw on them in a staggered manner. If you open several accounts, you can withdraw the assets in different tax years.