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Private pension & health

Can you still buy into a pension fund when you’re 65?

A man is standing at his workbench in a joinery workshop, working with wooden boards.
What do persons of retirement age who are in employment have to watch out for when buying into a pension fund? Helvetia pensions expert Reto Kleiner knows.
I’m 65 and I expect to keep working until I’m 70. Assuming I carry on accruing old-age credits – can I still buy into a pension fund. A work colleague also told me about “extra-mandatory LOB”. What is that? And will my purchases be entered in the mandatory occupational benefit scheme or the extra-mandatory scheme?
Asked by Hans P., Balterswil 03.05.2017

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Reto Kleiner, Head Key Account Management Sales Force
Basel 08.05.2017

Dear Mr P.,

Whether you are still insured in the pension fund after the age of 65 and can accrue old-age credits depends on your pension fund. If your employee benefit institution permits continued insurance and there are contribution gaps, you can in principle make purchases and also offset them against tax. To be able to claim the tax deduction you must, however, transfer the amount to your employee benefit institution before 30 December.

If you continue to buy into the pension fund after the age of 65, it is important to note that your purchasing potential that you had at the age of 65 – in the case of regular retirement – will be “frozen”. In the event of any subsequent purchases, the purchasing potential will be reduced by the interim old-age credits. An example: at the age of 65 you had purchasing potential of CHF 100,000. At 67 you want to buy into the pension fund. Between 65 and 67 the old-age credits amounted to CHF 10,000. So, in this situation, the maximum contribution you could make is CHF 90,000. Please note that after an initial partial retirement step it is not possible to make any more voluntary, tax-deductible purchases.

At the time of retirement – in your case at 70 – conversion rates are used to convert the accumulated old-age savings (including the purchases made by you) into an annual retirement pension. As old-age savings now have to cover a longer lifetime, monthly and annual payments are becoming smaller and smaller. You can significantly increase your old-age savings by buying into the pension fund.

With respect to the second part of your question: in the pension fund there are mandatory and extra-mandatory elements. Payments are known as extra-mandatory if the payments exceed the minimum requirements (in 2017 the top limit was set at an annual income of CHF 84,600). Whether your purchases are paid into the mandatory or extra-mandatory elements differs from pension fund to pension fund and from case to case. Information about the framework conditions and options can be found in your pension fund’s pension fund regulations. However, most employee benefit institutions enter the contributions in the extra-mandatory element of the pension fund.

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