22 July 2021, text: Martin Hügin, photo: Gettyimages
In Switzerland, provision for retirement is based on three pillars: Old Age and Survivors’ Insurance (OASI), Occupational Old-Age, Survivors’ and Disability Benefit Plans (LOB) (referred to colloquially as the “pension funds”), and voluntary private pension provision (3rd pillar). The benefits provided by these three pillars are the main factors in determining the funds available to you in retirement. That’s why it’s worthwhile knowing where you have to pay which contributions and where have you the option of doing so. This three-part series contains the key facts.
After retirement, the OASI and LOB pensions should ideally make up around 60% of a person’s original income. At least that was the original plan of the pension funds. In practice, however, it is rarely the case. Breaks in employment, missing years of contributions, divorce, low interest rates, rising life expectancy and many other factors can have a negative impact on the size of your retirement benefits.
You can make up for shortfalls in your retirement income with the 3rd pillar. A pension analysis at every major change in your personal life situation can give you the necessary overview. And to ensure you don’t exceed your financial budget, it makes sense to begin early with voluntary payments to the 3rd pillar.