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Part 3: Systematically make up for shortfalls in 3rd-pillar benefits

What contributions can you make to OASI, the occupational pension fund and the 3rd pillar? If you’re in the know, you can systematically make up for shortfalls and optimize your retirement benefits.

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.

Voluntary private provision – the 3rd pillar

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.

Good to know

Pillar 3a – tied pension provision
Tax-privileged form of pension provision: annual contributions are tax deductible; capital is taxed separately on disbursement; legally defined drawing options.
Maximum amounts per year (as at 2021)
CHF 6,883 for employees with LOB insurance
CHF 34,416 for the self-employed without LOB insurance (up to 20% of net income)
Pillar 3b – flexible pension provision
Individually adaptable form of pension provision; limited tax privileges; flexible drawing options; also open to all those who are not gainfully employed.
Maximum amounts per year
Unlimited or freely selectable

Swiss Federal Statistical Office – facts & figures

In 2019, the average amount of pillar-3a capital available to new pensioners was just CHF 45,839. Click here for further information on this topic.

Helvetia Vorsorgecheck
How large is your pension gap?
In the event of death, OASI benefits and your pension fund would cover only part of the financial requirements. You can close this gap with whole life insurance.
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