05 February 2019, author: Stéphane Meusy, photo: Helvetia
Pensions from OASI and pension funds generally do not exceed 60 per cent of the income that can be insured through the LOB mandatory insurance. However, experience shows that pensioners need about 80 per cent of their previous income to maintain their previous standards of living. This gap can/should be closed by a 3rd pillar plan. But by buying a house, pensioners may possibly tie up exactly the funds they need later for their daily living expenses.
When considering whether to withdraw pension fund monies early to buy a property you should take into account in particular any related reductions in your future pension and possibly also the risk benefits in the event of earning disability and death. If you choose this method of financing you should close the resulting pension gap again as quickly as possible by paying in to the pension plan and, if necessary, close any related gaps in risk benefits.
What is important is that your insurance or bank deems your mortgage to be financially viable even after you leave professional life. The mortgage interest and the maintenance costs must not exceed one third of your pension income. And this must also be the case if the mortgage interest were to climb to five per cent. If you cannot meet the viability requirements after you retire, you risk a termination of your mortgage and a forced sale.