All about retirement and statutory benefits in occupational pension plans
- Withdrawing retirement benefits as a pension, lump sum, or as a combination of the two.
- Early retirement (before statutory retirement age)
- Flexible retirement in stages
- Deferred retirement
The issue of retirement assets will dominate regardless of how you decide. They are the basis for calculating your benefits as of the retirement date, which therefore becomes the crucial factor in any decision. If you decide on early retirement, for example, you can expect to receive considerably lower benefits because the main portion of your retirement assets accrues in the years closest to retirement as a result, among other things, of increased retirement and interest credits.
Start to save early and enjoy the freedom later. From age 25, you and your employer will begin paying regular contributions into your benefits plan so that you will be financially independent when you reach retirement age. For this purpose, the law requires you to have a retirement pension. Moreover, the statutory framework also provides for a child's and survivors' pension in certain circumstances.
Statutory retirement pension
Pursuant to the Swiss Federal Law on Occupational Old Age, Survivors' and Disability Pension Plans (BVG), women are entitled to retirement benefits from age 64; men from age 65.
The benefits amount is calculated based on the retirement assets that have accrued at the time of your retirement. How your benefits are paid out depends on the pension fund regulations and your personal situation. You have three options.
1. Draw a pension
Better protection: Most people opt for a pension from their occupational benefits insurance, which guarantees you a lifelong income. Your accrued assets are converted into a pension on the basis of the conversion rate, which is set by the Federal Council.
2. Lump sum withdrawal
You gain flexibility: Instead of drawing a pension, you can withdraw all your retirement benefits as a single lump sum if the regulations permit you to do so. This gives you additional scope in realizing your plans.
3. Combination of pension and lump sum
You always can withdraw a quarter of your statutory retirement assets as a lump sum. But many pension funds also offer you a combination of the two, which means you can benefit from both protection and flexibility.
Advantages and disadvantages of the combination of pension and lump sum
Perhaps you are drawing a retirement pension and have children who are eligible for support? If so, then each child is entitled to a child's pension of 20% of your retirement pension. Eligibility applies to children
- up to their 18th birthday,
- up to their 25th birthday if they are in school or training,
- up to their 25th birthday if they draw a full disability pension.
No occupational benefits institution can ease the grief of losing a family member. It can, however, help to cushion the impact on your finances. In the event of a death, the pension fund will pay the surviving spouse at least 60% and the orphans 20% of the deceased's pension.
All about the topic survivors' pensions