Identifying and covering pension gaps in Switzerland

Why it’s important to cover the gaps in Swiss pension

Working and living in Switzerland is a privilege many can only dream of. For all of us who are fortunate enough to call this home and wish to continue living here or even retire while maintaining the same lifestyle, financial security is imperative at every stage. This requires a clear understanding of the country’s 3-pillar pension system, proper planning and a careful selection of insurance solutions.

What are the 3 pension pillars in Switzerland?

  • Pillar 1 is State Pensions provided by the government to cover old-age insurance and survivor’s insurance, disability insurance (AHV/DI), and also supplementary benefits under loss of income (EL). Everybody working and living in Switzerland is covered by this.
  • Pillar 2 is Occupational Benefits Insurance (BVG) provided by the employer to supplement the benefits from AHV/DI in old age, disability or death, and ensure that your current standard of living is maintained. Like the insurance coverage under Pillar 1, this is also a mandatory pension insurance.
  • Pillar 3 is Private Pensions wherein you have to contribute voluntarily towards building up private pension provisions for a life you wish to lead after retirement, while saving on taxes and insuring against risks like death and occupational disability.

What is a pension gap?

Payments provided to retirees under Pillar 1 and Pillar 2 guarantee only 60% of the final income and it is not always enough to maintain the same standard of living you might be accustomed to. This difference between actual living costs and the provided pension is called a pension gap.

There are also several factors that can cause a widening gap in pension insurance, like – long stays abroad, higher education, divorce, loss of short-term jobs, etc.

What does it mean for you in your old age?

  • Deterioration in the quality of life
  • Insufficient funds to meet expensive healthcare
  • Inability to cover costs if you are a property owner
  • Forced to return to home country if you are an expat or immigrant

In short, nothing that will make your retired life as worry-free and comfortable as it’s supposed to be.

How can you avoid this? 

The sooner you start planning, the better. Definitely before you turn 50. Study your pension fund to estimate your pension earnings. Then consult an expert to identify any possible gaps and how to go about it.

With our experience of advising and helping our clients close pension gaps and secure their retired lives, we recommend that you consider Private Pensions (Pillar 3) to compensate for anything not covered by the AHV/DI and BVG pensions (Pillars 1 & 2). Private Pensions are a big and important step towards leading a fulfilling retired life without any glaring gaps or surprises.

Who offers this?

Private Pension provisions can be arranged through both banks and insurance companies. However, it’s important to note that only insurance solutions offer you supplementary cover in case of extreme events like death or disability.

How can you get started?

By calling us and booking a free consultation!

Without rushing into products or solutions, our consultations are aimed at helping you understand every aspect of Private Pension provisions in relation to your age, health conditions, retirement goals and family finances.  Only after you’re convinced and ready, we move to the next step of recommending customized solutions with potential returns and guaranteed benefits.  

You only retire from work, not life! Cover the gaps with Private Pension planning and make your golden years comfortable and enjoyable.

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