RETIREMENT PLANNING: UNDERSTANDING THE SWISS PENSION SYSTEM

Every person living in Switzerland is entitled to old-age insurance under the state’s federally-administered pension system. Comprising three insurance pillars, this unique pension scheme has been designed to provide a secure retirement for all citizens of the country.

Through the Swiss pension system, optimum security in old age is achieved by devising an effective savings and investment strategy that encompasses all three pillars of the structure. Under the first and second pillars of the scheme, citizens and their dependents are given the means to sustain a basic standard of living during retirement, or in the event of disability or death of the primary wage earner.

However, by accumulating your own personal capital beneath the third pillar of the pension system, you’ll be able to supplement this state pension with sufficient means to provide for an ultimately comfortable retirement. Whilst adequately fulfilling your fundamental financial requirements, your state pension is unlikely to sustain the lifestyle you enjoy during your working life. Hence, it’s vital to compliment this insurance policy with a private pension plan of your own.

Pension planning is one of the most important financial undertakings of your life, and without the right guidance, you may be unable to enjoy the type of retirement you dream of. Helvetia Wealth’s skilled advisors offer sound financial advice aimed at helping you to prepare for the retirement you deserve.

Below, we help you to understand Switzerland’s 3-pillared pension plan, and show you how Helvetia Wealth’s expert retirement strategies have been designed to enhance the benefits of this system.

The Swiss pension plan has been designed to maintain the standard of living of insured individuals and their dependents during retirement, or in the event of disability or death. Through careful retirement planning and private investing, this system will provide optimum comfort and financial security during old age.

Pillar 1 comprises the state’s monthly pension provisions, and is applicable to all individuals living or working in Switzerland, as well as to Swiss nationals residing overseas and employed by the Swiss confederation. This mandatory insurance consists of Old Age and Survivors’ Insurance (AHV) and Disability Insurance (AVS), and it covers the basic needs of the entire population. Pillar 1 provides a basic standard of living for all individuals during retirement, or in the event of disability or death of a breadwinner.

Pillar 2 is the occupational pension component of the old-age insurance system, and is provided in conjunction with Pillar 1 benefits to those individuals who are gainfully employed. It serves to ensure that they maintain their current standard of living once they retire. It applies to individuals over the age of 17 who are required to make contributions to the AHV/AVS, and who earn an annual AHV/AVS salary exceeding CHF 19,890.

Pillar 3 is an individual’s privately financed pension plan, and serves to augment the contributions provided by the state. Often, the benefits offered under Pillar 1 and Pillar 2 of the Swiss pension plan are insufficient to sustain an individual’s attained standard of living once they retire, thus creating a pension “gap”. To close this gap, it’s essential to establish a private pension plan as early in your working life as possible.

Pillar 3 offers numerous advantages to investors. Foremost, long-term saving and wealth accumulation offers significant tax benefits, and moreover, these private retirement policies can provide a vital source of income for dependents in the event of a breadwinner’s disability or death. The earlier you begin building the third pillar of your pension plan, the more comfortable and secure your retirement is likely to be – for you and your dependents.

At Helvetia Wealth, we specialise in tailoring the right pension plans for each of our clients, whatever their stage of life. Assessing your individual needs and remaining cognisant of these at all times, we’ll devise a retirement strategy that not only fills the gaps, but enables you to enjoy the type of retirement you deserve.

Under the expert guidance of our financial advisors, you can start planning for a comfortable retirement today. Contact us to discuss your retirement goals with a private banking specialist, and let Helvetia Wealth tailor an investment strategy that will see you through this significant stage of life.