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The referendum was extremely close: just over a year ago, only 50.6 percent of voters were in favor of raising the retirement age for women from 64 to 65, while 62 percent of women voted against. The decision now applies from 2024. However, not all women who will soon reach retirement age will have to work an extra year. To ensure that the reform had some chance of success, the Federal Council built in transition periods. They apply to all women born between 1961 and 1969. The federal government has reserved a total of three billion francs for compensation measures. What does that mean specifically for those affected?
Women of the transition generation, i.e. born between 1961 and 1969, can choose whether they want to work until the age of 65 and receive a higher AHV pension, or whether they want to stop working at the age of 64 and accept a pension reduction.
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Being able to choose always sounds good, but with choice comes pain: what is better for me? The bad news: it depends on the individual case; every woman must calculate (or have calculated) what the right solution is for her. The good news: Overall, early retirement is often financially worthwhile, especially if wages are lower.
To understand why this is the case, you need to look at the details of the measures. First of all, it is important that the retirement age for women is not raised all at once. But only gradually, depending on the vintage, in three, six or nine months (see table 1).
Option A: work longer
Women who continue to work beyond their retirement age receive a lifelong supplement to their AHV pension. How high this is depends on the average income and age group. The higher the salary, the lower the bonus. And the older, the higher the allowance.
For an average annual income up to 58,801 francs the pension supplement is 160 francs per month, for wages up to 73,500 francs 100 francs and for even higher average incomes the supplement is 50 francs. But: Only women born in 1964 and 1965 receive the full allowance; up to those born in 1970, the compensation then drops to zero (see Table 2).
Option B: accept a pension reduction
Anyone who renounces the higher retirement age and retires according to the old rule (at age 64 or earlier) will have to live with a reduced AHV pension. Less cuts are made on lower incomes than on higher incomes (see Table 3).
Spoiled for choice: how to decide?
Lots of numbers, lots of variables. To find the best solution, you need to calculate the variants. But the figures only say one thing: if you want to stop working as quickly as possible, you may be willing to accept a reduction in your pension. On the other hand, if you enjoy going to work, you can still do so for a few months after age 64.
But in many cases the raw figures speak in favor of an earlier retirement and against continuing to work. This is due to the billions in bonuses that the Federal Council donates for the higher retirement age. The cuts for those who want to receive the AHV earlier are significantly smaller than would be mathematically justified (almost 4 percent per year). These are considerably smaller than for men who want to retire at 63 or 64. And the less the women previously earned, the smaller they are.
A numerical example
A 62-year-old woman born in November 1961 would have to work three months longer, meaning she would retire on March 1, 2026. However, if she receives the AHV from March 1, 2024, her pension will be ‘only’ reduced by 2 percent, provided that her average annual income (calculated from the age of 21) does not exceed 58,800 francs. A man who receives AHV at the age of 63 instead of at the age of 65 will receive a pension discount of 13.6 percent for his entire life. Even if the woman in the example earned better, her pension will decrease by only 4.5 percent (with an average salary of up to 73,500 francs) or by 6.5 percent (with an average salary of more than 73,500 francs).
Pillar 3a: Pay before the end of the year
Or expressed in figures: with an average income of 58,800 francs, the now 62-year-old woman receives a regular AHV pension of 2,058 francs, and she also receives a bonus of 40 francs (25 percent of 160 francs) because she is a member of the transition generation. work until the new retirement age. If she receives the AHV from the age of 62, the pension is reduced by 2 percent and amounts to 2017 francs, so only slightly less.
With a remaining life expectancy of 23 years – that’s how long 65-year-old women live on average – she will do almost 20,000 francs better with early retirement than with a regular pension. This is what pension specialist Andreas Zeller calculated for “NZZ am Sonntag”. Wage losses are not taken into account.
Conclusion: The AHV revision rewards women with a bonus if they work longer than 64 years. But because the cuts are so small if you retire early, they generally do better. It’s different for men; For them, the preliminary admission is usually not worth it – unless they have only a short life expectancy due to serious health problems.
Stop working gradually
And what if, despite the relatively small discount, there is not enough for early retirement? Then partial retirement may be an option. Many pension funds are familiar with this hitherto voluntary model. They now have to legally offer it. From 2024, men and women can also receive part of the AHV instead of all or not at all. For example, by reducing your workload at the age of 63, receiving a partial pension from the AHV and the pension fund and then retiring at the age of 66.
However, partial retirement only works if the employer lends a helping hand. Talk to him about it early. Try to convince him that he can count on your expertise for longer than if you took early retirement.
Calculate variants
Calculating the partial pensions of AHV and pension funds is complicated. Let the AHV and your pension fund show you exactly what financial consequences a gradual partial retirement has. Have several variants with different work levels and/or different times of workload reduction calculated and only make a decision when you are sure that you understand the consequences.
Source:Blick
I am Liam Livingstone and I work in a news website. My main job is to write articles for the 24 Instant News. My specialty is covering politics and current affairs, which I’m passionate about. I have worked in this field for more than 5 years now and it’s been an amazing journey. With each passing day, my knowledge increases as well as my experience of the world we live in today.
