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About 13 billion francs: this is how much money the Swiss pension funds will have paid out as capital to their policyholders in 2022. 54,273 people had their pension savings paid out instead of receiving a monthly pension. On average about 240,000 francs per person. This is evident from the latest available figures from the Federal Statistical Office.
This article was first published in the “Observer”. You can find more exciting articles at www.beobachter.ch.
This article was first published in the “Observer”. You can find more exciting articles at www.beobachter.ch.
Compared to the previous year, there are more than 15 percent more capital recipients. And even more than twice as much as ten years ago. The monthly pension from the pension fund (PK) is still the most popular form – but the share of lump sum recipients is already more than a third. Another 20 percent opt for a mixed form.
This speaks for the capital absorption
Why is the number of capital recipients increasing? Ultimately, a pension remains the safest and most convenient way to withdraw your accumulated retirement savings. Three reasons are important:
- The number of retirees is increasing overall, so it makes sense that the pure number of those receiving the capital is also increasing.
- As the conversion rate (UWS) falls, the pension becomes less and less attractive. With a UWS of less than 5 percent, it is tempting for many people to withdraw all the money at once, invest it themselves and live on it.
- From a tax perspective, withdrawing a lump sum is more attractive; the bottom line is that there is more money left over to live on.
There are roughly two groups that receive the capital: those with a particularly low pension capital and those with a particularly high pension capital. The majority of people who earn somewhere between six figures opt for a pension.
- Everyone is entitled to have at least a quarter of the mandatory pension fund funds paid out in the form of a lump sum. The amount is stated annually in the PK statement. However, with many pension funds you can choose between capital and pension or a mixed form.
- The PK may set a pre-registration deadline for the withdrawal of the lump sum. It may not be longer than three years.
- Caution: If you have voluntarily bought into the PF, you will have to wait at least three years before you can withdraw all or part of the PF money as capital. Otherwise, the tax credit on the purchase must be refunded.
- Everyone is entitled to have at least a quarter of the mandatory pension fund funds paid out in the form of a lump sum. The amount is stated annually in the PK statement. However, with many pension funds you can choose between capital and pension or a mixed form.
- The PK may set a pre-registration deadline for the withdrawal of the lump sum. It may not be longer than three years.
- Caution: If you have voluntarily bought into the PF, you will have to wait at least three years before you can withdraw all or part of the PF money as capital. Otherwise, the tax credit on the purchase must be refunded.
Why? Those who have been working part-time or caring for children for years often only have a relatively small amount in their pension fund. And that means: a very modest pension. If you have 50,000 francs in pension at retirement age, a conversion rate of 5.2 percent (so low on average) gives a pension of 2,600 francs annually or 217 francs per month. For many, this seems so little that they prefer to withdraw the capital in one go. They make their budget exclusively with the AHV (and possibly their partner’s pension) and use the one-off capital payment for holidays or other extras.
That speaks for the pension
In principle this idea is correct. But: Especially if the budget is tight, 100 or 200 francs do play a role. At the end of the month you can decide whether life is financially bearable or not. Moreover, the pension is guaranteed until the end of your life. This ensures certainty and predictability in the budget. The tighter the budget, the more important these factors are. Therefore, this decision, which cannot be reversed, should be carefully considered, seriously calculated and, if in doubt, discussed with a specialist – the advice center “Observer” can also help.
That suggests a mix of both
In most cases, the ideal solution would be different, namely a mix of pension and capital. It works as follows: You decide based on a budget, how high the fixed costs (rent, food, health insurance, etc.) will be when you retire. The expected AHV pension is deducted from this. The difference should be covered by the PF pension. With the PF you can calculate what part of the total PF money you should use for this monthly pension. The rest is received as capital; it is used to finance luxury items such as vacations.
To make this calculation work, you usually need a six-figure amount in the PK. Not everyone can do that. Depending on your individual budget and how much other savings you have, a lower PK amount may be sufficient.
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.
