Working after retirement Continuing to work after retirement

You can continue to benefit from the Swiss pension system after you retire.

by UBS Insights 27 Jul 2019
Bild: iStock

If you receive a pension and continue to work, you may under certain circumstances have a higher taxable income than you did before drawing the pension, putting you in a higher tax bracket. You can have an important impact on the amount of your taxable income by deferring your pension payments and continuing to put money in your pillar 3a account.

Postponing AHV

By deferring receiving your AHV pension, you can avoid paying higher taxes that come by working while you receive your AHV pension. If you do not submit your intent to defer your AHV pension on time, you will receive your AHV pension paid out without any early withdrawal or postponement. It is recommended to defer receiving your AHV pension if you can assume, based on your health situation, that you could live to age 86 or longer.

AHV deduction with nothing in return

Many people who work do not realize that if they continue to work past the statutory retirement age that they are still liable to pay into AHV. If your annual income is more than 16,800 francs, the usual AHV, IV and loss of income contributions are deducted, with no claim for any compensation in return. However, there is no requirement for persons of retirement age to make contributions to unemployment insurance. Similar to postponing AHV, if you defer receiving pension fund payments it is possible to avoid moving to a higher tax bracket. In principle, when retirement age is reached the contribution obligation ends. If you want to continue working, it is possible to postpone receiving pension fund benefits until the completion of age 70, depending on the pension fund. Check the regulations of your pension fund in advance to review the possibility of deferring your pension fund benefits.

Continue making Pillar 3a contributions

The Pillar 3a is another way to impact your taxable income after retirement age is reached. If you carry on working, you can continue to make Pillar 3a contributions, up to age 69 for women and age 70 for men. If you are part of a pension fund, you may contribute up to 6,883 francs (as of 2021) to a Pillar 3a account, the same amount as before retirement. For persons who no longer pay into a pension fund, one fifth of the annual net salary can be contributed (up to a maximum of 34,416 francs).