Retirement planning for part-timers Part-time employment and retirement provision

Women who work part-time may experience financial difficulties once they reach retirement age.

by UBS Insights 12 Apr 2017

In Switzerland, 57% of women work at an employment level of less than 90%. In contrast, only 17% of men opt to work part-time. This form of employment, which is still more typical among women, often has severe implications for people’s financial situation in old age.

Retirement provision under a pension fund in the case of part-time employment

Old-age and survivors’ insurance (AHV) is compulsory for all employees. This is only partly true if they join a pension fund, which is compulsory only from a minimum annual income of CHF 21,510 (2021). If the salary is lower, the employer is not obliged to include part-time workers in the pension fund, but may do so voluntarily. Employees with various part-time jobs that individually fall below the minimum amount but which cumulatively meet it are entitled to join a pension fund. Ideally, all part-time income can be handled by an employer’s pension fund in this way.

If inclusion in a pension fund is denied, another option is membership in the Substitute Occupational Benefit Institution. It enables women in this situation to secure employer’s contributions to the pension fund, which amount to 9% of the insured salary for all women over the age of 55.

However, when calculating the insured salary, pension funds first deduct the coordination amount, which is CHF 25,095 (as of 2021). The remaining income subject to insurance is very low. However, some pension funds only deduct this amount on a percentage basis in accordance with the level of employment.

Retirement provision with pillar 3a

Women who are members of a pension fund can contribute up to CHF 6,883 (2021) annually to pillar 3a. The maximum amount applies regardless of salary. All women who are not members of a pension fund may contribute up to 20% of their net income, but no more than CHF 34,416 per year (as of 2021), into a restricted 3a retirement savings account. As a result, the amounts paid into pillar 3a reduce the taxable income.