“I couldn’t just do nothing” A deferred pension and a preference for chestnuts

Freddy Illi could live off his pension nicely. Still, he decided to continue working after retirement – because he enjoys it.

by UBS Insights 30 Nov 2018
Image: Claudio Bader

For Freddy Illi, food is much more than just a means to sustain life. As a boy he liked to spend time in the kitchen, helping his mother. He took an apprenticeship as a chef – and even during his 34 years as a sales representative for a large food company, the passion never left him: “Once food, always food. I couldn’t have sold insurance,” says the 68-year-old.

So it’s no wonder that Freddy Illi is still doing things with food even after retiring. He took over a street stall selling roasted chestnuts from a fellow rifle club member, and has been running it from October to February for the past six years. He takes it seriously, but keeps it firmly in perspective: “In the morning I need some time for gardening or going to the gym. And if I’m not feeling well, the stall stays closed.”

Contact with life

When Freddy Illi stands at his chestnut stall, he enjoys conversations with other people. For him it was clear that after many active years as a salesman in the field, he couldn’t simply sit around doing nothing: “I would miss the contact with the outside world.” Admittedly, Freddy, who is a marksman in his spare time, is in a comfortable position. Financially he would get by without his chestnut stall, courtesy of his former employer’s pension fund. And because his wife also nearly always worked full-time until she retired, the couple are comfortably off. In addition, he did not start drawing his AHV pension at 65, but is deferring it – until he gives up his chestnut stall. This way the extra income is not taxed with the AHV pension.And as soon as he draws his pension (by law no later than the age of 70), he benefits from a higher amount as a result of the deferral.

For many people my age, a part-time job would be wonderful. Not just for the extra income, although that’s part of it.

But he doesn’t run the chestnut stall just for the money. Anything he makes goes towards “nice vacations.” He doesn’t want to earn any more than he’s earning now, he says. Otherwise what started out as fun would quickly become a serious affair. Especially since his extra earnings could become pretty “taxing.”

Does his non-retirement have any drawbacks? Skiing in winter has to take a back seat, he says. But apart from that, Freddy Illi would recommend his concept to anyone. “Some people want to enjoy complete freedom when they retire. They’re welcome to that. But for many people my age, a parttime job would be wonderful. Not just for the extra income, although that’s part of it.”

Deferring your pension?

The minimum deferral of AHV pension payments is one year and is rewarded with a 5.2 percent bonus. Anyone who puts off drawing their AHV pension for the maximum permitted five years is granted a 31.5 percent higher old-age pension. However, this approach is recommended only if you expect to live beyond the age of 85.

Any questions? Virtually everyone’s situation is slightly different and should be taken individually.