Retirement
Retirement planning for women who work part-time
Cut back a little on your job and have more time for your family or yourself: working part-time sounds attractive at first and is particularly popular with women.
Content:
Content:
- Women in Switzerland predominantly work part-time.
- If you earn too little, you do not contribute to the pension fund.
- The fixed coordination offset from part-time income precludes high savings contributions.
- If the coordination offset is adjusted to the part-time workload, the contributions to the pension fund will not be too low.
- Contributions you have made to pillar 3a are tax-deductible.
- To the conclusion
The number of women working part-time in Switzerland clearly outweighs the number of men. Over 60 percent of working women do not work full-time. This means their working hours are below 90 percent (as of 2024. Within Europe, the only country where more women are employed part-time is the Netherlands (63.9 percent).
Only 18.8 percent of men in Switzerland are employed part-time. This means that almost three quarters of all those who have reduced their working hours in Switzerland are women. In the past, the most common reason was childcare; today, part-time self-employment and leisure activities have become more important.
This trend has implications for pensions. Reduced working hours also mean a lower income and fewer contributions to the OASI and the pension fund. To maintain their expected standard of living in old age, it is important part-time workers anticipate and prevent pension gaps.
Insured in OASI and the pension fund
Although the three pillars of the pension system have been modified and enhanced over time, they remain primarily geared towards full-time workers. In pillar 1, part-time workers benefit from the same mandatory insurance as full-time workers. This means that anyone who lives or works in Switzerland pays into the OASI, but because their contributions are lower – the same as for many self-employed or non-working individuals –, they do not receive the maximum pension of CHF 2,450 per month (as of 2024). Often, their contributions are only enough for the minimum OASI pension of CHF 1,225 per month.
In principle, the insurance obligation also applies to pillar 2, subject to special rules that mainly affect part-time employees. One difference is the minimum income requirement of CHF 22,050 (as of 2024). If you earn less, you are not automatically insured unless your employer and its pension fund voluntarily choose to insure lower salaries. If you are self-employed, you may be able to take out voluntary insurance with the pension fund of your professional association.
Mandatory insurance requires a minimum income and employment that generally lasts longer than three months. Pension fund benefits in old age are intended to supplement the OASI pension. Part-time employees must decide for themselves whether this is enough to ensure financial security in retirement.
Do I have a pension gap?
If the benefits from pillars 1 and 2 are not enough to maintain your desired standard of living in retirement, you’ll need to save more. Find out how much today.
The meaning of the coordination offset
The “coordination offset” is an important benchmark for calculating pension fund contributions. It is set by the Federal Council and amounts to CHF 25,725 (as of 2024). Its function is to “coordinate” the contribution obligations of pillars 1 and 2. This means that pension fund contributions are only paid for that portion of the salary that is not already insured by the OASI. To achieve this, the coordination offset is subtracted from gross annual salary. What remains is the “coordinated salary” for which contributions are paid to the pension fund.
The coordination offset does not differentiate between full-time and part-time work. The impact is greater the lower the income. Accordingly, it significantly reduces the insured portion of the annual salary.
Particular caution is required if you work multiple part-time jobs. For example, if you earn enough in two part-time jobs to be included in the pension fund, the coordination offset will also be applied to both salaries. The coordinated salary is usually low as a result.
If you do not cross the entry threshold in any of your part-time jobs, but your total income is higher, you can buy in to a pension fund. Ideally, you should process all part-time income through the pension fund of a single employer and ask the funds of the other employers to transfer the contributions there. In this case, only one coordination offset is made.
If part-time employees are not accepted in the pension fund, they can join the Substitute Occupational Benefit Institution BVG. The coordination offset is not made in full for individual part-time employers, but according to the proportion of your total income.
To make pension contributions that are sufficient for a financially secure retirement, you can take the following steps as a part-time employee.
Plan your retirement at an early stage
When you think about your retirement, you are faced with some important decisions. Let’s draw up a plan together based on your personal wishes, so that nothing stands in the way of a relaxed financial future.
Reduce the coordination offset
You may be able to reduce the coordination offset in your pension fund. This would prevent your contributions to the pension fund from being disproportionately low. In consultation with the employer, some pension fund plans provide for the coordination offset or the entry threshold to be adjusted according to the percentage of part-time work.
A higher coordinated salary means higher contributions and thus higher pension entitlements. However, employers and pension funds are not legally obliged to make the percentage adjustment. You can find out which rules apply to your fund in your pension fund regulations.
Increase your workload
If your workload is less than 50 percent, the pension benefits from the OASI and the pension fund will probably only partly cover your financial needs in old age. The Swiss Conference of Gender Equality Commissioners (SKG) therefore recommends that you do not permanently reduce your workload below 70 percent.
Avoid contribution gaps
If you are missing contribution years in the OASI, you can make up missing contributions in the five years that follow. To do this, request a statement from your individual account from the compensation office. You must pay at least the minimum contribution for all of the contribution years (2024: CHF 514).
You can also reduce an existing contribution gap in the pension fund. You do this by making a voluntary buy-in. The amount you can purchase, however, is limited and depends on your currently insured salary. Here too, you can find out what is possible for you in the pension fund statement from most funds. You can deduct these purchases from taxable income, provided you do not receive any benefits in the form of capital within the three years immediately following the purchase.
Save for retirement in pillar 3
Whether employed or self-employed: as a part-time worker, you can take advantage of the opportunities offered by pillar 3a for voluntary retirement savings. You can deduct the contributions paid from your taxable income in the same year they are deducted.
If you are affiliated with a pension fund, you can pay up to CHF 7,056 per year (as of 2024) into pillar 3a. Part-time employees who are not affiliated to a pension fund may pay in up to 20 percent of their net income, up to a maximum of CHF 35,280 per year.
You can decide for yourself each year whether you want to pay in the maximum amount with banking solutions. A monthly standing order of CHF 100 would already be a successful start. Missed payments cannot currently be made up for in another year.
Working part-time and making basic provisions for old age are not mutually exclusive. However, the lower incomes make it more difficult for part-time workers to save for retirement. In addition, particularly in pillar 2, there are some regulations that represent a real hurdle.
All the more reason for you, as a part-time worker, to consider the topic of “retirement planning” important and take appropriate steps – from OASI to the pension fund to pillar 3a.
Disclaimer
Disclaimer
