How can you close the pension gap?
There are different ways to close these gaps:
You can make voluntary tax advantaged purchase contributions to your pension fund and so increase your pension. The best returns for a pension fund purchase are attained in the last years before retirement. Then as a rule your salary is at its highest and you save more due to progressive taxation. Before making a purchase in a pension fund you should definitely check the fund’s financial condition (for example the coverage rates). Or ask a pension specialist.
A further possibility is to pay into a private pension plan. For this purpose, the restricted Fisca 3a and the unrestricted retirement account 3b are available. The state provides your additional pension for the 3rd Pillar. You can offset up to 6,768 francs (Effective:2016) against taxable income. This is conditional upon you being affiliated with a pension fund. The capital paid into Pillar 3a is however restricted until retirement. You can only withdraw this capital in exceptional circumstances, for instance when buying a home – crucially: You must live in this home.
With the Pillar 3b retirement account, you have total freedom of choice. You can even invest in property. Or put your money into equities. The disadvantage of the restricted retirement account is basically that payments in are not tax advantaged. For that reason, you can invest as much as you like. And you decide for yourself how readily available your money is.
In the following case study see how a family discovered, calculated and closed their pension gap: