“Honey, I need time with our baby!” says many a new mom to a new dad; though the dialogue could just as easily play out in reverse. In fact, studies show that the relationship between parent and child in the first three years of the child’s life has a significant impact on his or her future success and happiness.
In the case of many couples, one partner decides to reduce their number of hours at work for the benefit of their child – or even gives up working completely. This is a meaningful investment in the child’s future, but it also has an impact on their pension. What should Mom and Dad know if they suddenly decide to stay at home?
Pension fund: benefits shrink
If you reduce your workload, you also reduce the benefits of your occupational pension because your insured salary is lower. Should you or your partner become disabled, contrary to expectations, you would need to accept lower invalidity benefits from the pension fund. Likewise, your retirement assets will also drop.
This problem is magnified if you or your partner decides to stop working completely. Later or in the case of invalidity, you will only have benefits from the first pillar AHV/IV as well as any possible vested benefit capital in the pension fund that you managed to accumulate earlier. However, you can generally only access it when you start drawing your pension.
If you only reduce your workload, this still leaves the possibility of making pension fund purchases to close any pension gaps. They can be deducted from your taxable income. Still, you shouldn’t only make purchases based on tax considerations. Rather, the important thing is to stabilize your family situation and to thoroughly vet the financial condition of the fund.
Pillar 3a: close gaps – save on taxes
Under any circumstances, the voluntary restricted pension plan (pillar 3a) is an attractive option. Deposits into pillar 3a (UBS Fisca account) are entirely tax deductible. Those with a pension fund can pay a maximum of 6768 Swiss francs into pillar 3a. It’s also possible to make smaller deposits. For families who want to get more out of their savings, fund saving in pillar 3a can also be suitable. The UBS Vitainvest investment fund opens opportunities for higher returns over the long run. On the other hand, you will also be subject to fluctuations in value.
Pensions and saving for your own home
In principle, you can only draw from your funds in the pillar 3a no earlier than five years before you reach regular retirement age. However, there are exceptions: If an individual receives a full invalidity pension, they can also have their pillar 3a disbursed. In addition, you can also buy your own home – a dream of many young families – with the money saved up in the pension fund.
Saving: every percent counts
Ultimately, a pension means: saving. No matter which pension benefit scheme you prefer, the same principle applies: the earlier you begin regularly putting money aside, the better. Every percent of interest and every year count. If you save 250 francs every month, after 20 years at an annual interest rate of 2 percent, you will have capital of almost 74,000 francs. At an interest rate of 3 percent, you would have 82,000 francs. The most serious retirement mistake you can make is putting your pension planning on the back burner.
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