Basically, if the proposed reform to alter the 1st pillar passes, it could have serious consequences on the 2nd pillar as well, most notably on the retirement age. Pre-retirement and “post”-retirement ages would be adjusted (not sure if you could still pre-retire at 58 years).
One important point that is not put down in the text of law, but which would be implicitly added afterwards is the fact that you could not keep your vested benefit account anymore after the official age of retirement (whereas it’s allowed until 70 years old currently).
This would of course mean more taxes to pay while in retirement.
Why would you want to keep the cash within the pension fund for as long as possible? To me, it feels like the rules of the game could change any time. There are so many moving parts in the pension and the tax systems. Who knows what will happen to the taxation of a withdrawn pension lump sum? How many tranches will we be able to withdraw (thus lowering the tax). What will the conversion rate for an annual pension be? Will it become less or more attractive in the future? Will the pension be inflation adjusted? Will the pension age be raised to 68 years?
I try to understand all options the rules of the game provide me with and select the best option at any time. The only thing I would hate is to loose some options, i.e. when all people are forced to follow a single approach.
For now you can move abroad or to a different community, become self-employed, stop working or change jobs, declare yourself female or insane, pay more or less into the pension system, invest in different assets, sell or buy a home, create a tax-optimizing structure (like the rich do), take care of your health or not, etc.
Vested benefits accounts are not with pension funds. You transfer pension money from pension funds to vested benefits accounts or vice versa.
Pension money paid out at retirement age from either pension fund or vested benefits account incurs a tax. But SwissDan is referring to the yearly wealth tax required for paid out pension money. Can’t be delayed anymore beyond 65 unless you are working.
Good question. That’s what some people are saying concerning the proposed law. It’s just a stop gap to raise age later.
But to come back to the subject, yes, I was talking about vested benefit accounts that you need to cash out (they don’t provide any pensions; as capmac said, these are not pension funds). But you could cash them out until 70 years old with the current law.
So did anyone hear about this potential change?
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