Early retirement vs Severance pay

1

Dear all,
My company is going through a reorganization and I am being forced to take an early retirement at 58years of age with a contribution of CHF33K into my pension or a severance pay of CHF79K.
The early retirement option also includes a top up of the difference between my OASI now and when I am 65. Which option should I take?
I can also take a lump sum of my pension or get monthly pension payments.
I would like to understand the tax implication of each option as well as my entitlement to unemployment benefit if I do not find another job. I am single with no dependents. Thank you

2

Well, you should list at least roughly what other assets you have. As well as how much it will be in your 2nd pillar in both cases.

What would be the conversion factor for 2nd pillar?

Can you withdraw 2nd pillar if you decide to retire early?

And finally, how experienced and how comfortable you are with investing by yourself?

P.S. Maybe it would make sense to pay to a fiduciary for an advise?

P.P.S this is assuming you don’t have a strong preference for either option.

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3

You don’t provide a lot of details.
Depends on those and whether you plan to look for a new job and expect to find one.
Just some ideas you may or may be not aware of:

  • Severance is taxable income; the pension fund contribution isn’t. But even with a very high tax rate, it’s more than 33k
  • At 58, you could probably stay in your current pension fund if do retire early, would you like to?
  • Severance sounds like cash on hand, ready to be spend or invested. Pension fund gives you the option to get a pension or a lump sum payment, at regular retirement date or earlier
  • Will the severance result in suspension days for unemployment insurance? This depends. Is it on top of your normal notice period or instead of it?
  • Is the severance is affected if you take up a new job, or receive benefits?
4

Thank you for your prompt response @Brndete

  • I cannot continue to stay in my pension fund either way. I have to either take a lump sum or monthly pension payments or take it to another pension provider if taking severance payment.
  • I am unsure if the severance will result in suspension of unemployment insurance as I am yet to register with RAV
  • The severance is unaffected if I take on another job or receive benefits
  • I have just been notified of the termination and serving a notice period until the 31st Dec2024
  • I am also a B permit holder from the UK
    Please let me know if you require additional information to give advice.
    Very much appreciated
5

This is an important option to consider, esp. if you don’t get another job and so will not be able to get an annuity (at least not likely at good rates).

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6

If you receive your regular salary until end of the contractual notice period, and the severance is on top, it shouldn’t affect your unemployment benefits.
In this case, 79k severance sounds better than 33k towards your pension. Neither should impact the unemployment benefits.

You could still top-up your pension fund with your own funds while you are still employed and insured.

I can’t quantify the monthly payments you could get instead, but it might affect your benefits if they consider you retired-early. There’s some special rules for people at your age that I’m not sure about, though.

7

Thank you SO much, I very much appreciate your input :pray:t5: