I have gaps in my second pillar pension plan (home ownership incentive). Is it better to buy back these gaps or invest in the markets (funds, ETFs, etc.)?
It depends.
(That would be 200CHF, thanks)
(You need to provide much more context on your life situation, goals, current asset allocation etc.; before anyone can try to give any advice)
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Buybacks are not tax-deductible until they are fully paid back. So, if you are between 20 and 50 years old, I wouldn’t bother filling up the second pillar unless you earn 300k or more and can invest a large portion of that into the second pillar (to get instant return because of the tax break).
There could still be an incentive to buy back, if some benefits of the pension plan (eg in case of invalidity or death) are linked to the accumulated capital instead of being linked to the salary only.
Probably this was already checked before withdrawing capital for home ownership…
It depends. You 2nd pillar pension fund has very limited downside risk (if not de facto none).
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Although you get back (at least temporarily until/if you withdraw again) the tax paid.
I think it can make sense to pay back early/at all if:
- the pay back is relatively small compared to income (i.e. you don’t need 15y of savings to pay it back)
- you expect to have spiky income (big bonuses, …) you would like to smooth out with buybacks.
Ultimately, if/when to buyback is a guessing game based on future expected income, time to withdrawal, pension fund performance, markets performance, risk tolerance, …
Either 1) post specific numbers: gross salary, age, desire RE age, CH or elsewhere, pension plan returns, etc or 2) consult some of the excellent posts on the topic