Part-time employment and retirement provision

Father sits with daughter on the sofa and reads a book

Part-time employment and retirement provision

Children or career? Today, both are possible – the world has become far more flexible and part-time employment far more widespread. A reduced workload can mean that you are badly insured in old age - but this is not inevitable. Five tips for a better protection.

The days when a part-time job automatically turned out to be a career trap are long gone. Many employers have become far more flexible and in some companies a reduced workload is even possible in management positions. Currently, three in five women and one in five men work part-time in Switzerland. Children are a major reason for reducing the workload. Other motives are further training or a second mainstay via professional self-employment.  

Occupational retirement provision: oriented to full-time employment 

However, what many part-time workers do not realize: they are faced by severe gaps in their occupational retirement provision. Basically, this is a throwback to the 1970s or 1980s, when full-time gainful employment was normal. Part-time employees should take these five tips into account to ensure they are not at a disadvantage in retirement: 

  1. Check your insured wages. 

    To determine the insured wage portion, normally the so-called coordination deduction is examined, currently amounting to CHF 25,095. What remains are the insured wages that influence the amount of pension fund contributions.  Fortunate are those employees whose pension fund reduces the coordination deduction for part-time employees, for example, in relation to the workload. This results in higher insured wages. The retirement credits will also increase correspondingly. Anyone applying for a part-time job should be sure to take a critical look at the pension fund regulations of their potential employer – or ask directly.  
  2. Get advice to close the gaps early on. 

    A retirement provision specialist can explain your pension statement to you in detail, what benefits you can expect from the pension fund in retirement or also in the case of illness-related disability. If these analyses reveal pension gaps, your advisor can provide you with recommendations on how to reduce these gaps or close them completely – whether in the second or also in the third pillar. 
  3. Ask your employer. 

    Progressive pension funds offer their insured additional options to tailor the occupational retirement provision individually to their personal life situation, for example with an expanded savings plan. Tax-friendly purchase into the pension fund may be of interest to part-time employees. Some pension funds offer older employees the opportunity to continue to pay full contributions even with a reduced workload. Clarify the options with your employer.  
  4. Seize the opportunities of private retirement provision. 

    Don't forget: private retirement provision in the third pillar is also an important and flexible instrument for closing pension gaps. According to a current study from Credit Suisse, only half of all employees make any payments at all into the third pillar – and of these, a third pay the full contribution of currently CHF 6,883. The average paid by all gainfully employed is CHF 2,870.

    The third pillar is particularly important for part-time employees for evening out pension gaps in retirement. Pillar 3a also offers options for combining retirement savings with risk cover. If you select a 3a account, you can make flexible payments and decide up to December how much money you would like to put aside in the particular year for private retirement provision. Apart from classic bank saving, which these days hardly provides any interest, there are other options, such as a 3a account with custody account and investment in the corresponding active and passive or index-based security funds. 
  5. Don't forget pillar 3b.

    Have you already exhausted pillar 3a, but would still like to make more retirement provision or are looking for more flexibility, such as the investment form? Then an unrestricted pension plan via pillar 3b might be an interesting option for you. This is a life insurance policy with risk cover. For example, you can insure your family or relatives and your capital will be earning income at the same time. You can choose whether you would like to pay regular contributions or a high one-time deposit. 

Incidentally, retirement provision is not something you look at once and can forget for the next 30 years. As soon as your life changes – for example, as a result of professional development, marriage, birth or building a house – it is worth examining the situation and adjusting the solutions if necessary. 

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