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AHV reform: What you should know


AHV reform: What you should know

It's official. The women's pension age of 65 is coming. In addition, the reform also has extensive consequences for all women and men who want to retire early or continue working in old age. On September 25, 2022, Switzerland narrowly said YES to the AHV reform. It is therefore expected that important parameters in the AHV will change from 2024. If you want to prepare properly for your retirement, you should already know these consequences of the reform today:

Women's retirement age

The ordinary retirement age for women will gradually increase from 64 today to 65 in the future. The first increase by three months is expected to take place in 2025 for women born in 1961. From 2028, the same retirement age of 65 will apply to both women and men.

Transitional generation

Women born between 1961 and 1969 belong to the transition generation. They are financially compensated for the higher retirement age. They can choose between two options:

Supplement option: women who work until the new retirement age that applies to them receive a lifelong supplement to their AHV pensions in return. For an average annual income of up to CHF 57,360, the pension is increased by CHF 160 per month (CHF 1,920 p.a.). For wages between 57,361 and 71,700 francs, it is 100 francs; from 71,701 francs income, it is 50 francs per month supplement. Only women born in 1964 and 1965 receive the full supplement. Up to the 1970 cohort, the compensation then drops to zero (see table).

Early withdrawal option: Women of the transition generation can also opt against the higher retirement age and for early retirement. They retire at age 64 (or earlier). Because of this early withdrawal, their pensions are reduced. Lower incomes are reduced less than higher wages (see table).

This is how pensions are reduced in the event of an early withdrawal

Important: The decision lasts a lifetime and has a major impact on your financial situation in old age. If you are a "woman of the transition generation", you should already find out today about the effects on your retirement. We at Caveo offer you an initial consultation, where we will show you what pensions you can expect.

Flexible pension withdrawal - an interesting planning option

The reform does not only affect women, but also men. The new rule is that you can draw your AHV pension flexibly between 63 and 70 (exception: women of the transition generation already from 62). In addition, it will be possible to draw only part of the pension first, namely 20 to 80 percent, and to defer the rest. This is intended to make the gradual transition to retirement easier and more predictable.

If, for example, the pension is drawn forward by one year, the pension will in future "only" be reduced by an anticipated 4% (current 2022: 6.8%). If the pension is deferred by one year, there will probably be an increase of 4.3% (Current 2022: 5.2%). The specific percentages have yet to be determined by the Federal Council at a later date.

Continuing to work after 65 - now also pensionable

If, for example, you want to work beyond the normal retirement age (65) in the future and earn more than 1400 francs per month, you must also continue to pay into the AHV. Before the reform, these AHV contributions did not lead to any increase in AHV benefits. The AHV reform corrects this. Now, contributions paid in after 65 will also build up pensions. This makes it financially more attractive for you to work beyond the normal retirement age. However, if you have already reached the maximum pension (currently 2022: CHF 28,680 p.a.), you cannot increase it further.

Pension fund - partial retirement now regulated by law

Many pension funds already offer partial retirement on a voluntary basis. Newly, all pension funds are obliged to allow partial retirements and the conditions are now regulated by law. Now you are allowed to draw your own pension fund pension in up to three steps. Pension funds may also allow more steps. In the case of a lump-sum withdrawal of the credit balance or a mix of pension and lump sum, there may be no more than three steps. This renewal offers you interesting planning options for your retirement.

Vested benefits - any restrictions regarding deferral

Today, you may postpone the withdrawal of your vested benefits by up to five years. This also applies if you are no longer gainfully employed. This possibility could be eliminated in the future: The Federal Council wants to limit such deferral to people who continue to work after 65. This will make it more difficult to draw your pension benefits on a staggered basis and thus save taxes. Whether the Federal Council will actually revise the corresponding ordinance in this way and exactly when the change will come into force is not yet clear and may take some time to implement.

Our conclusion:

The AHV reform will have a major impact on all future retirees - including you. Therefore, we recommend that you start taking care of your professional and private pension plans today. At Caveo, we offer you the most modern pension consulting tool in Switzerland. Your advantage: Your pension situation is clearly understandable and we show you how you can make smart provisions for your pension.

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