Buying into Swiss pension fund

Thanks to a major job upgrade I am now earning more than double my last salary. I was told that I can buy into my pension fund by paying extra until my pension fund is based on my new salary instead of my old salary. Is this true? How does it work? How much should I pay?

Hi there,

The pension which you receive from your pension fund is based on the contributions you make throughout employment - which in turn are based on your salary.

When your salary increases, you can make extra contributions in retrospect to make up the difference between your past contributions and your current contributions.

These extra, voluntary contributions can be deducted from your taxable income. If the gap in your pension fund is larger than your annual taxable income, then you consider dividing your voluntary contributions over two or more years in order to obtain the full benefit of this tax deduction.

Best regards from Moneyguru

Buying into a Swiss pension fund can be a wise decision if you want to secure your retirement savings. Swiss pension funds, also known as "second pillar" or occupational pension plans, are regulated by the government and provide a reliable and stable source of retirement income.

One benefit of investing in a Swiss pension fund is that your contributions are tax-deductible, which can help reduce your tax bill. Additionally, your employer may also contribute to your pension fund, which can help boost your retirement savings.

It's important to note that there are several types of Swiss pension funds available, including defined benefit plans and defined contribution plans. It's important to understand the differences between these plans and choose the one that best fits your needs.

Overall, buying into a Swiss pension fund can provide a reliable and secure source of retirement income, as well as potential tax benefits. However, it's important to do your research and choose a reputable pension fund that aligns with your retirement goals and financial situation.