Inquiry Regarding Implications of Returning to Work after retirement.

Hi,

I retired in 2023, two years ago. Today, a former client contacted me with a request to return and work for them again as a full-time consultant.

I am open to resuming work; however, I would like to understand whether there are any implications I should be aware of before proceeding.

I look forward to your advice.

Chutima

Hi Chutima,

If you have already begun receiving your old-age pensions from the OASI (pillar 1) and your occupational pension fund (pillar 2), the main implication to consider will be the impact on your tax bill. Because pensions are taxable in Switzerland, your taxable income would include both your pension income and the salary you earn from your employment. The result is that you could be pushed into a high tax bracket.

If you have not yet begun receiving your pensions, you can postpone your pillar 1 and pillar 2 pensions, and withdrawals from the pillar 3a, for as long as continue working, but at the most up to the age of 70. This will prevent receiving double income, with the possible tax implications that brings. It will also result in your getting a higher pension when you do retire.

Other than the tax aspect, the other impacts are mostly positive. You can apply to the compensation office to have the additional contributions you have to pay during your continued employment credited to your OASI pension in order to increase it (at the most up to the maximum OASI pension). You can also continue making contributions to your occupational pension fund to improve your pillar 2 pension. You also benefit from employer-based accident insurance, which is more comprehensive than the accident cover you get from mandatory Swiss health insurance.

Best regards,

Daniel

Dear Daniel,

Thank you very much for your information.  It is very helpful.

I've been  receiving my 1st pillar pensions since 2023 and also withdrew all of my 2nd and 3rd pillars at the end of 2023.

I did some research regarding the 2nd pillar, I still can contribute to it but it is also depending on the pension fund institute of my employer.  Could you please confirm this point?

Thank you very much again for your information.

Have a nice evening !!!

Best regards,

Chutima

Hi Chutima

All pension funds must enable deferred pensions based on benefits accumulated by age 65 for people who keep working after retirement age. Delaying withdrawal can result in a higher pension. However, pension funds are not legally required to let you continue contributing after age 65, though some pension funds make allowance for this. In every case, you remain insured against disability and death by your occupational pension fund for as long as you defer retirement.

But the situation is different if you take on new employment after the age of 65, after you have already retired and begun receiving your pension. In this case, you normally will not be enrolled into your employer's occupational pension fund.

If you are unable to enrol in a pension fund, you can contribute more to the pillar 3a. You can find the limits here. Be aware, though, that you will have to withdraw all your pillar 3a savings by the age of 70.

Best regards,

Daniel