The importance of the 3rd pillar
Source: Action.ch, Author: Ignazio Bonoli, date: 3.6.2019
We offer you this interesting article, published on 3.6.2019 by the online weekly magazine Azione.ch (AUTIOMATIC TRANSLATION FROM ITALIAN, SORRY FOR TRASLATION MISTAKES)
Retirement provision - The difficulties of the AHV and the pension funds create some apprehension. This does not mean that the three pillar system is in danger. But just the third pillar offers an extra guarantee in many cases
Even before the federal vote on tax and social reform, some experts expressed the fear that the 2 billion francs allocated to AHV from 2020 could slow down the reform work indispensable to the first pillar of our old-age insurance. However, not for a long time, since it could be seen that at most these billions would have served to lighten the AHV fund only until 2022, even if accompanied by an increase in contributions from workers and employers. Today's situation, however, is such as not to arouse enthusiasm even after the positive outcome of the popular vote. Indeed, already in 2018, the AHV closed with a liability of 2.2 billion francs and, according to the most recent data, the absence of deficits is expected to last until 2024 at the latest, while in 2025 it will return to lack. about half a billion to cover expected expenses. At this rate, about 20 billion francs will be missing from the AHV in 2030 if the renovation is not taken in time. However, the Federal Council has already prepared an intervention plan which foresees a 0.7% increase in VAT which would yield 2.5 billion francs in 2030. This would also contribute to the current pensioners, while it remains fixed an increase in the retirement age of women to 65, with a slight increase in the pensions of the first 10 years of retirement. The project will be presented in August, but it is not known how long it will take Parliament to approve it. In the meantime, occupational pensions (second pillar) are also not much better. In the three pillar system it is essentially based on a capital accumulated during the years of work, fueled by both the worker and the employer. Its purpose is to guarantee a standard of living on the basis of an annuity which, together with that of the AHV, must guarantee approximately 60% of the income obtained before retirement. However, the situation has evolved in such a way that the assumption of the accumulated capital that guarantees the retirement pension cannot be realized. Currently many pension funds have to use their reserves to guarantee the payment of pensions, that is, money that has not been saved by those who receive them today. Basically, there is a transfer of funds from policyholders active towards retirees. This transfer is estimated to have reached CHF 5.3 billion globally as early as 2015. The second pillar, like AHV, also suffers from an aging population (hence the increase in the number of pensioners), but above all from the long period of poor return on accumulated capital, due to the persistence of a low level of interest rates. interest. This situation means that the target of 60% of pre-retirement income is not achieved in many cases. Hence the growing importance that the third pillar is assuming, namely individual private savings. Conceived to finance expenses that may exceed the aforementioned 60%, it is now increasingly needed to fill important pension gaps, caused by the first two pillars. It is therefore increasingly common to advise those who have the opportunity to increase these savings, which can be very useful in retirement years. The state also favors this savings in two ways. With the so-called pillar 3a, 6,768 francs per year can be saved today, per employee, which can be deducted from taxable income for taxes. Self-employed workers who are not affiliated to a pension fund can deduct 33,840 francs. When collecting the capital saved, the taxman does not assimilate this capital to the rest of the taxation, but taxes it separately and, in some cases, even at a favorable rate. For pillar 3b there are no limits, but there are also no privileged tax treatments. In this case, both banks and insurance companies offer adequate solutions for individual cases. A problem for these forms of savings can arise from the risk that can be taken. As a rule, investments take place over the long term, which tends to increase risks, but also to compensate for moments of difficulty with other more favorable ones. This market has expanded significantly in recent years, especially for bank savings, also through pillar 3a. However, it should not be forgotten that this saving is subject to certain limits. The capital can be withdrawn at the latest five years before retirement, except in the case of the acquisition of one's home, the financing of one's own business, or the repayment of mortgage debts, as well as in some particular cases. Even in the case of an early withdrawal of capital, it is good to think about the future needs to complete the annuities of the first two pillars and, therefore, to maintain a certain portion of the third pillar.
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Clarification by Terzopilastro.ch
The deductible amounts shown in the article are for 2018. For 2019, these amounts have increased slightly: CHF 6826 for employees, and CHF 34'128 for independent employees.
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