Avoiding Pension Gaps for Self-Employed Women
What do I need to know about pension provision if I'm self-employed? Is retirement provision different for women over 40 than for those over 50? Generally speaking, what do women need to keep in mind for their finances? Dr. med. dent Sandra Saulacic-Perunski – a self-employed dentist from Geuensee – decided to get advice on retirement planning from Daniel Egli. In this interview, they each describe their experience.
Ms. Saulacic-Perunski, was there a particular moment or incident that led you to actively take charge of your pension provision?
The ball certainly got rolling when we started our family. My husband and I had our first daughter after I finished my dentistry program, which led me to reduce my professional activity to 50 percent. I also went from being at the university to my parents' dental practice, and then I became self-employed. Then all of a sudden, there were several rapid changes, which is why pension provision became important to me.
Mr. Egli, what factors lead women to address their pension provision?
Pension provision concerns practically everyone. There are, of course, those magic moments that cause people to actively address it. It could be the birth of a child that makes you wonder: What if something happened to me personally? Getting married and starting a company can also set things in motion. Many people start their pension provision with a 3a account, often as a result of the tax savings. Then there are an increasing number of changes in their personal and professional life that force the issue of pension provision. For women, reduced workloads and leaving the workforce are of particular note here.
Ms. Saulacic-Perunski, what do you value most about the professional service provided by Mr. Egli for your pension provision?
My parents were less active and thorough in taking charge of their pension provision. There were two of them in the practice and they only had one insurance advisor. Our dental practice has grown considerably in recent years, and it has more employees, which involves different challenges in terms of pension provision. We met with Mr. Egli through a recommendation. Things clicked from the start, and he has provided us with a professional service. This has led us to conduct other finance business with Credit Suisse. If we did not have this amount of mutual trust, we would diversify among several banks instead.
Mr. Egli, Ms. Saulacic-Perunski is self-employed and married with children. What aspects of her situation need to be considered in particular?
Generally speaking, no one should be overlooked, which means we need to consider every party and person. When you are self-employed, you have more responsibility for yourself but also for any employees, for instance. It is less regulated than traditional employment. This means there is a great deal of flexibility, but also that you are also responsible for taking charge of your own pension provision. Some pension provision decisions cannot be put off, particularly when employees are involved. Since Ms. Saulacic-Perunski is a sole proprietor, there are a few parameters that need to be specified correctly, such as her voluntary registration with the pension fund and the insurable components it includes. In turn, this has an impact on topics such as taxes, insurance benefits, etc.
When you are self-employed, you have more responsibility.
Ms. Saulacic-Perunski, pension funds frequently generate bad headlines. What effect does this have on you?
It sends shivers down my spine every time. We have made purchases of pension benefits and are still relatively young, meaning that we still have a long time before retirement. This means there is even more uncertainty. The idea of taking out money to invest in our own home, for instance, or to at least distribute it differently, has now become a concrete goal of ours for the next few years.
Mr. Egli, what trend are you seeing in withdrawals from pension funds to finance home ownership (FHO)?
The trend is definitely on the rise, particularly since real estate prices have risen so quickly. So based on past experience, it's a good option. We will have to wait and see if this holds in the future as well. Generally speaking, I have a positive view of FHO withdrawals for making your dream home a reality. This money can be paid back later on, and your own home is also a reliable asset in and of itself. Taxes are due on advance withdrawals and reductions in benefits may result, but this is not always the case. If the money is paid back into the pension fund, the taxes are re-adjusted and any reductions in benefits are restored. There are three major risks in pension provision: a long life, disability, and death. There are fewer benefits for those in old age or with a longer life if you take an advance withdrawal, but depending on the pension fund, these benefits may remain the same in the event of disability or death.
Ms. Saulacic-Perunski, what impending issues are there for your pension provision?
There is our project of owning a home. We are building our own home, which requires financing. There are still a few issues we have to clarify. Then there is the practice. My parents founded the business 25 years ago, and it has grown considerably since then. The question now is whether we want to look for new offices or renovate and expand the existing ones. Either way, we will need to figure out the financing, insurance, and investment once again. Another issue is the practice's legal form. It is currently a sole proprietorship, and given the growth, we are considering converting to a GmbH or a joint-stock company. Such a change would alter a few things in terms of pension provision – it would mean I was employed with all the implications for the three pension pillars.
Mr. Egli, is there a point of no return for pension provision?
Yes, when you enter retirement or when an insured event occurs. When you retire, there is one decision that you cannot go back on: whether you would like a lump sum and/or a pension. Without any background information, our neutral recommendation is a 50/50 option, but this depends heavily on your personal situation: how large your other income and assets are, your financial needs, and – most importantly – your personal health must not be overlooked.