Bespoke retirement: Switzerland's four retirement models

Retirement is a milestone in your professional life. That is why it needs to be planned well. Whether you choose to retire early at 58 or defer retirement until 70, and whether you take a partial retirement in stages or retire upon reaching the reference age: Learn about the pros and cons of the different retirement models and find out more in informative articles. These will help you find out which retirement model is best suited to your personal situation.

It's better to think about your retirement today than to put it off until tomorrow. Timely, comprehensive planning is absolutely essential when it comes to choosing the right retirement model. A sensible way to start is by calculating your financial needs after retirement. By comparing your living costs and other expenses before and after retirement, you'll learn whether your financial resources are sufficient for your desired form of retirement. 

Adjust your retirement to fit your needs

Switzerland's Old Age and Survivors' Insurance (AHV) offers insured flexibility when it comes to drawing their pension. Pension funds also allow you to tailor your retirement. In addition to entering retirement normally upon reaching the statutory reference age, you can also retire earlier, later, or in stages.

Each retirement model has both financial and personal consequences that you should be familiar with when planning your retirement. It is therefore worth comparing the advantages and disadvantages of the various retirement models. How much importance you give to each individual point will depend upon your own personal needs. More free time might be the deciding factor for some, while for others, a larger pension may make all the difference.

A comparison of the pros and cons of the various retirement models

Early retirement

(+) More time for your family and hobbies.
(+) The AHV 21 reform will enter into force on January 1, 2024: The reduction rates will probably be lowered, but from the beginning of 2027, at the earliest.
(+/-) Women born between 1961 and 1969 who are affected by the AHV 21 reform can opt for a lower reduction rate if they decide to draw their pension in advance and therefore choose not to benefit from the pension supplement. It depends on the individual situation whether this is beneficial or not.
(-) AHV benefits are currently reduced by 6.8% for each year of early retirement (as at 2023). In addition, people who are not part of the workforce must continue to make AHV contributions until reaching the reference age.
(-) The retirement assets in your pension fund and the resulting pension are lower because of the shorter time spent paying in and the lower conversion rate. This equates to up to 8% (estimated) for each year of early retirement.

Partial retirement

(+) More free time, but you still have partial income.
(-) If you draw your AHV pension early, it is reduced by 6.8% for each year of early retirement (as at 2023). You must also continue to make contributions until reaching the normal reference age. Under the AHV 21 reform it is now also possible to withdraw only part of your pension early.
(-) You continue to make payments to your pension fund and your retirement assets continue to grow. However, because of your reduced level of employment, your contributions are lower. In addition, benefits (pension or capital) must be drawn in line with your degree of partial retirement.

Normal retirement

(+) Reliable planning and less administration.

(+) Because you work until the reference age, your pension will not be reduced – apart from any gaps you may have already had in your pension provision.

(-) May not be the ideal solution for your personal situation. The possibilities offered by flexible retirement models are not fully utilized. 

Deferred retirement

(+) The insured receives a percentage increase to their AHV pension, depending on the deferral period (maximum of five years).
(+) Once the AHV 21 reform enters into force, as of January 1, 2024, you may continue to make contributions to your pension fund, increasing your retirement assets. In any event, the assets will also be paid out using a higher conversion rate.
(-) Extended professional life and less free time.

The four retirement models

Early retirement

It's nice to imagine retiring early and having more time for your family and your hobbies. But drawing your pension early has financial consequences. Find out whether early retirement is an option for you. 

To early retirement
Early retirement: Planning for early retirement

Partial retirement

Partially working, partially already retired: Thanks to the AHV 21 reform, both the AHV and pension funds offer new options for this gradual transition to retirement. Read about what to consider when thinking about staggered retirement. 

To partial retirement
Partial retirement: Key points on staggered retirement

Normal retirement

Upon reaching the reference age, retirement benefits from the state, employee benefits insurance, and private pension provision are paid out. Learn which steps must be taken to initiate normal retirement. 

To normal retirement 
Normal retirement: How to take your retirement

Deferred retirement

Enjoying their job and being in good health are reasons why a growing number of people in Switzerland are working longer than legally required. This has financial benefits. Learn how deferred retirement works.

To deferred retirement
Deferred retirement: Postpone your BVG and AHV pension

Filling the gaps and increasing your retirement assets

Gaps in your pension provision reduce your retirement assets considerably. If you discover gaps in your AHV contributions due to, for example, stays abroad, studying, or missed payments by your employer, you can take specific measures to address them. Learn what those measures are here.

It may also be worthwhile to make voluntary purchases of pension benefits or payments into Pillar 3a as a way to ensure your standard of living in your twilight years. The best option for you depends on your personal circumstances. You should carefully review the pros and cons of each option.

AHV 21 reform: The changes coming to retirement

The AHV 21 reform enters into force on January 1, 2024. With this change in the law, women also reach the reference age at 65, the same as men. The adjustment from 64 as before will take place gradually every three months and will not be at 65 until 2028. Women born between 1961 to 1969 are in the transitional generation and are entitled to a pension supplement. However, they can waive this requirement and instead choose a reduced reduction rate when drawing their pension in advance.

However, the changes do not only affect the first pillar. The second pillar is also affected by the AHV 21 reform: All pension funds are now obliged to allow their members to draw a pension in advance from the age of 63 and to defer their pension until the age of 70.