Partial retirement: phased retirement is a sound option

Many working people would like to take early retirement. In most cases, however, their pensions wouldn't be sufficient for them to maintain their accustomed standard of living, even if they took statutory retirement. Early retirement further exacerbates the problem.

Occupational pension funds and the state (OASI) pension system offer their insured members the option of taking phased retirement. For example, if you reduced your working hours from 100% to 70% at the age of 60, you could withdraw 30% of your pension fund assets as a lump sum or a pension annuity. You'd have this opportunity a second time if you reduced your working hours by a further 30% at the age of 65. If you then stopped working completely at 69, you'd receive the remaining 40% of your retirement benefits.

Occupational pension funds generally offer phased retirement for members between the ages of 58 and 70. OASI pensions can be drawn in up to three phases between the ages of 63 and 70 (or between 62 and 70 for women born between 1961 and 1969). Pension funds allow for more phases than the OASI system. However, if you opt to draw your saved capital as a lump sum instead of a pension annuity or to draw a combination of both, you can only make three partial withdrawals at most, as in the OASI system.

This is worthwhile, as your overall tax bill will be lower if you make several partial withdrawals rather than withdrawing your entire capital at once. It's often possible to save several thousand francs with a phased lump-sum withdrawal.

If you take partial retirement, you won't have to make any additional OASI contributions, as you normally would with full early retirement. The OASI contributions you pay on your part-time income will generally cover your OASI obligations.

If you phase your retirement in such a way that you continue working after statutory retirement age, you must continue to pay OASI contributions – at least on the income that exceeds the contribution-free allowance for pensioners. Previously, the OASI system didn't take these contributions into account when calculating pensions. That changed at the start of 2024. Any contributions that you make after the reference age now count towards your OASI pension, unless you're already entitled to the maximum OASI pension. In this case, you can't increase it any further.

Would you like to retire gradually and do everything right? Talk to a specialist at your local VZ branch.