Pension Fund & Inflation

Finance, Taxes, Banking, Insurance and Retirement
1
Dear Englishforum folks,

I was wondering about the recent news of upcoming inflation. The loose monetary policies by central banks since the GFC have created a storm that is starting to appear.

This does not bode well for pension plans. What do you guys think and what is your mitigation strategies?

Cheers

2
Find the conversion rate for your Pillar II.

Calculate

100 / conversion rate = number of years before you get your money back.

If you think you won't live that long, cash out. Though at the moment I think it makes sense to cash out if you can anyway, as payouts are not index linked.

3
And how exactly would you propose do this? And who do you expect should be on the hook for indexing your pensions.

4
Is it really that simple? If you invest what you cash out surely the calculation is not this.

5
If you invest what you cash out, then your situation improves, no? Which is more reason to cash out.

Meaning how to cash out? If serious, I should consult a tax advisor to find out. But I am aware of the following methods (caveats may apply - this is not financial advice, etc.):

My current employer (and my employer immediately before this one) allowed me to cash out entirely, and there was a calculator I could use to work out how much I would get, etc. Maybe this depends on your current PF.

Depart Switzerland, and you can cash out your Pillar 2, less tax (5.6% at the moment?). Your Pillar 1 stays behind and you will eventually receive a Swiss state pension.

There is a mechanism whereby you can leave your job, go self-employed and cash out your Pillar 2.

I am not saying your pension should be index linked. I was merely pointing out that in general they are not indexed linked. If they were, you would mitigate somewhat the erosion of your unchanging payout by inflation (another reason to cash out).

Inflation is another reason to cash out. Remember that the money in the PF is effectively theirs once you make your retirement decision. If the PF starts to earn greater returns then your paltry conversion rate, they get to pocket the difference. If it was in your pocket, you will benefit from the improved peformance.

6
So bloody pointless in the context of the question and that most are not exiting the country to a third country any time soon.

7

What pension plans do you have in mind? There's nothing you can do about the state pension if you're employed. Pillar 3a, well there's no much choices either. Some people just park the money on account satisfied with income deduction for tax purposes, others choose providers who let you invest in stocks.

If your question was about the future, how to secure one's retirement situation, that's nothing new either, work hard making money, developing other streams of income, etc. We all know that state pensions are ponzi scheme, with ageing population it's a high risk to count solely on your pension.