Second pillar buy back - voluntary contributions or financing of early retirement?

Finance, Taxes, Banking, Insurance and Retirement
1
I am thinking of investing some money in second pillar this year to reduce the taxes a bit.

My pension plan is set up in two plans, the basic which covers the LPP amount and the extended which covers the excess.

For basic plan, upon retirement I can either draw a pension or lump sum. Excess is lump sum only.

Given the status of my account I am either able to contribute to the basic to finance early retirement (as my contributions are "full") or to "fill" the extended plan.

I am told by pension institution that both are tax deductible.

Any idea what else I should consider? Our pension plan changed since last time I looked and this is all a bit new and I am worried I will not consider the right things....

Thank you

K

2
Careful with early retirement pot. Any money paid in which is not used for early retirement will be gone if you continue working.

So only makes sense if you can pay in enough to finance multiples of one year of retirement. (And you actually want to retire early)

3
Topping up the base plan would be beneficial as the conversion rate is better. Unfortunately the options are very limited. AFAIK there's only 5 years window to buy back missing contribution years. Other voluntary payments are always booked on the excess part.

However when you draw your assets earlier, to finance property purchase etc, the amount is drawn from both pools proportionally.

4
Yes my base plan is full. I can only buy early retirement now on this plan. Can you explain the 5 years window pls?

5

I've mixed here 1st pillar, sorry about that. The 5 years window applies to buying missing contribution years to the 1st pillar.

I don't really understand what do you mean by having a base plan full.

In 2nd pillar we can top up to fill the gap between what we have and what we could have had if our contributions were paid with the same amount as for current salary. My 2nd pillar is not explicitly split between mandatory and extra-mandatory investments. However all my top-ups are always booked as extra-mandatory. I wonder if my pension fund is cheating me. Obviously booking the money on the mandatory part would be beneficial for me, but unfavorable for the pension fund.

6
Our plan changed a few years ago and split this way.

Maybe your plan is different?

Understood on the 5 yrs - it's all very confusing indeed at times.

Will try to read the plan rules and figure it out.

7
In my company (defined benefit) pension plan, the "main retirement account" pays retirement from age 65, and we can make voluntary payments if we joined the company / moved to Switzerland after age 25 (to bring payments from age 25 onwards).

Then there's an "early retirement plan" which can only be paid into voluntarily (not from paychecks directly). The idea is that it supports an early retirement from age 58.

In reality, the main retirement account seems to get a quite healthy return (as capital increases with age, with salary raises, etc.). The early retirement plan is effectively a cash savings account that pays an interest rate each year.

However, making voluntary payments to either of us entitles the payer to tax deduction of that amount. It makes no difference which plan is paid in to, both are deducted.

Both of them can also be withdrawn upon leaving Switzerland, buying a property, etc. - all the usual rules

8
What do you mean by this? If you were to continue working past ~age 58, you would effectively lose capital?

If you retire early, I understand you can take some / all out as a cash payment?

Sounds like it might be better to use it before retirement to buy a property / leave Switzerland.