Save taxes on investments and retirement provisions

Save taxes on investments and retirement provisions
In Switzerland, there are all kinds of opportunities to build up assets in a clever way - and this is something you need to take advantage of.
In times of negative interest rates and shrinking pension fund pensions, private provision is more necessary than ever. All the better that this can be done in Switzerland with tax benefits, such as pillar 3a or pension fund purchases. In addition, there are other ways to reduce the tax burden when investing assets. Particularly in the current environment, it is important to explore these, otherwise the net yield will continue to melt away. Which tax saving possibilities there are for asset accumulation and what to consider:

Payments into the pillar 3a:
A natural person normally has the bulk of his or her assets in retirement savings. Private individuals should first make use of pillar 3a. This year, people who have a pension fund connection can make tax-privileged payments of up to CHF 6826 into their restricted pension plan. For employees who are not affiliated to a pension fund, this can be as much as CHF 34,128 or 20% of net income from employment. However, savers should not forget that a capital payout tax is due on retirement when the funds are withdrawn.

Purchase into the pension fund:
In principle one should think only in second place about pension fund purchases. Financial experts generally advise against such voluntary payments into the pension fund before the age of 50. Finally, early purchases dilute the tax saving effect, as the time to retirement is longer. However, pension fund purchases can make sense earlier for people who have a pension gap. This is the case, for example, for people who have immigrated to Switzerland, have been through a divorce or have taken a longer break from work. Pension fund purchases should be made up to three years before retirement if the money is to be withdrawn as capital. Otherwise you will have to pay the taxes you have saved. With such purchases always also the financial situation of the pension fund is to be considered, this must be examined before. In addition, it should be noted that the money paid in during the purchase generally flows into the extra-mandatory part of the pension fund. There, the return could be low, as there is a redistribution in the second pillar. Consequently, precise planning is recommended. If done correctly, however, there is a chance of breaking the tax progression in a targeted manner and over several years.

Save taxes as a real estate owner:
If you own property, you have to declare either the imputed rental value ("Eigenmietwert") or rental income as income in your tax return. These must then be taxed. However, maintenance deductions could be asserted of it again. Thus for example also renovations would be favoured steuerlich. Also debt interest can be deducted.


draw graduated pension benefits upon retirement:
When pension assets are paid out, a capital payout tax is incurred. It is therefore advisable to create different "pots" for retirement provision and then to draw these in staggered amounts over several years when retiring. In this way the tax progression can be broken. It is recommended, for example, to keep several Pillar 3a accounts. If you give up your job in the meantime or lose it, the money flows into the vested benefits account. If you do not split the pension money directly, this will not be possible later. Owners of owner-occupied property have the option of withdrawing money from the pension fund by means of a home ownership advance withdrawal and thus amortizing the mortgage. This is taxed, but the burden is usually lower than if the entire "pension fund pot" is taxed in one go when they retire. In addition, such graduations are also possible through partial retirement. If older employees reduce their workload, they can draw part of their retirement capital from many pension funds.

Tax optimization is an important issue for private savers
However, in his view, the first and most important step is to look at the overall financial situation and the structure of the assets. This results from the free assets - for example, cash in the account, investments in securities and tied assets such as the pension fund, pillar 3a or real estate. In doing so, the entire asset situation is taken into account. There is no patent remedy for the correct distribution. Ultimately, it depends on what the client's plans are and what their obligations are. For example, if someone wants to buy a property in the foreseeable future and needs equity capital for this, it makes sense to keep a higher proportion of the assets in the account. If, on the other hand, he or she has a long-term investment horizon, investments in securities or a higher proportion in tied pension provision make more sense than leaving a lot of money "lying around" in the account.