Pension or lump sum?

Throughout your career, significant assets have accumulated in your pension fund. As you approach retirement, you must decide whether to receive these savings as a lifelong pension or as a lump sum, either in full or in part.

There is no right or wrong choice; this decision not only affects the amount and stability of your income, but also your financial flexibility, tax burden, and the financial security of your loved ones. Every situation is unique and depends on your personal goals.

Our dedicated wealth solutions team is here to guide you through this complex decision with personalised advice.​‌ 

Pension

The pension option provides the security of a regular, lifelong income, freeing you from the responsibility of managing your accumulated assets. However, one important drawback is that this income is added to your OASI pension, increasing your total taxable income. In addition, your surviving spouse or partner will generally receive only 60% of your pension after your death.

Pension payments also do not guarantee stable purchasing power: with an annual inflation rate of 1.5% and no pension adjustment, a pension worth CHF 5,000 today could fall to the equivalent of CHF 4,300 in ten years and CHF 3,700 in twenty years. Moreover, if there is no surviving spouse or partner, the pension fund may keep the entire remaining capital, with no payments made to adult children (over age 18, or 25 if still in education).

Choosing a pension can nevertheless offer additional benefits, such as child pensions. If you are retired and have dependent children, you may receive a 20% supplement for each child until they complete their education, up to a maximum age of 25.​‌ 

Lump Sum

If you choose to withdraw your capital, you have full freedom to use your pension assets as you wish and decide how much to withdraw based on your needs. In the first years of retirement, this may allow you to generate a higher income or take a larger withdrawal to reduce a mortgage, renovate your home, or provide an early inheritance.

However, those who opt for a lump sum withdrawal must then generate their own form of income from this capital. It is generally advisable to invest most of the withdrawn capital in securities to generate returns.

Taking the lump sum should not compromise your long‑term financial comfort. Investment returns alone cannot guarantee the preservation of your lifestyle. Viewed with this in mind, the lump‑sum option offers many advantages, provided the assets are managed carefully.​‌ 

Mixed retirement

Many future retirees struggle to choose between a pension and a lump sum. As a result, more and more people are opting for a mixed solution: receiving part of their benefits as a lump sum while converting the remainder into a lifelong pension.

In this approach, the pension covers your essential needs for life, while the capital provides the liquidity you need for your projects. Today, the goal is often to find the right balance between pension and capital, combining the strengths of both models while diversifying risks.​‌