Women's retirement
Women's retirement benefits: the future in their hands.
Although women contribute significantly to the labor market, we observe that professional outcomes between women and men can still be very different. Indeed, women work part-time much more often, they also sometimes wish or must opt for a career break generally linked to motherhood or their husband's career choices.
Taking into account the three pillars of pension provision in Switzerland, we observe that statistically women's old age pensions are significantly lower than those of men.
In the first pillar (AVS), the gap observed is almost zero thanks to splitting (sharing of spouses' income) and bonuses for educational tasks (fictitious income during the years during which the child(ren) are dependent).
The difference noted is greater in the second pillar, since the occupancy rate has a very significant impact on the pension capital constituted according to the insured salary. This phenomenon is therefore reinforced by the application of the coordination deduction, which systematically penalizes the pension contributions of low incomes, whether they are linked to part-time work or to having several different jobs.
Finally, 50% of working women do not contribute to the third pillar, thus depriving themselves of a reduction in their tax burden (or that of the couple) and an improvement in their retirement benefits.
What solutions?
A higher occupancy rate and fewer career interruptions would of course bring more financial peace of mind, but this choice is not always possible.
A review of the Swiss tax system, including the introduction of individual taxation for couples, would also encourage part-time workers to work more. It will be remembered that for married couples where both spouses work, the considerable progressiveness of marginal tax rates is a very penalizing factor, which therefore encourages women to reduce their working hours, when they do not simply leave the market employment.
At the level of occupational pensions, the elimination or reduction of the coordination deduction would make it possible to improve retirement benefits. This measure would, however, imply higher social security contributions for both the employer and the employee.
But the tax system, like the Swiss welfare system, is still based on a family model inherited from another century. And if the need for reforms is recognized by all, they are slow to materialize!
Therefore the only effective remedy is one individual awareness from this state of affairs: It is the responsibility of every active woman to take an interest in the subject and to take all necessary measures to ensure a decent lifestyle in retirement.
We can in particular cite two interesting avenues, provided that the available cash allows us to do so:
- Proceed with the voluntary redemption of contribution gaps in 2e pillar. These can be significant in the event of career interruptions, or part-time work for a limited period of time, because returning to full-time employment then opens up significant reserves of buyouts.
- Subscription to a 3e pillar a) or b). It should be noted that contributions to pillar 3a have the advantage of not depending on the salary level, even if they remain modest compared to LPP savings. It will be remembered that in the case of a married couple, both spouses can subscribe to such an account and deduct the contributions from the couple's income, provided that they both have a salary subject to AVS.
Long-term planning for your retirement can therefore bring several concrete results for those who know how to use the tools available wisely.
