We pay into our pension fund every month, as required by law. You can also make voluntary purchases. Check whether it would be worthwhile for you.
As an employee, you pay a monthly contribution into the second pillar together with the contributions of your employer. If you want to secure your financial future over the long term and at the same time enjoy tax benefits, then an additional voluntary purchase may make sense.
How you benefit
The main advantage is obvious: The more you pay into your pension fund, the higher the payouts in old age and, as the case may be, the higher your risk benefits. A payment into the pension fund also has tax advantages: payments from private assets can be deducted from your taxable income. This reduces your tax rate. For this reason, it is generally a good idea to spread payments over several years. Your vested pension capital is also exempt from wealth, income and withholding tax during the contribution period.
Remember: what you pay into the second pillar stays in the second pillar. You can only withdraw the funds prior to retirement if you become self-employed, purchase owner-occupied property or move abroad permanently. And In the event of divorce or dissolution of a registered partnership, pension fund assets, including purchases, are shared.
The permissible purchase amount depends on your individual funding gap. You can find out the precise amount from your employee benefits institution. For example, any 3a accounts need to be taken into consideration (if they stem from a period of self-employment). Other restrictions also apply: any pension funds you have withdrawn for home ownership purposes must first be repaid before you can make further purchases. New purchases are also blocked for three years, meaning that benefits resulting from the purchase may not be withdrawn in a lump-sum form for three years. However, if lump-sum payments are made, then the taxes that had been "saved" become payable again.
In a nutshell: a voluntary purchase is recommended in the following situations
- If you join the pension fund after the age of 25
- After a salary increase
- If your pension plan is improved through higher savings contributions
- If you switch to a pension fund with higher benefits
- To make up for missing insurance years, e.g. following a break in employment due to pregnancy, study, unemployment or a stay abroad
- To plan an early retirement
- To offset a gap in coverage resulting from divorce