Category: Pensions

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Pensions

Retiring Outside of Switzerland: Your Swiss Pensions and Finances Abroad

Retiring Outside of Switzerland: Your Swiss Pensions and Finances Abroad

“It’s better to look ahead and prepare, than to look back and regret” – Jackie Joyner-Kersee

2 min read

Retiring Outside of Switzerland: Your Swiss Pensions and Finances Abroad

“It’s better to look ahead and prepare, than to look back and regret” – Jackie Joyner-Kersee

2 min read

Living abroad comes with its own set of unique challenges, including managing pensions, taxes, currency fluctuations, and inflation risks. If you are considering retiring away from Switzerland or have already made the move, it is crucial to familiarize yourself with the specific differences between your chosen country and Switzerland.

Financial Management and Investment Strategy

One key aspect to consider is your future financial management and investment strategy. It is advisable to plan ahead and take into account country-specific differences and your initial financial situation before moving abroad.

The Significance of Inflation for Retirement Income

When it comes to retirement income, three main sources typically come into play: 

  1. State Pension (AVS / AHV)
  2. Personal Pension fund
  3. Income from assets

The Swiss Federal Council reviews AVS / AHV adjustments in line with changes in prices and salaries every two years. However, the impact of inflation on your AVS / AHV pension will depend on how prices and salaries change in your new country compared to Switzerland. Additionally, payments from Pillar 2 are generally not adjusted for inflation, which means that inflation can reduce the purchasing power of your pension.

Currency Risks and Mitigation Strategies

Managing currency risk is another important consideration. Both Pillar 1 and Pillar 2 offer the option to receive monthly payments in either Swiss francs or the local currency of your country of residence.

If your income and expenses are in different currencies, you are therefore exposed to currency risk. It is generally advisable to convert only the amount needed for your living costs into the local currency if it loses value compared to CHF. Consulting with Financial Advisers can provide guidance on mitigating currency risks, so get in touch with us today!

Mitigate Double Taxation

Double taxation can be a concern when it comes to pension payouts. If you are already a resident abroad at the time of payment, pension payouts from your personal pension fund or Pillar 3a are taxed at source in the Canton where the your Pension Foundation Provider is based. However, you may be eligible to reclaim this tax or have it credited towards taxes due abroad, provided there is a double taxation agreement (DTA) between Switzerland and your country of residence.

Planning Ahead for Financial Success

Retiring abroad presents a range of financial considerations, but with careful planning and professional advice, you can navigate these challenges successfully. By understanding the intricacies of managing finances abroad, you can make informed decisions and ensure a secure financial future.

So, are you ready for your retirement abroad? Get in touch with us today to ensure all your ducks are in a row before you leave Switzerland.

Contact us now to book your initial, no-cost and no-obligation meeting. Either send us an e-mail to info@pattersonmills.ch or call us direct at +41 21 801 36 84.

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Pensions

Will You Enjoy the Retirement You Deserve?

Youthful and playful happy senior old couple enjoy outdoor leisure activity riding together the same bike. Man carrying aged woman in healthy active lifestyle. Retiremd people using bycicle with sunlight

Will You Enjoy the Retirement You Deserve?

“Stay young at heart, kind in spirit, and enjoy retirement living” – Danielle Duckery

1 min read

Will You Enjoy the Retirement You Deserve?

“Stay young at heart, kind in spirit, and enjoy retirement living” – Danielle Duckery

1 min read

We are witnessing a surge in the number of people giving retirement a second thought. Not only are more individuals looking to work beyond their State Pension age, but some are returning to employment after retiring due to increasing financial pressures.

Considering Postponing Retirement

Studies have shown that millions of people aged 55 and over will be impacted by the long-term effects of financial insecurity and may believe that they have to continue to work past their State Pension age. Furthermore, many of those aged 55 and over simply do not believe their pension is enough to fund their retirement. It is worth noting that in Switzerland, your Pillar 1 (State) and Pillar 2 (Occupational) Pensions provide approximately 60 to 80% of your last income, with the Pillar 3 being an optional addition to make up the remaining gap.

Numerous over-55s who are not retired also anticipate having to work past their State Pension age due to the increasing cost of living and not adequately saving for retirement. Uncertainty of how long retirement savings will last, or not having made any preparations for retirement at all, are key drivers for working past State Pension age.

Concerns of Working Past State Pension Age

Those expecting to work past their State Pension age may also be apprehensive that doing so will mean they cannot enjoy their later years. Health is another major concern, with concerns over health deteriorating as a result of having to continue working being a top focus for many. The questions arising over health also attribute to the ability to remain employed, too. In addition, there is also rising concern about being treated differently (or worse) at work because of age and also worry about not being able to spend enough time with family due to work commitments.

Take Back Control

We all want to be in control of our retirement plans and feel confident we can stop working when we want to so that we can enjoy the retirement we deserve. If you are worried about how your current situation could impact on your retirement savings, we are here to talk through your options and provide peace of mind. To find out more, please speak to us.

Get in touch today and book your initial, no-cost and no-obligation meeting. Send us an e-mail to info@pattersonmills.ch or call us direct at +41 21 801 36 84.

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Pensions

Time for a Retirement Reboot?

Happy senior couple enjoying retirement lifestyle having fun walking on the beach in a sunny beautiful day holding hands and hugging each other while traveling around Europe. In active old People.

Time for a Retirement Reboot?

“Retirement means doing whatever I want to do. It means choice.” – Dianne Nahirny

2 min read

Time for a Retirement Reboot?

“Retirement means doing whatever I want to do. It means choice.” – Dianne Nahirny

2 min read

Once you retire, how will you replace your income to maintain your current standard of living?

Nowadays there are more choices open to you than ever before when it comes to your retirement. This means there are more things you need to consider and have a plan for, like how to manage your finances to provide the income you’ll need to live on, how you’ll transition into full retirement and what lifestyle you want to enjoy in your later years.

Our Top Considerations

One of the biggest mistakes people can make is not saving enough for retirement. Our top 10 considerations in retirement are aimed at ensuring you have the ability to take control of your financial future. Knowing your destination helps you plan the best route to get there.

  1. Make a plan!
  2. When do you want to retire?
  3. Are there any ways you can reduce your tax liability?
  4. Can you continue working?
  5. Do you need to downsize?
  6. Have you planned for your long-term care needs?
  7. How much will you need to fund essential and non-essential spending in retirement?
  8. How much are you saving?
  9. When can you access your state benefits and how much will you receive?
  10. Have you taken the opportunity to receive trusted financial advice?

Planning is vital, and there is never a better time than the present. Work out what you spend each year now, when do you want to retire, how much of your spending is essential and how much is non-essential, and what lifestyle you wish to have in retirement. As a rule of thumb, it is often the case that people spend more in the earlier years of their retirement, and their spending reduces over time. It is important to take as many relevant factors as you can into account.

Your State Pension

In Switzerland, the pension system is split into 3 pillars. The 1st pillar is your state pension, the 2nd pillar is your occupational (workplace) pension, whilst the 3rd pillar is your private pension(s). The purpose of the Pillar 1 state pension is to provide you with a source of revenue to cover your basic financial needs.

Contributions are deducted from your gross salary as a percentage and are compulsory until you retire (age 64 for women, and 65 for men). Should you remain in Switzerland, you will receive the Pillar 1 pension as an annuity and does not have a transfer value (therefore, cannot be taken as a lump-sum). The amount you are paid is dependent mainly upon your years contributed, earnings, and the total value in your account. For the maximum allowance, men should contribute for 44 years and women for currently 43 years.

Reboot Your Retirement

We’re all leading busy lives and so it’s understandable if retirement plans have been placed on the back burner. If you are keen to revisit your plans and get them back on track so you can relax and fully enjoy your retirement years, there is never a better time than today, so please do get in touch. 

Get in touch today and book your initial, free, no-obligation meeting. Send us an e-mail to info@pattersonmills.ch or call us direct at +41 21 801 36 84.

Categories
Pensions

Your Retirement Matters

Your Retirement Matters

“Retirement is not the end of the road. It is the beginning of the open highway” – Unknown

2 min read

Your Retirement Matters

“Retirement is not the end of the road. It is the beginning of the open highway” – Unknown

2 min read

Today, things are evolving with immense speed. We are not only living longer, healthier, and more active lives, but we can often now decide when, how, and even if, we retire.

An important note to remember is that it is never too early to start thinking about retirement planning.

One of the most crucial things you can do is begin saving for your future. Though, worryingly, there are many of us who do not have a clear plan for what we want to get out of our retirement, and there are even more of us who may underestimate how much money is needed.

Questions for you

A useful start is to ask yourself these questions:

  1. How much money do I want to have saved by retirement?
  2. What kind of lifestyle do I want in retirement?
  3. What are my sources of income in retirement?

Essentially, the sooner you start saving and investing, the more time your money has to grow.

When you near retirement, the useful questions may change as you now have a clearer idea of what you have and what you will be able to afford.

You could now ask yourself:

  1. How long will my money last?
  2. Can I maintain my current lifestyle?
  3. Do I stay invested or do I draw an income?

As you may have noticed, it cannot be stated enough that the key to an enjoyable retirement is to start as soon as possible. This can save you the panic of being in a situation where you are not prepared for retirement.

Your Swiss pension

In Switzerland, your pension is structured in Pillars. There is the 1st Pillar, which is intended to cover basic needs, the 2nd Pillar, which is based on the contributions you make during your working life, and the 3rd Pillar, this being your private pension. The first 2 Pillars are compulsory, whilst the 3rd is not.

It is unlikely that the Pillar 1 and 2 pensions will provide sufficient income in retirement to support the lifestyle you envisage, and so the Pillar 3 pension helps to bridge that gap.

Unfortunately, there is no crystal ball for any of us to look ahead and know what is going to happen during our retirement. So, it is increasingly important to explore the different advantages offered by having an effective retirement strategy in place.

Never too late

There should never be an occasion where you think that it is ‘too late’ to begin saving for your pension. Even if you only have a small amount of money to put away each month, it will add up over time. In addition, with the right plans in place, you can make your money go further than you may initially think.

Investment is important

Investing is an effective way to put your money to work and provides you the opportunity to build your wealth. How to invest, and where to invest, can be slightly more complicated and has a lot to do with your personal circumstances and risk appetite.

Understanding the type of investor that you are is one of the first steps toward understanding what sort of investment approach is best for you.

We are here to help

Whether you are looking to save as much as possible to build up your pension pot, or you want your money to stretch as far as possible in retirement, it makes sense to have an efficient strategy in place. Having a solid retirement plan is vital for a worry-free future.

We can help you look at the right options for your retirement plans, investment strategies and more, tailored to your individual circumstances and objectives. To find out more and discuss your own situation, get in touch with us today.

Get in touch today and book your initial, free, no-obligation meeting. Send us an e-mail to info@pattersonmills.ch or call us direct at +41 21 801 36 84.

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Australia Pensions

Australian Superannuation for Swiss Tax Residents

Pink Piggy bank money concept on dark blue background, stuffed with Australian cash.

Australian Superannuation for Swiss Tax Residents

“Anyone with a pension or retirement is an investor in the stock market” – Brad Katsuyama

2 min read

Australian Superannuation for Swiss Tax Residents

“Anyone with a pension or retirement is an investor in the stock market” – Brad Katsuyama

2 min read

Whether you are planning on a permanent move to Switzerland, elsewhere overseas, or looking to return to Australia, there are some important things to consider when it comes to contributing to your Superannuation (Super) Fund.

It may be surprising to learn that despite non-residency status, there remains eligibility to make contributions to a Super Fund in Australia.

Initially, working out if Australian residency for tax purposes applies to you is vital, as this would determine the best approach for your personal finances.

Contributing to your Super could be a particularly good option to maximise your tax efficiency if your objective is to eventually retire in Australia, or if the taxation on your Super is more attractive in your planned final country of residence. If you are thinking about maintaining your Super as a non-resident of Australia, the considerations below are key factors of which to be aware.

Contributing to your Super as a Non-Resident of Australia

The rules regarding eligibility for Super contributions apply equally between residents, non-residents and temporary residents. Although some Super Funds can require Australian residency, in these cases you may be able to rollover (transfer) your Super into a different fund that accepts non-residents.

The standard contribution caps and rules apply universally, with the exception of certain co-contributions and concessions that may not be available, or applicable, for non-residents. Additionally, it is potentially detrimental to make contributions to a Self-Managed Super Fund as they require annual residency tests and will therefore require the investor to take prior professional advice.

Foreign employment income is not taken into consideration when working out the tax concessions for personal Super contributions. However, for those with sufficient Australian sourced assessable income, you may be entitled to claim a tax deduction against that income for your personal contribution.

Accessing your Super

In most cases, non-residents and residents are subject to the same rules when accessing their Australian Super. This means you will typically be unable to access your Super until you meet the conditions of release, which will vary between the ages of 55 to 65, depending on the year you were born and your Australian employment status.

If your ultimate goal is to retire in Australia as a tax resident, the tax rate in the pension income withdrawal phase on a Super Fund converted into a pension will be nil. As such, continuing to make contributions whilst living and working overseas could well be a viable option in order to maximise your retirement fund.

Alternatively, if your plans are to remain overseas for retirement, it is essential to note that your Super may be subject to tax in the receiving country. This will be dependent on any relevant double tax agreements between Australia and the country you will ultimately reside in.

Whether you are considering returning home or remaining overseas, it is essential to seek professional advice from one of our specialist advisers to ensure you make the most of your Super in accordance with your individual tax position.

Tax-Efficiency and Flexibility

Due to the generous tax-efficiencies, contributing to your Super in Australia can be in your interests when in Switzerland. We help you to create a retirement strategy that includes and accounts for your Super Fund, Swiss Pillar 2 and 3 pension funds and other tax-efficient options. In this way, such strategies facilitate a great degree of flexibility down the line, regardless of where you ultimately retire.

For this, specialist advice that takes account of your personal circumstances is vitally important.

How we can help

Navigating the complexities of Super contributions as a non-resident can often present unnecessary difficulties without proper guidance. We are here to guide you through the process and make it as smooth as possible.

There are also additional opportunities available to non-residents planning to return to Australia to achieve even greater tax efficiency. To find out how to take advantage of the suite of options open to you, get in touch today and book a no-cost and no obligation call or meeting with our specialist Australian Advisers now.

Simply send an e-mail to sophie@pattersonmills.ch or call us direct at +41 21 801 36 84.

Please note that all information within this article has been prepared for informational purposes only. Patterson Mills are not tax advisers and, as such, this article does not constitute legal or tax advice. Should you require a tax adviser, we are able to refer you. Always ensure you speak to a regulated financial adviser and tax adviser before making any financial decisions.

Categories
Pensions

Come Retirement, You Reap What You Sow

Hand planting beans seed in the vegetable garden. Growing vegetables

Come Retirement, You Reap What You Sow

“Some of the wealthiest people in the world became wealthy by saving money” – Doug McMillon

2 min read

Hindsight, they say, is a wonderful thing and that is certainly true for many retirees struggling financially. Diligent planning at the earliest opportunity, however, can make all the difference between enjoying a comfortable retirement and enduring a regretful one.

Retirement Regrets

Research constantly shows that people typically leave retirement planning too late and regret not saving more across their working lives. For instance, a survey1 recently revealed one in five people expect to leave planning for their retirement until they are aged at least 60. Another study2 found almost half of over-50s regret not saving into a pension sooner, while nearly two thirds wished they had made larger contributions at an earlier stage. These findings vividly highlight the need for more people to take control and prioritise retirement planning earlier in their working lives.

Pension Blind Spots

Other research3 has revealed the cost of being kept in the dark on key pension details, with over three-quarters of people not knowing how much they pay in pension fees. Additionally, a third of pension holders are unaware of their pension’s risk profile, with a similar proportion invested in low-risk funds. This lack of awareness in relation to fees and investment choices is estimated to cost an average pension holder around CHF 140’000 over their working life.

Engagement Gap

The lack of engagement has led to an industry campaign to boost people’s understanding of pensions. The campaign, which is due to run this autumn and winter, will aim to raise awareness of various pension-related issues so that more people can ultimately enjoy a better standard of living in retirement. Patterson-Mills completely supports this initiative and believes that one of the keys to a successful retirement is not just saving but financial education, too.

Help at Hand

While current everyday financial pressures can make saving a difficult task, it is clearly imperative not to neglect your pension if you do want to avoid retirement regrets. We can help you take control to ensure you are able to enjoy the happy and fulfilling retirement you deserve.

Get in touch today and book your initial, free, no-obligation meeting. You have nothing to lose and potentially lots to gain! Send us an e-mail to charles@pattersonmills.ch, call us direct at +41 78 214 84 32.

1Hargreaves Lansdown, 2022

2Aviva, 2022

3interactive investor, 2022

Categories
Pensions

The 10 Worst Retirement Planning Mistakes

The 10 Worst Retirement Planning Mistakes

3 min read

Retirement planning should always be a top priority. More and more people are beginning to consider their own retirement, but the truth is that our retirement is often decided long before we even think about it.

See below my 10 worst retirement planning mistakes. With the appropriate advice, you will be able to avoid all of the below.

1. Underestimating Your Lifespan

It may be something that goes unconsidered, but nowadays it could well be that retirement lasts for 30 or more years. This then leads to the growing potential that people out-live their retirement savings. It is hugely important to take notice of your family history and other factors and make sure you take into account your own longevity to determine what steps to take before reaching retirement.

2. Underestimating Retirement Costs

Despite retirement being a wonderful, work-free, time of our lives (at least, that’s our aim!), it is possible that the lifestyle you currently have becomes out of your reach as prices rise, and your income does not, or you may find that you end up spending more in retirement than you thought. It could be simply that you want more than you initially planned for, so within your retirement plan it is important to take many factors into account to gain a rough idea of any potential increase in your spending.

3. Financial Scams

A common thought around scams is that it will never be you. However, no matter how careful you are, it is never a guarantee that you will not get caught out. No matter how rare, it is not impossible that you experience a misuse of your funds by an untrustworthy financial advisor, or even deceptive family members trying to take advantage of you. Make sure that you are also aware of healthcare scams, investment scheme scams, lottery scams and more. Remember, if it seems too good to be true, it probably is!

4. Ignoring Inflation

Inflation is a silent taxation on our wealth. Slowly eroding it as time goes on. Even a small increase in inflation, hardly noticeable in the short term, can be of great detriment to your spending power in the future. Over a long period of 15 or 20 years, there could be the potential of your purchasing power being halved. It is certainly something you should allow for in your future retirement plan.

5. Paying Over the Odds

Excessive fees are something we strive to avoid. Throughout your lifetime, fees really can add up and make a dent in your pocket. Often, what looks on the surface a small difference, e.g. between 1% and 2%, can end up making all the difference in the long-run. It is of paramount importance to have regular reviews to ensure your costs are as low as possible.

6. Age-Based Risk Profiling

“Lifestyling” or “Lifestyle Funds” refers to reducing the risk of your portfolio as you get closer to retirement, along with other assumed factors. It aims to lock-in the investment gains you have already made throughout your life so you can comfortably retire. This sounds good in theory, and may well be suitable for some, though, as with everything, it is not without risk. As much as we wish it, there is no ‘one size fits all’ formula. It might even be your spouse or children that you were planning to have benefit from your investments, so the best decision is certainly to seek trusted financial advice to find the solution that works best for you.

7. Not Rebalancing Regularly

Rebalancing is essential to the future of your wealth. It ensures that your assets remain within your agreed risk level without ever straying too far from the path and can optimise gains already made. Of course, over-rebalancing exists, so it is important to not avoid over-rebalancing. Approximately 2-4 times per year is a good amount for most portfolios.

8. Attempting to Predict the Market

Trying to find the perfect time to withdraw from, or enter into, the market will often come up short of your expectations. Nobody knows for certain exactly what is going to happen in the next few years, or even the next few weeks, so the best route is making informed decisions from high-quality analysis using trusted advice. Cumulative returns can be seriously harmed if your prediction turns out to be wrong.

9. Not Talking to a Financial Professional

The complexities of today’s financial systems are simple when it is your day job, but the reality is that the majority of people do not have the time to spend their few hours of relaxation a day researching the latest changes in the system. Of course, it is not impossible to do, but as with most things there are often rules that you might miss. It is essential to contact a financial professional to ensure your retirement plan and financial future is as secure as possible, and if not, to make it so. After all, that is what we are here for.

10. Not Getting Around to it

This may seem obvious, though unfortunately it is more common than you may think. Retirement is often overlooked as it is ‘so far’ into the future that you do not consider it, or you believe that your respective State pension will suffice. It is important to note that State pension benefits often leave a gap in your income. Therefore, it is essential that you begin sooner rather than later as every day you wait is one more day that you will be playing catch-up in retirement. You might miss out on investment returns, end up not having enough money in retirement, or simply miss out on compound interest. Either way, one thing remains certain, begin sooner rather than later.

Here to Help

We are here to take the stress out of retirement planning. Get in touch today and book your initial, free, no-obligation meeting. You have nothing to lose and potentially lots to gain! Send us an e-mail to charles@pattersonmills.ch, call us direct at +41 78 214 84 32.

Categories
Pensions Protection

Protect Your Retirement From the Risk of Mental Decline

Happy elderly couple resting on beach waving hands

Protect Your Retirement From the Risk of Mental Decline

"Retirement: That's when you return from work one day and say, 'Hi, Honey, I'm home—forever'"

Gene Perret Tweet

3 min read

Retirement – that magical time when we can finally live our lifelong dreams. Increased life expectancy means that many of us can now expect a longer retirement, but this comes at a cost: the increasing prevalence of age-related cognitive decline, which could leave us vulnerable to costly financial errors.

According to the Alzheimer’s Society1, estimates suggest that between 5% and 20% of over-65s suffer from mild cognitive impairment (MCI), a condition in which someone has minor problems with cognition, such as memory or thought process.

Protecting your finances

Planning for the possibility of cognitive decline is an essential part of preparing for retirement. Although many people still have the capacity to live independently and make decisions for themselves, MCI has been linked in scientific studies to poorer financial capacity and an increased susceptibility to scams.

Getting the timing right

Over 80% of investors surveyed2 thought the ideal time to transfer financial control would be ‘sometime after they had begun to experience some cognitive decline but before they became completely incapable.’ Respondents thought there was a higher than one-in-three chance of a mistimed transfer, partly attributable to a reluctance to relinquish control, which exemplifies the need to start planning sooner rather than later, so that any future transfer takes place on your terms.

Opening up conversations

Although it may feel awkward, preparing for the possibility of cognitive decline requires careful planning, not only having legal documents in place but also starting conversations with your family and those you trust about money and your goals for the future, in advance of its possible onset. This means that everything is out in the open and close connections are more likely to notice if you begin making decisions about your money that appear to contradict your objectives.

We can assist you with planning and in starting these conversations with your family well in advance and help you better plan for the future, giving you a greater sense of ownership and control over your plans.

Get in touch today and book your initial, free, no-obligation meeting.

You have nothing to lose and potentially lots to gain!

Send us an e-mail to edward@pattersonmills.ch, call us direct at +41 78 214 84 32, or fill in our contact form below.

[fluentform id=”1″]

1Alzheimers Society, 2019

2Vanguard. 2021

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