Retirement is often described as the longest holiday of your life, and with the changing demographics of the western world most people can now look forwards to 15 – 20 years of retirement. However it is this ageing population which can threaten our future quality of life since it requires a great deal more funding during our working lives. Yet many of us still do not have a properly defined plan, either to determine how much we might need in retirement, or to help attain the goals we have set or to ensure we can live the lifestyle we have worked for.

Whilst we all look forward to the day when we can retire, free from the stresses and pressures of work, and able to do all the things we would like to do, without additional funding during our working lives the reality for many of us may be quite different.

In order to calculate your required retirement income you will need to list all your expected expenditure. In an ideal world most pension experts and actuaries suggest that you should aim to set aside enough capital to provide for approximately two thirds of your salary. However in reality it may simply be as simple as saving as much as possible whilst still working, in order to ensure the highest possible standard of living in retirement.

Delaying taking action is therefore the biggest problem for most people. For an individual with 25 years to go to retirement, a delay of five years will mean that for the remaining 20 years they will need to contribute twice the level than would be the case had they started 5 years earlier. Although 25 years may seem a long time, it is only 300 months in which to take action to prepare for your future retirement. We strongly suggest a regular review of pension planning provision, and an annual review is generally recommended to ensure that plans remain on track.

Blackden Financial can help advise you; initially this will be to determine whether you are on target to achieve your retirement objective, and if not, to propose an effective, tax efficient solution to help meet the shortfall.

The Swiss Pension System

The Swiss Pension system is based on a 'three pillar' complimentary combination of state, occupational and personal contributions.

1st Pillar - (AHV/IV - AVS)

The first pillar of the pension system is compulsory for the entire working population, and is funded from social taxes. This is designed to provide for the basic income needs in retirement. Contributions are deducted from taxable income and only taxed at the time of payment. Interest on contributions is not taxed.

2nd Pillar - (BVG/UVG - LPP)

Compulsory for all employees in Switzerland, and levied by social taxes payable equally by employer and employee. The percentages levied increase with age, and varies between 7 - 18%. Your pension plan can be 'liberated', with a cantonal tax levied, in certain circumstances, including commencing self employment, leaving Switzerland permanently, or within 5 years of normal retirement age.

3rd Pillar - (3a/b)

The 3rd Pillar is the third tier in the Swiss pension system, and is available to both the employed and the self employed in Switzerland, with differing maximum limits according to your employment situation.

• Employed - Maximum CHF 6,365 (2007)
• Self Employed - CHF30,000 (2007)

There are various types of 3rd Pillar Investments, and although intended as a long term tax efficient Pension 'top-up', withdrawals can be made under certain circumstances, including:-

• Purchasing your principal residence in Switzerland
• Leaving Switzerland permanently
• Becoming self-employed in Switzerland
• Retirement

UK Pensions

In recent years, there have been a number of significant changes to UK Company and private pensions - called the 'A day' changes. These provide alternatives to taking your pension as an annuity, and even allow for a transfer outside the UK, and a potentially much greater degree of access to the pension fund. For advice on this and any other aspect of UK or other pension planning please contact us at your nearest office, or by e mail to info@blackdenfinancial.com