Sustainable investment and private procurement: here are two concepts that are essential in our modern societies today! For the former, we are implementing more and more actions that can have a positive effect on our environment. We find solutions and take action preserve our planet. For the second concept, private pensions, over the years, has found a place of choice to register as a real necessity.
Being able to combine the two, namely, plan your futuresafe a additional income retirees and protect your family, all by making investments that care about our environment, there is no doubt, it is the winning combination! Conducting responsibly, including from a financial point of view and making sure to do so in companies that promote sustainable management, allows us to look to the future and allow long-term actions. Here it is a question of finding the solution to do so build an individual pension integrating climate issues.
A few words about the pension system
Before talking about any environmental and climate issue and above all how to reconcile it with the investments made in individual pensions, it seems appropriate to return to the need for this 3rd pillar.
The third pillar is enshrined in the Federal Constitution of the Swiss Confederation, which, through this article of law, attests to the great need for everyone to subscribe to a 3rd pillar A, in particular. L’section 111 requires the Confederation to take measures to ensure adequate retirement, survivors’ and invalidity insurance. This the pension is based on the three pillars which are federal old-age, survivors’ and invalidity insurance, occupational pensions and individual pensions.
The 1st pillar, theAVS – Old-age insurance for survivors, it is compulsory, it is a state pension based on a pay-as-you-go system. Here it must be understood that the economically active generation finances the benefits of retirees.
The 2nd pillar, the BVG – Law on Occupational Pensions where the active person contributes on their own. Here there is the obligation to contribute to the exceeding of certain income ceilings, but also only from the age of 25 for the old age risk.
Third pillar: secure your pension!
So why this 3rd pillar? Is this individual arrangement essential in your retirement financial plan? These first two pillars have shortcomings that will lead to a sharp drop in the standard of living in retirement. In fact, we believe that the 1st and 2nd pillar correspond to 60% of your asset income, so you lose 40% of your salary on average. This significant loss can have serious consequences in retirement age. Therefore, to compensate for this decrease in income, the solution is sign an individual insurance contractor a 3rd pillar.
To encourage workers to create additional income, the Confederation has introduced a tax benefit that allows a contribution limit to be deducted from taxable income. So, you lower the final income tax. Our article 3rd pillar: what tax deductions for 2022? will give you more information on the deduction limits applicable.
Individual pensions are based on a so-called capitalization system, just like the BVG. The difference between the two is the optional nature of the 3rd pillar. It is up to everyone to perceive its usefulness and long-term need. The contributions of policyholders to their restricted individual pension plans are placed in investment funds whose objective is to achieve the best possible return.
Therefore, why fail to reconcile return opportunities with sustainable investment funds that respect our environment and personal values.
If you would like more information on the functioning of the social security system and in particular on the 3rd pillar, do not hesitate to contact us!