How part-time work affects our pensions

In the first pillar, state provision, the relevant average annual income, which determines the amount of our pensions, is falling, or there are even gaps in contributions. In the best case, the AHV pension in Liechtenstein is currently CHF 2,450 per month if you have paid contributions without interruption from the age of 21. Missing a year of contributions will result in a reduction of 1/44 of the pension. In our example with the maximum full pension of CHF 2,450, this amounts to around CHF 56 per month less. You have five years in which to pay the contributions you owe. 

In the second pillar, the occupational pension, which in many cases makes up the bulk of retirement provisions, the retirement assets in the pension fund rise less sharply due to part-time work, because we also pay in less than the so-called savings portion due to a lower salary. Part-time employees must earn at least CHF 14,700 per year for their employer to be legally required to insure them in the pension fund. Part-time work has more than just an impact on our pensions. Lower wages and gaps in contributions also mean lower benefits in the event of disability or death. It is advisable to check your pension fund certificate at least once a year to see what capital or pension can be expected in old age and how high the risk benefits are.

In the future, private pension provision (the 3rd pillar) will become more and more important for this reason, among others. You should start thinking about your retirement provision as soon as you receive your first salary. A portion of your monthly savings should be set aside for this purpose. Due to the very long investment horizon, higher risks can be taken, which argues in favour of the highest possible equity component. Albert Einstein is often quoted as saying: ‘Compound interest is the eighth wonder of the world. Those who understand it earn money from it, while everyone else pays it.’ This quote highlights the enormous power of compound interest, where interest is earned on interest that has already been earned, leading to exponential growth of savings.

Those who work part-time should therefore carefully consider what impact this has on their financial security and whether measures can be taken to offset any disadvantages or whether the financial restrictions are acceptable.