Lump sum or pension?

At retirement you can usually take your pension fund as a pension for life, as a lump sum, or as a mix. Here is the trade-off in numbers.

Your result

Pension per month: CHF 2’833 / month
Lump sum after tax: CHF 465’000
Lump sum runs out at age: 91

Your result, explained

The pension pays CHF 2’833 / month for life. Taking CHF 465’000 instead and paying yourself the same amount, the money runs out at about 91. Live longer than that and the pension wins; die earlier and the lump sum leaves more to heirs.

Pension-fund pensions are usually not adjusted for inflation, so their buying power falls over time. This comparison uses today’s francs and ignores that.

Estimates for planning, not advice. Use at your own risk. Read the full disclaimer

How it is calculated

Pension = balance × conversion rate, per year.
Lump sum after tax = balance × (1 − withdrawal tax).
Run-out age: you invest the lump at the real return and pay yourself the same amount as the pension each year; the tool finds the age at which it is used up.

Pensions from the pension fund are usually not indexed to inflation, which the comparison in today’s francs leaves out. More in your pension fund before 65.

Frequently asked questions

Which is better?

It depends on your health, other income, heirs and how comfortable you are investing. A pension protects against a long life; a lump sum gives flexibility and can be left to heirs.

Can I mix?

Most funds allow at least a quarter as a lump sum, many allow any mix. Check your fund’s rules and the deadline to declare it.

Is the pension taxed?

Yes, as income every year. The lump sum is taxed once, separately and at a reduced rate.