Glossary

The AHV is the state’s basic pension scheme and secures your basic needs in old age.

Occupational pension provision supplements the AHV and is intended to maintain your accustomed standard of living.

Pillar 3a is a voluntary, tax-privileged private pension plan.

Active insured persons are individuals who are currently working and paying contributions into the pension fund.

If you have an AHV advance calculation from your compensation office, you can select the corresponding value directly with the slider. Women of the transitional generation (born 1961 to 1969) receive a lifelong pension supplement. It can be taken into account under «Choose amount». Otherwise you can adopt our estimate or a full AHV pension (without the supplement for the transitional generations). For married couples and registered partnerships, the joint entitlement to the AHV pension is limited to 1.5 times a maximum single AHV pension. This mechanism is called capping. Note: with the introduction of the 13th AHV pension, the AHV retirement pension increases from December 2026 by one additional monthly pension per year. For the calculations, this additional payout is spread over twelve months, which raises the monthly AHV retirement pension shown.

Asset drawdown means using your accumulated savings to pay for ongoing expenses.

The annual asset management costs comprise the asset management fee (or advisory fee), the custody charges as well as the product costs of the collective investments used (so-called TER costs). Customary on the market and unnegotiated, the annual asset management costs are between 1.5% and 3%.

The average return shows the mean annual return on an investment over a longer period of time.

Bonds are fixed-interest investments that generally fluctuate less than equities. The CHF bonds asset class is represented by the Swiss Bond Index AAA-BBB.

A budget calculator is a tool for estimating your future expenses.

Capital market risk describes the danger of losses arising from fluctuations on the financial markets.

The compensation fund administers AHV contributions and calculates pension entitlements.

The conversion rate determines how your accumulated retirement assets are converted into an annual pension. Please take the applicable conversion rate at the ordinary retirement age of 65 from your insurance certificate.

Cost of living includes all everyday expenses you incur after retirement. The cost of living includes expenditure on food and beverages, alcohol and tobacco, health expenses (excluding health insurance premiums), dining out, leisure and holidays, clothing and shoes, transport, communication, education and school. The household budget survey of the Federal Statistical Office provides income-dependent standard budgets for these expenses, also taking into account the number of people living in the household.

The average annual distribution yield is determined for the investment strategy you have chosen and for the chosen observation period. The distribution yield comprises the dividend yield of the equities and real estate securities as well as the coupons or interest income of the bonds.

In the enveloping model, the entire retirement assets are converted into a pension using a single uniform conversion rate.

Equities are shares in companies and offer return potential, but are subject to price fluctuations.

Extra-mandatory retirement assets comprise all pension benefits that exceed the statutory minimum.

Financial planning is the structured planning of income, expenditure, assets, and pension provision for the future.

The gross return shows the return on an investment before deduction of costs and taxes. The average annual gross return is determined for your selected investment strategy and the chosen observation period.

Housing costs consist of rent and incidental costs. For owner-occupied property they comprise the mortgage interest and the maintenance costs. Furnishing costs are also included here.

Income streams are all recurring income in old age — in addition to pension income, for example rental income from your own property or fees from continued employment.

Income tax is levied on regular income such as salaries, pensions, rental income, and capital income from securities. Based on your details (marital status, domicile and income after retirement), your income tax burden is estimated directly. The income tax calculation assumes that the PF pension is drawn in full.

Independent advice is provided without any commercial interest in persuading the client to purchase specific products or services.

In addition to health insurance premiums and other insurance premiums, transfer payments such as maintenance payments to other households must be taken into account. Fees and donations also fall under this item.

The insurance certificate is an annual document from your pension fund providing details of your assets, your benefits, and possible voluntary purchases.

Interest crediting describes how much your retirement assets in the pension fund grow each year.

The interest guarantee describes the guaranteed return that is embedded in a lifelong pension. The interest guarantee corresponds to the return of your lifelong PF pension. The level of this interest guarantee depends primarily on your conversion rate, your marital status, and your individual life expectancy. For «average people», a conversion rate of 5% means an interest guarantee of around 2%.

The asset investment is interest-aligned and efficient if, firstly, the chosen investment strategy matches your risk appetite and risk capacity and, secondly, the implementation takes place at competitive conditions determined in provider competition.

The investment strategy determines how your assets are allocated across different asset classes. As the investment strategy we start with the «Balanced» strategy, with an equity share of 35%, a bond share of 55% and a real estate securities share of 10%.\n\nYou can choose between five standard strategies, with an equity share from 10% (standard strategy «Security») to 65% (standard strategy «Equity focus»). Alternatively, the «Individual» strategy lets you define your own allocation across the available asset classes.

Life expectancy indicates how many years a person will live on average. Remaining life expectancy, or conditional life expectancy, indicates how many additional years a person will live on average after reaching a certain age. For our calculations we use the mortality data of the Federal Statistical Office. This results in an average life expectancy of an additional 21 years for 65-year-old men and an average life expectancy of an additional 24 years for 65-year-old women.

A lifelong pension is paid out until your death, regardless of your actual lifespan.

Living expenses are regular expenditures for housing, food, insurance, and more.

Longevity risk is in fact a stroke of luck — it means that you live longer than average. Financially, however, longevity can become a serious risk if your assets are not sufficient to sustain you for longer than expected.

The lump-sum benefit tax is a one-off tax on pension capital from the 2nd and 3rd pillars. It is due at the time of the lump-sum payout. The lump-sum benefit tax is a tax that applies to lump-sum withdrawals from the 2nd and 3rd pillars. In terms of percentage burden, it falls between the (high) income tax and the (low) wealth tax.

The lump-sum death benefit is a one-off payment made to survivors upon the death of the insured person.

With a lump-sum withdrawal, you receive all or part of your pension fund assets as a one-off payment.

Mandatory retirement assets are the legally required portion of your occupational pension provision.

The dividend income (equities) and interest income (bonds) arising from your investment strategy are subject to income tax. For the calculation we assume a marginal tax rate of 25%. The marginal tax rate shows how much tax you pay on one additional franc earned. You can adjust the marginal tax rate. Marginal tax rate calculator of the FTA

To estimate the maximum loss per year, statistical methods are used to derive from the return developments on the capital markets over the past 20 years which return can result in a very bad year for the chosen investment strategy. The so-called «1% quantile» of the return distribution is used for this. Statistically, the result is worse than this value in only one out of 100 cases, and better in 99 out of 100 cases.

A misaligned incentive exists when an advisor makes a specific product or service recommendation driven by self-interest rather than the client’s best interests.

A needs gap arises when your income in retirement is not sufficient to cover your expenses.

The needs-covering PF pension is the portion of your PF pension that, together with the AHV pension and other income after retirement, ensures the financing of your cost of living. If the total PF pension together with other income is not sufficient to cover living expenses, we refer to this as a needs gap.

The net return shows the return on an investment after deduction of all costs and taxes. The average annual net return results from deducting the asset management costs and the income taxes from the gross return.

Objective risk capacity measures your ability to economically absorb losses. We measure risk capacity using a simple key figure derived from your basic financial situation data. For this key figure, the free assets available at retirement are divided by the annual asset consumption. When calculating asset consumption, expenses are increased by a safety margin of 25%. The resulting key figure can be interpreted as the length of time until your assets are depleted.

Ongoing Charges refer to the ongoing annual costs of a financial product. Ongoing Charges are a similar cost concept to the Total Expense Ratio (TER).

The orphan’s pension is paid to children if one of their parents dies.

With a partial lump-sum withdrawal, you combine a pension with a one-off lump-sum payment.

Your pension fund manages your occupational pension provision (2nd pillar) for you. The pension fund is selected and organized by your employer. There are around 1’200 pension funds in Switzerland.

Pension fund assets are the money that you and your employer have saved over the years for your retirement provision. Your personal pension fund assets correspond to your retirement assets.

The pension fund regulations contain the rules of your pension fund regarding benefits, contributions, and conditions.

Pension income includes all regular income from AHV and PF pensions (1st and 2nd pillar).

The personal risk profile is derived from subjective risk appetite and objective risk capacity. Specifically, both risk appetite and risk capacity are quantified on a scale of 1 (low) to 5 (high). The lower of the two values is then taken as the risk profile. The risk profile provides you with an indication of how much investment and equity risk is appropriate for you.

The portfolio of pensioners comprises all persons who are already drawing a pension from the pension fund.

Private investment means investing your capital independently or through an asset management mandate.

Redistribution means that funds are transferred from one group (e.g. employed persons) to another (e.g. pensioners).

Reinvestment refers to the investment of your capital after receiving a lump-sum payout at retirement.

Retirement is the point at which you end your gainful employment and draw benefits from the old-age pension provision. Ordinary retirement takes place at the age of 65. Pension funds may allow a retirement date between the ages of 58 and 70 in their regulations.

Retirement assets are the basis for drawing your retirement benefits from the time of retirement. They are made up firstly of employee contributions deducted from your salary, secondly of employer contributions, and thirdly of the annual interest credited. You can increase your retirement assets by making voluntary purchases.

A retirement loss arises when the available retirement assets are not sufficient to finance the promised pensions.

The retirement pension is a regular monthly payment from the pension fund until the end of your life.

The retirement phase is the stage of life after retirement in which you no longer earn an employment income.

The return indicates how much income an investment generates in relation to the capital invested. It is expressed as a percentage.

Risk capacity describes whether you are financially able to absorb losses.

The risk of loss refers to the possibility of losing part of your invested capital.

Risk profiling analyzes your financial situation and your attitude to risk, and forms the basis for selecting an investment strategy suited to your needs.

Risk tolerance, or risk appetite, describes how well you can cope emotionally with fluctuations and losses.

A securities custody account is an account in which your investments — such as equities, bonds, or funds — are held.

Shadow accounting is an internal control calculation used to ensure that the statutory minimum benefits are complied with.

In the split model, the pension is calculated separately for the mandatory and the extra-mandatory portion.

A standard budget is an average benchmark for expenses for comparable households.

A stock market crash is a sudden and severe slump in equity markets.

Subjective risk appetite measures your personal willingness to take on investment risk in the capital markets. A large risk appetite also means being able to accept larger losses. To assess risk appetite, we need a preference statement from you.

Supplementary benefits are state support payments provided when pension income from the 1st and 2nd pillars is not sufficient.

Survivors' benefits are payments made to dependants when an insured person dies.

Choose the place where you are liable to pay taxes. As a rule this is your place of residence. If your tax domicile is abroad, for example as a cross-border commuter or after moving away at the time of retirement, please select «Abroad».

Tax progression means that the tax rate increases with rising income, assets, or pension capital.

Taxable income is the portion of your income that is subject to tax after deductions.

The TER indicates the total annual costs of an investment fund as a percentage. The TER can usually be found in the fund factsheet and in the annual report of the investment fund.

Transaction costs are incurred when buying and selling investments.

Vested entitlements are claims by third parties to future benefits from your pension fund — for example, for surviving spouses in the event of death.

Wealth tax is levied annually on your total net assets.

This pension is paid to the surviving spouse when the insured person dies.