BVG pension or lump-sum withdrawal?

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BVG pension or lump-sum withdrawal?

The choice between paying an annuity for life and withdrawing capital from retirement provision is often not an easy one to make. It involves striking a balance between security and flexibility, risk and stability. Each of these options has unique advantages and potential disadvantages that need to be carefully considered.

Advantages and disadvantages of a BVG annuity


  • Security: the payment of a monthly annuity offers a constant, guaranteed source of income during retirement. There is the certainty of a regular income for life, providing financial stability.
  • Survivor protection: in the event of the death of the annuitant, the spouse receives a widow's/widower's pension, and children in training can receive a child's pension.
  • Simplicity: the annuity variant is uncomplicated and requires no special financial or investment knowledge, as the pension fund takes care of managing the retirement capital.

Disadvantages :

  • Dependence on conversion rate: the amount of the life annuity is highly dependent on the pension fund's conversion rate and the amount of retirement savings.
  • Inflation and taxes: Over the years, the annuity's purchasing power declines due to inflation. In addition, the annuity is taxed as income at 100%.
  • Loss of capital in the event of early death: in the event of the early death of the annuitant, the remaining capital reverts to the pension fund, not to the heirs.

Advantages and disadvantages of lump-sum payments

Advantages :

  • Flexibility: with a lump-sum withdrawal, you enjoy total flexibility and can use the money as you wish, whether to invest, repay debts or meet personal needs.
  • Inheritance: the capital remaining after death is passed on in full to your heirs.
  • Tax advantages: Retirement capital is generally taxed at a reduced rate, providing long-term tax savings.

Disadvantages :

  • Assuming the risks yourself: With personal investments, you assume the risks yourself, and the amount of income you receive depends on your investment strategy and the returns you achieve.
  • Uncertainty as to the duration of the capital: there is uncertainty as to the number of years for which the capital saved must be sufficient, and an incorrect estimate of the return can lead to problems.
  • Financial and investment knowledge required: You need the courage to take risks, to plan and know about investments, or to have good investment advice.

The choice between an annuity or lump-sum payment depends on individual needs, risk tolerance and financial goals. Ultimately, it's important to carefully consider personal circumstances and preferences to find the best solution for you.

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