Proper re­tire­ment plan­ning for young professionals


Are you just getting started in your career?  Let us show you how you can get started with your pillar 3a even without much money. The following example refers exclusively to private retirement planning.

Example: Fabienne, 25 years old, young professional

Let's assume you are Fabienne, 25 years old, and you’ve started your first job as a graphic designer after finishing your degree. You’re single with no children. Your retirement date is still 40 years away, but you are aware of the importance of retirement planning. To keep the pension gap as small as possible you would be best advised to start now, even if you don’t have so much money available to save.

Possible investment product:
Extreme 95 Responsible

Fabienne opts for a sustainable, active investment product. Due to her long investment horizon and her pronounced risk appetite, she opts for a very high equity component (95%). The objectives of the investment product are to achieve long-term capital gains and to generate income. Fabienne is prepared to accept considerable price fluctuations in the process. Thanks to her long-term investment, securities offer her the prospect of higher return opportunities than a pillar 3a bank account, where interest rates are likely to remain very low for a long time.

To the investment products

What kind of pension could Fabienne achieve with frankly by the time she retires?

Based on the initial situation, Fabienne could achieve the following retirement savings with frankly compared to a traditional pillar 3a banking product:

Statement of changes in net assets:

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Calculation and risk information

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Statement of changes in net assets:

If Fabienne were to leave her money in a normal 3a account, in 40 years’ time, assuming interest rates remain low at 0.80%, she would have CHF 113,514. If she were to save in securities, however, with a hypothetical return of 4.66% (net after costs) this could rise to CHF 222,600.

The possible savings with securities are worth much more than just a few hundred francs. Fabienne, for example, is 25 years old and in employment. She pays CHF 2,400 into her pillar 3a account with frankly each year until her expected pension age of 65, and she chooses an investment product with an equity component of 95%.

Calculation and risk information

Assumptions: equity component 95%, hypothetical return per year 4.66% (net after costs). The future returns and risks presented here are for illustrative purposes only. Securities savings may fluctuate, the hypothetical return cannot be guaranteed, and tax effects are not included in this forecast.

Economic models and statistical methods are used for calculation purposes. The forecast corresponds with the most likely performance, and can be predicted for an investment horizon of up to 10 years. In the event of a longer investment horizon the calculations are continued using the same values, whereby no statements can be made about the probability of the calculated results occurring. In the event of very unfavourable market developments, the performance may be lower than the nominal savings value. The calculated values are net of the frankly all-in fee, and are based on an interest rate on the pillar 3 account of 0.80%. Please note that inflation and the taxes payable when the balance becomes due are not included in this forecast.

Additional tax savings:

Based on the above values (living in Winterthur, single, no children, no religious affiliation, deposit CHF 2,400 per year) and a possible taxable income of CHF 65,000, Fabienne can save an additional CHF 501 per year in taxes with each pillar 3a solution! Source: Zürcher Kantonalbank tax calculator

tax calculator - Zürcher Kantonalbank

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