Voluntary contributions to the pension fund: what should be considered?

Contributions to the pension fund are generally a good thing. They strengthen one's own provision for old age and can simultaneously save taxes. Nevertheless, there are situations in which investment in the second pillar can be counterproductive.

Positive Aspects‍

If voluntary contributions to the pension fund are possible, this is generally a good thing. If you have a lot of liquid assets, you can use them to strengthen your own retirement provisions. Moreover, depending on the amount of the contribution, you can save a considerable amount in taxes through voluntary contributions to the second pillar. This effect is even more pronounced if you make contributions over several years.‍

Negative Aspects

‍Before definitely deciding to make voluntary contributions to the pension fund, however, two aspects should be clarified:

1. How does the respective pension fund handle cases of premature death?

Some pension funds are structured so that in the case of premature death, voluntary purchases may (partially) lapse. Thus, if the insured person were to die before retirement, the voluntary purchases could be lost. This should be clarified in advance.

2. What is the coverage status of the pension fund?

This is an aspect that should not be neglected. Voluntary contributions to the second pillar should generally only be made to healthy pension funds. If a pension fund has been underfunded over several years, it may need to be rehabilitated. In such cases, it can demand contributions from the insured for the rehabilitation. Therefore, before making a voluntary contribution, make sure that your own fund is healthy.

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