With the implementation of the AVS 21 reform, which standardises the retirement age at 65, and the recent rejection of the LPP reform proposal, it is essential for employers to understand the challenges facing women’s pension provision and adopt the appropriate strategy. These challenges include the loss of earnings due to careers often interrupted to devote themselves to the family, part-time work and salaries that are relatively lower than those of men. Ekspert takes a closer look.
AVS 21 reform: what changes?
– Uniform reference age: All insured persons will have a reference age of 65, with the option of withdrawing their capital between the ages of 63 and 70.
– Greater flexibility : Introduction of the possibility of partial retirement and flexibility in the choice of pension commencement.
– Transitional measures: For women born between 1961 and 1969, compensatory measures have been introduced to cushion the impact and phase in the increase in retirement age.
BVG reform rejected
This reform, which was intended to improve cover for part-time workers and low-paid workers, and to strengthen the financing of the 2nd pillar, was rejected in the vote on 22 September 2024 . In particular, it would have allowed contributions and benefits to be better adapted to the needs of women working part-time, for example by proposing a pro-rated coordination deduction rather than a fixed amount, which, according to the supporters of the yes vote, would have made a significant contribution to improving their pensions. But uncertainty about the real impact for each insured person and the difficulty of projecting ahead led to the rejection.
Specific challenges
1. Increased longevity : On average, women live longer than men.
2. Unequal pay and part-time work: These factors lead to lower contributions (lower retirement capital).
3. Career breaks: Professional breaks for maternity or caring for relatives have a negative impact on their pension provision.
Solutions and best practice for employers
1. Flexible pension plans :
o Adjusting the coordination deduction: Adjusting the coordination deduction in proportion to working time can help to introduce greater fairness by not excessively penalising their pension cover.
o Optional contribution options: Encourage employees to maximise their contributions during periods of full employment and offer them the possibility of making buy-backs for periods not covered or maintaining 100% contributions (e.g. unpaid leave for parenthood, sabbaticals). In the event of forgetfulness or lack of liquidity at the time of leave, unlike the 1st pillar, these contributions can also be paid retrospectively!
o Choice of Fund: Opt for a pension fund with a higher return and offering a choice of contribution plans.
2. Raising awareness and providing information :
o Organise regular information sessions on retirement provision to clarify the options available (such as using the tax advantages offered by Pillar 3a) and recent legislative changes.
o Provide personalised consultations to help employees understand how to optimise their pension provision based on their professional and personal career paths.
3. Early and partial retirement :
o Offer early or partial retirement options, in line with the provisions of the AVS 21 reform, which introduces more flexibility in the choice of retirement age.
4. Compensatory measures for the transition :
o For women born between 1961 and 1969, who are particularly affected by the gradual increase in the retirement age, offer solutions to mitigate the impact, such as pension supplements or flexible retirement options.
Individual pension strategies
For their part, women can adopt several strategies to optimise their retirement:
1. Early planning: Starting retirement planning as early as possible is crucial to maximising accumulations in all three pillars (or at least two). Ask your pension fund, via your employer, about unpaid leave before taking time off.
2. Maximise contributions :
Ask your employer about the different contribution plans available and the performance of the pension fund. Maintain payment of contributions in the event of unpaid leave (e.g. for a sabbatical year or extended parental leave).
3. Interruption management: Compensate for career interruptions by buying back contributions or making voluntary payments to minimise the impact on future benefits.
4. Financial education: Find out about and obtain personalised advice on financial planning that takes account of your specific situation.
Conclusion
Employers have an essential role to play in securing the financial future of their employees. By adopting proactive and inclusive strategies, they can not only ensure fairness and compliance but also improve well-being and job satisfaction. This, in turn, will contribute to greater productivity and a more harmonious working environment. Adequate preparation for retirement for women requires a personalized approach that takes into account both the demographic challenges and the individual needs of each employee. In order to avoid gaps in the pension fund (LPP), which can vary depending on the rate of activity, salary, age and the length of unpaid leave, anticipation is essential.