Lump sum vs lifelong pension

Hi all. I work for a big multinational and in my company's pension fund agreement I saw that I have the choice between getting all my pension savings paid in one lump sum or receiving a (skimpy) pension every month over my retired life.

Since I have no idea what the world (and the pension fund) will look like in say, 30 years, I am tempted to take out the lump sum and invest in real assets (property or a small business). But maybe that is being naive. Any chance that a pension is the better option? How secure would that pension be against financial crises?

Greetings,

Whether you withdraw your pension savings as a lump sum or a regular pension is entirely up to you. Unless you die shortly after retirement, receiving a pension is generally more profitable from a purely financial perspective. However, if you prefer to have control over your assets, then withdrawing pension savings as a lump sum puts control over your money into your hands.

It is important to note that withdrawing a large amount of money in one go can push you up into a higher tax bracket. If you leave your employer before retiring, you can get around this by placing your pension savings in more than one vested benefits account and closing each account in separate tax years.

Taking up residence in a low-tax canton (like Schwyz) or placing your money in a vested benefits foundation in a low-tax canton (if you leave Switzerland) can save you a lot of money when you withdraw pension assets.

Best regards from Moneyguru

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