Partial Retirement: How a Staggered Exit From Working Life Works

In brief: Partial retirement is a staggered exit from working life: you reduce your working hours in several steps instead of all at once, and draw your AHV pension and pension fund benefits proportionally alongside it. Since 2024, pension funds allow up to three lump-sum withdrawals, and since the AHV 21 reform, the AHV allows a partial early draw or deferral between 20 and 80 percent. Anyone who keeps working reduced hours from age 58 can, under certain conditions, stay insured at their previous salary.

The move from working life into retirement does not have to happen on a single date. With partial retirement, you reduce your working hours step by step, for example from 100 to 60 and later to 20 percent, and draw a corresponding share of your pension benefits at the same pace. Two independent systems are involved, each with its own rules: the AHV as the first pillar and the pension fund as the second pillar. Both have made their rules more flexible in recent years, but they follow different logic.

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The key points at a glance

• Pension fund lump sums: since 1 January 2024, up to three lump-sum withdrawals are allowed as part of a partial retirement (Art. 13a BVG), up from two previously.
• Minimum amount: the first partial withdrawal must equal at least 20 percent of the retirement benefit, unless the regulations set a lower figure.
• AHV flexibility: since the AHV 21 reform, a partial early draw and a partial deferral of the AHV pension are possible between 20 and 80 percent, with monthly precision.
• AHV age: a partial early draw is possible from age 63, a partial deferral up to age 70; both can be combined.
• Continued insurance: Art. 33a BVG allows continued insurance at the previous salary from age 58, if the regulations provide for it and the salary falls by no more than half.
• Taxes: staggered lump-sum withdrawals are taxed separately and progressively; the effect depends on canton, municipality, and the size of each withdrawal.

What exactly is partial retirement?

Partial retirement refers to the gradual reduction of your working hours before full retirement, combined with a proportional draw of AHV and pension fund benefits. It allows a phased transition into retirement and can be structured advantageously from a tax perspective, because lump-sum withdrawals are staggered rather than taken all at once. You can also find a full definition in the glossary entry on partial retirement.

There is no single form of partial retirement that applies to everyone. How many steps are possible, the minimum reduction in working hours per step, and whether you draw a pension, a lump sum, or a mix of both depend on your pension fund’s regulations. Federal law has set a clear framework for the second pillar since 2024, which individual funds then implement in their own regulations.

How does partial retirement work with the pension fund?

Since 1 January 2024, Art. 13a BVG explicitly governs the partial draw of retirement benefits. Up to three lump-sum withdrawals are allowed as part of a partial retirement, and the first must equal at least 20 percent of the retirement benefit. The pension fund may set a lower minimum share in its regulations, and it determines the minimum size of the second and third withdrawals. Before 2024, at most two lump-sum withdrawals were allowed as part of a partial retirement; anyone already in the first stage at that point can now claim a third withdrawal as well.

Alongside the lump-sum withdrawal, many funds also allow a proportional pension corresponding to the reduction in working hours, or a combination of pension and lump sum. The minimum required reduction in working hours per step, and how far apart the steps can be, are not uniformly regulated at federal level; it is a matter for the fund’s regulations. Ask your pension institution early on which variants it offers and how much lead time it needs for the application.

How do a partial early draw and a partial deferral work for the AHV?

With the AHV 21 reform, in force since 1 January 2024, you can draw your AHV old-age pension more flexibly than before. A partial early draw or a partial deferral of the pension is possible between 20 and 80 percent, chosen in francs or in whole percentage points and with monthly precision. A partial early draw is possible from age 63 at the earliest, or from age 62 for women in the AHV 21 transitional generation. A partial deferral is possible up to age 70 and must last at least one year.

An early draw, the ordinary draw at reference age, and a deferral can also be combined: part of the pension can be drawn early, and another part at reference age or later. The chosen percentage can be increased once before reaching reference age. Anyone who defers in order to benefit from the resulting lifelong pension supplement must inform the relevant compensation office within a year of reaching reference age.

Do I stay insured at my previous salary if I reduce my working hours?

If you reduce your working hours, your insured salary in the pension fund normally falls as well, and with it your ongoing pension contributions. Art. 33a BVG creates an exception: employees from age 58 can apply to stay insured at their previous, higher salary, even though their actual salary is lower. This requires that the salary falls by no more than half and that the pension institution’s regulations provide for this continued insurance. It is not an automatic benefit; the insured person must apply for it, and it ends no later than the ordinary reference age.

This continued insurance can prevent a noticeable pension gap that would otherwise arise from the reduction in working hours, but it usually requires higher personal contributions, because employers often only match their share on the actual salary paid. Whether it is worthwhile depends on your individual pension situation and the fund’s contribution rules.

Does staggering affect my taxes?

Lump-sum benefits from occupational pensions and pillar 3a are taxed separately from other income at a reduced but progressive rate, known as the capital withdrawal tax. Because each withdrawal is assessed individually, spreading it over several years often results in a lower total tax burden than a single large withdrawal in the same tax year. How much this matters depends on your canton and municipality of residence, your marital status, and the size of each withdrawal, and the practice of tax authorities differs from canton to canton.

A worked example of the staggering effect, with figures from a Swiss municipality, is in our article on staggering your pillar 3a payout. The same logic for reducing tax progression applies to staggered pension fund withdrawals in a partial retirement. If you are planning several pension withdrawals, also check whether they fall in the same tax year: AHV, pension fund, and pillar 3a withdrawals in the same year can push each other into a higher tax bracket.

Checklist: what to clarify before talking to your employer and pension fund

Partial retirement cannot be arranged at short notice. Prepare for the conversation with the following points:

• Pension fund regulations: does the fund allow partial retirement at all, in how many steps, and with what minimum reduction in working hours per step?
• Notice period: how much lead time does the fund require to register the first and subsequent partial withdrawals?
• Withdrawal type: is a lump sum, a pension, or a mix available, and can this be chosen separately for each step?
• Continued insurance: do the fund’s regulations offer continued insurance of your previous salary under Art. 33a BVG, and what would it cost you?
• Employer’s agreement: is your employer prepared to allow the reduced working hours in the steps and at the times you want?
• AHV planning: does a partial early draw or deferral of your AHV pension fit the timing of your pension fund’s staggering, and in which tax year does each withdrawal fall?

Frequently asked questions about partial retirement

What exactly is partial retirement?

Partial retirement is the gradual reduction of your working hours before you fully withdraw from working life, combined with a proportional draw of your AHV pension and pension fund benefits. Instead of stopping on a single date, you reduce your working hours and your withdrawals in several stages. The exact steps are set by your pension fund’s regulations and, for the first pillar, by AHV law.

How many partial steps does the pension fund allow?

Since 1 January 2024, Art. 13a BVG allows up to three lump-sum withdrawals as part of a partial retirement, up from two previously. The first partial withdrawal must equal at least 20 percent of the retirement benefit, though the pension fund may set a lower threshold in its regulations. The fund’s regulations set the minimum size of the second and third withdrawals.

Can I also draw my AHV pension in stages?

Yes. Since the AHV 21 reform, you can draw part of your AHV old-age pension early or defer part of it, between 20 and 80 percent, chosen in francs or in whole percentage points and with monthly precision. A partial early draw is possible from age 63, and a partial deferral up to age 70. You can also combine an early draw and a deferral, so that part of your pension starts earlier and another part later.

Do I stay insured at my previous salary if I reduce my working hours?

Only if your pension fund’s regulations provide for it. Art. 33a BVG allows employees from age 58 to keep their previous, higher salary insured, as long as their actual salary falls by no more than half and the fund offers continued insurance in its regulations. You have to apply for it yourself, and the option ends no later than the ordinary reference age.

Does staggering affect my taxes?

Yes, usually favourably, because lump-sum pension benefits are taxed separately from other income and progressively: several smaller withdrawals spread over several years often fall into lower tax brackets than a single large withdrawal. How much this matters depends on your canton and municipality of residence, your marital status, and the size of each withdrawal. You can find a worked example in our article on staggering your pillar 3a payout.