Non-mandatory 2nd pillar pension provision
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In addition to the minimum 2nd pillar benefits available under the mandatory BVG occupational pension provision, insured persons can also benefit from non-mandatory provisions. These additional benefits may vary greatly depending on the pension fund provider. Only those who are familiar with the regulations governing their pension fund, and who are also aware of the amount and extent of the additional benefits available, can effectively supplement their 2nd pillar occupational pension provision with a further 3rd pillar private pension arrangement.
When non-mandatory provisions apply
An occupational pension scheme is compulsory for every employee earning an annual salary of at least 21'510 francs. Above this threshold, employers and employees are obliged to make 2nd pillar contributions. These payments serve to build up retirement capital and also to secure disability and survivor’s benefits. However, the insured portion of the salary is capped, and since 1 January 2021, the maximum annual salary has been set at 60'945 francs. Where a pension fund offers benefits above the maximum amount, this is referred to as non-mandatory provision. In the case of the insured portion of the salary, the salary coordination offset which serves to coordinate 1st- and 2nd pillar payments is also taken into account.
2nd pillar interest rate structures and commitments
While a minimum interest rate is guaranteed for compulsory payments, the pension provider alone determines how the interest rate is structured for the non-mandatory provision. In principle, the pension provider’s retirement pension is a restricted fund set up specifically to meet retirement provisions. However, there are exemptions which may apply in certain situations. Thus, insured persons can obtain their BVG premiums early if they become self-employed, purchase a residential home for their own use, or emigrate from Switzerland.
However, certain emigration restrictions have been applied since June 2007, and BVG capital can now no longer be withdrawn when a person emigrates to Norway, Iceland or any country within the EU. Nevertheless, the non-mandatory portion can still be paid out in such circumstances.
Your pension fund certificate provides information about non-mandatory provision
As mentioned above, it is the responsibility of individual pension funds to regulate whether non-mandatory arrangements are made, and precisely how they should be structured. For example, they can take the form of higher contributions to build up retirement capital or the disability pension. Your annual pension fund certificate reports on the current status of your retirement capital and also estimates your projected benefits at the time of your planned retirement, as well as confirming the amount of insurance benefits to which you are presently entitled.
Using the 3rd pillar to complement your non-mandatory benefits
Non-mandatory benefits alone will not be sufficient to close the gap between your working income and your retirement income. Private provision is intended to meet this need, and you can choose from a wide range of savings, investment and insurance products designed for this purpose, and also benefit from tied-pension tax advantages. Under pillar 3 arrangements your pension contributions are tax-deductible up to a certain maximum amount. You can find more detailed information about pillar 3a private pension plans here.
We can help you to optimally align and coordinate your occupational benefits and private retirement provision. Our highly competent and independent advice is complemented by our access to a comprehensive network of more than 150 financing partners so that we can bring you the best possible selection of tax-optimised products.
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