Switzerland provides for pension in three categories (or pillars). They integrate into this the long term invalidity, widow's and orphan's compensation for loss of earnings in the event of sickness, injury or death. More details on the three pillars. The second pillar is the Swiss Professional Pension, which is offered by private pension companies under the supervision (and guarantee) of the state.
Anyone with an annual salary above CHF 21'150.- and an employment contract that extends beyond three months must have at least the minimum compulsory cover. The time rule applies to employment with a given employer regardless how long you already worked in Switzerland.
If you have a contract less than three months that is extended, the cover applies from the date the extension is signed. If you leave and return within 3 months, the new contract is considered an extension to the previous contract for this purpose and the pension is applied from the beginning of the new contract.
Swiss Professional Pension comes in two levels.
The BVG minimum level covers salaries up to CHF 84'600 (in 2018) at a level increasing with age ranging from 6% up to 18% of salary.
The supermandatory ("voluntary") pension often offered by employers can increase this level up to 25% of salary in some cases. The rules applying to the BVG minimum part of your pension are more strict than those applying to the supermandatory part.
Accurity offers a variety of Swiss pensions to suit individual needs.
Pension based on salary up to CHF126’900 per annum (in 2016) is guaranteed by the Federal Government. For this reason the pension management team can only invest this portion of pension capital in instruments allowed by the Federal government (chosen to minimise risk). The pension premiums are guaranteed from the month of payroll, even if the employer becomes insolvent before paying the premiums.
Funds above this limit are not guaranteed by the Federal government and are therefore much less closely controlled. Some such funds even allow the employee to decide where his/her funds are invested.
Yes, no income tax is paid on the premiums in Switzerland: they are not added to the income statement in your Swiss tax return. Additionally, although the norm is for the employer to pay half to two-thirds of the premiums they may pay all of it. Note that if you pay Swiss source tax the tax office may require your employer to pay no more than half the basic premium as it is assumed the employee pays half in the source tax tables.
Either as a capital lumpsum, or as an annuity. Currently the annuity rate on the BVG minimum funds is set by the state at 6.8% (in 2018) but is expected to drop in the near future. The Supermandatory funds are not so regulated and the conversion rate tends to be a few percent lower.
Retirement for professional pension can be between age 60 and 70 in Switzerland. You can continue to work once retired and can also contribute further to pension (but do not have to).
Yes, pension capital can be paid out:
* to (re)finance your primary residential property (worldwide)
* if you become self employed
* if you leave the EU (if you only leave Switzerland just the supermandatory part)
A witholding tax is levied from your your canton (or if you already left, the canton in which the pension fund resides). In Zürich (in 2018) this ranges from 6% at CHF 25’000 to 8.6% at CHF 750’000, thereafter 8.3% on holdings above CHF 950’000.
Note that Accurity's scheme also pays the capital out if the capital accrued during your employment does not exceed one year's worth of employee premiums.
Based on premium shortfall due to career years where you were not paying premiums in Switzerland you can top up your pension and this can be deducted from income on your Swiss tax return, resulting in a significantly lower tax bill. The pension company will show you how much you can top up on the tax certificate you receive when you join us.
If you move to a new Swiss employer the pension capital is transferred to their scheme. If you do not move immediately to a new Employer, and do not qualify to pay the capital out (see other questions in this FAQ to decide if you can) then the funds are placed in a vested benefits account by the pension company in your name. You can choose which account with which provider or bank. Some accounts invest more agressively with potentially more volatility and higher returns.
However when choosing an account beware of the rules for paying the capital out from that account, which may be more restrictive than those of your pension company.
For the Mandatory BVG or supermandatory capital there is no statutory waiting period, other than the time required for documents and payments to be processed.
For lump sum purchases there is a waiting period of three years from the date of making the purchase before this can be paid out.
In some circumstances this is possible but generally not straightforward, and depends on agreements between Switzerland and your country.
If you have any further questions please don't hesitate to contact us. We are always interested to know what people are concerned about regarding Swiss employment.
Please note the above information is provided without guarantee or warranty. Employment, tax and pension laws are dependent on your specific situation and can change quickly. To be sure of the facts always contact us directly for a verified up to date answer.