Comprehensive advice on occupational pension provisions
Our services in occupational pension provisions can provide you with support on the road toward change
- Analysis of your pension provision plan
- Drawing up a report for the HR Department and the Direction including any proposals of adaptation to market trends or for new legal provisions
- Presentation of various types of contract and provision of decision-making tools
- Support and advice for the management committee during the bidding process
- Preparation of a detailed list of providers, preparation of a decision matrix, organisation of the submission of tenders by the providers retained
- Change management: information for employees regarding the new pension fund institution, transfer of personal data and assets, timetable, configuration of the IT system with the HR Department, transfer of cases currently receiving benefits (disability benefits), subscription and medical examinations, drawing up contractual documents (new affiliation agreement, pension plan, etc.)
- Support for the management committee during its meetings, including training for new representatives and the organisation of elections if necessary
Our services for occupational pension provisions, to suit your requirements
- Renewal and/or adaptation of contracts to meet new legal provisions and/or new market practices
- Annual report and benchmark for the HR Department and the Direction
- Processing of entries and transfers
- Creation of explanatory notices for employees and on-site or videoconference information meetings
- Coordination with the HR team and the Payroll provider for transfers
- Possibility to create a secure link between the Payroll provider and our PeopleSoft software
- Support for the management of long-term absences by a dedicated expert, including coordination with your absence management provider and/or your HR team as well as management of contribution liberation with the Pension Fund Institution and coordination with the Payroll provider
- A training programme adapted to your specific needs, based on real cases and experience feedback
- Choice of subjects covered and the depth desired
- The trainers are recognised professionals in their various complementary domains (actuaries, jurists, human resource specialists, tax specialists and accountants)
- The organisation information sessions and seminars on the Swiss pension provision system and your company’s occupational pension fund with the possibility of providing individual meetings.
- Evaluate a company’s commitments according to international accounting standards (IAS19, US GAAP ASC 715, IPSAS 39) with the help of software recognized by the largest auditing companies
- Etablish a clear and made-to-measure report
- Consolidate the commitments of multi-nationals with an evaluation at foreign subsidiaries level thanks to our global network of consultants
Our advantages in occupational pension provisions
Pension provison : your questions and our answers
- What is the difference between the 3 pillars?
The Swiss pension system is based on 3 pillars.
The 1st pillar is the state pension. It includes AVS (old age and survivors’ insurance), AI (disability insurance) and supplementary benefits. AVS is funded according to the distribution system.
The 2nd pillar is the occupational pension comprising the mandatory and voluntary scheme. It covers old age, disability and death. It is a system by capitalisation. Each insured person contributes according to the plan chosen by the social partners (employer/employees joint management). The employer participates at least at the same level.
The 3rd pillar is the individual pension scheme. It consists of the 3A, called the tied pension plan, and the 3B, the unrestricted pension plan.
- Who contributes to the 2nd pillar?
Any employee over 17 years old receiving a salary of more than CHF 22,050/year* must contribute for the death and disability risk.
Any employee over 24 years old receiving a salary of more than CHF 22,050/year* must contribute towards their retirement and build up retirement capital.
A self-employed person can choose to finance a 2nd pillar but they must assume all of the funding.
The 2nd pillar completes the 1st pillar, the objective (not guaranteed) being to obtain a pension equivalent to 60% of the last salary before retirement.
- What happens if you are a cross-border worker?
An employee residing in the European Union and working in Switzerland is subject to occupational pension (2nd pillar) under the same conditions as a Swiss resident. At the time of retirement, they will be entitled to their pension in the same way.
On the other hand, the cross -border worker who ceases all activity in Switzerland can obtain the cash payment of the voluntary part. The compulsory part (also called legal minimum LPP ) must be paid into a vested pension plan and may be perceived at retirement age.
- What is the retirement capital composed of?
Retirement capital is made up of:
- the sum of the employee's savings contributions
- the sum of the employers' savings contributions
- the interest
- the vested benefits provided by the insured person
- any buyouts made by the insured person and the associated interest
The pension certificate given to you every year by your pension fund gives you all the information and in particular the projection of pension capital at the time of your retirement.
- Can we choose between annuities and lump-sum at the time of retirement?
In the mandatory regime, old age benefits are paid in the form of a pension, but the insured person can nevertheless request to receive 25 % of their pension assets in the form of a lump-sum.
In the voluntary regime, the insured person may withdraw all of their pension assets in the form of a lump-sum if the pension fund’s terms and conditions provide for it.
If you have any doubts, take advice from your pension adviser or your broker. The correct solution depends on your situation.
If you are married, the payment in the form of a lump-sum is only possible with the agreement of your spouse.
Pension, lump-sum or a combination of the two ... this is to be seriously considered before deciding to retire.
- In the event of a change of employer, how does this affect the pension?
- The vested benefits (pension assets) must be fully transferred to the new employer's pension fund. This approach is not automatic and is the responsibility of the insured person. In general, your previous pension fund writes to request the contact details of the new fund. In the event of no reply, the funds are transferred to the Substitute Occupational Benefit Institution.
- And in case of unemployment?
It is recommended to transfer your pension assets to a vested benefits account or a vested benefits policy. Discuss with your insurer or broker to discover the most interesting solution for you.
- What becomes of the 2nd pillar in the event of divorce?
Whatever the matrimonial regime, each spouse will be entitled to half of the former spouse’s pension that was accumulated during the marriage period. The spouses can renounce the right to share. The judge will decide whether the conditions of renunciation are met or not.
- What happens in the event of death?
- It is important to refer to the pension fund’s terms and conditions because the benefits differ from one fund to another. So do not hesitate to contact them.
If the death occurs before retirement: The surviving spouse (married or registered partnership) is entitled to an annuity if they have at least one dependent child or if they are over 45 years old and they have been married for at least 5 years. Children under the age of 18 or under 25 (if still in education) will receive an orphan’s pension. It is difficult to be more precise because the conditions are different depending on the pension fund.
If the death occurs after retirement: The surviving spouse will receive a pension corresponding to 60% of that of the deceased. The orphan's pension amounts to 20 %. These pensions stop at the death or remarriage of the spouse and when the child reaches the age of 18 or 25 years old (if still in education).
- Why make buyouts of the 2nd pillar?
If you have stopped working for some time or if you are coming from abroad, you may have occupational pension shortcomings, that is to say missing years. In this case, you can buy these years of contribution. You therefore increase your old age pension and you benefit from a tax deduction. Contact your pension fund to know the procedure and the maximum amount you can pay.
If you have been a Swiss resident for less than 5 years or cross-border worker, you are limited in your buyout capacity. Your pension fund will be able to inform you of the details of this amount.
- How to buy your accommodation thanks to the 2nd pillar?
The insured person can use their 2nd pillar to buy a property if it is their main residence. They can also acquire shares in the ownership of an accommodation or reimburse a mortgage.
The minimum amount is set at CHF 20,000, every 5 years and up to 3 years before retirement. The maximum amount depends on the age of the insured person.
Until the age of 50 years old, all of the pension assets can be taken.
Over 50 years old, it is the highest amount between pension assets acquired at 50 years old (and up to 3 years before retirement) and half of the available assets at the time of the request for early payment that can be withdrawn.
- How is the interest rate set?
- The interest rate that applies to the mandatory share of old age assets is set every year by the Federal Council.
The interest rate that applies to the voluntary share is set by each pension fund according to its performance.
- What is the coordinated salary?
- In the mandatory scheme, contributions do not apply to the entire salary. The first CHF 25,725* are not concerned. This is called coordination deduction.
The coordinated salary is therefore the difference between the annual salary (capped at CHF 88,200*) and the coordination deduction.
For example, for an annual salary of CHF 80,000, the coordinated salary amounts to 80,000-25,725 = CHF 54,275. It is on this amount that contributions are calculated for the occupational pension.
The coordinated salary cannot be less than CHF 3,675* (= minimum coordinated salary) or greater than CHF 62,475* (=maximum coordinated salary).
* LPP 2023 figures