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Working in Switzerland
Choosing or Changing Your Occupational Pension Plan in Switzerland
Unlike the so-called “first pillar” of social security in Switzerland, the other two parts of that comprehensive insurance scheme are supposed to ensure more than a subsistence level income for retirees. The InterNations GO! guide explains how expats can also benefit from occupational and private pension plans.
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Time to Say Goodbye… To Your Pension?
Good news — expats who decide to leave their respective Pensionskasse (the entity legally responsible for looking after the money they pay into their BVG pension fund) before they retire will not lose their money. If you get a new job, for example, you can easily transfer the funds from your BVG pension fund to a new Pensionskasse with your new employer.
Should a person decide to leave Switzerland for good, they’ll need to contact their pension fund directly to discuss the options on what to do next. Like with the AHV pension, your occupational pension can be paid abroad as long as you have reached retirement age.
If you are not yet at the standard age of retirement, you may be able to transfer the funds in your BVG pension account to a bank or a different insurance policy. The rules regarding this transfer vary between different cantons and companies, so it is best to explain the situation to your employer directly and ask them to advise you.
There is also the possibility of cashing out your BVG pension, but there are a number of conditions that you must fulfill in order to be able to do this. If you are leaving Switzerland and are moving to a non-EU/EFTA member state for good — and can prove it — then you could be entitled to a payout.
Expats who leave their job to become self-employed are also entitled to request a payout, as are people who want to buy property. The property, however, must be for you to live in.
It is worth bearing in mind that an early withdrawal will significantly reduce the old age pension, survivors’ benefits, and disability pension that you are entitled to.
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A Second Pillar Safety Net: The Choice Is Yours
As was already mentioned earlier on in the article, the second pillar pension scheme is only compulsory for employees in Switzerland. While paying into a BVG fund is voluntary for the self-employed in Switzerland, it is highly recommended, and so the majority of residents like to contribute to an occupational pension fund as a backup plan.
There are a variety of private insurancecompanies that specialize in occupational pension schemes for individual professions. If you are self-employed and decide that you would like to contribute towards a second pillar pension fund, these specialist organizations should be your first port of call.
The Stiftung Auffangeinrichtung BVG is an example of a private second pillar pension scheme open to everyone. They are the only organization in the whole of Switzerland who will add any business or individual — employer or not — to their benefits scheme.
Of course, the individual or company in question must meet the standard legal requirements. However, for self-employed expats looking for that little bit of extra coverage, the Stiftung Auffangeinrichtung BVG and their occupational pension plan can provide it.
The other thing to bear in mind is that if you are self-employed and have employees, you must sign them up to an occupational pension scheme — remember, it is mandatory for all employees in Switzerland. It is worth noting that the contributions you pay on behalf of your employees, and those that they pay themselves can also have an effect on your tax return. For this reason, business owners are advised to hire a tax advisor to help them with this.
In contrast to employees, self-employed expats will not be automatically insured against personal accidents or accidents in the work place: if they want accident insurance, they have to organize it themselves. A lot of health insurance policies will offer accident insurance as an add-on, but you are still responsible for organizing this.
If you have employees, you will also need to organize and pay contributions towards accident insurance for them. Make sure you research this thoroughly to ensure that you have the proper coverage.