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  #21  
Old 08.08.2013, 00:50
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Re: AHV and BVG for a dummy (me).

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There are a few things:

-I don't really see where the 4%-8% difference comes from. If it's really the case that you can't get more than 4% in your 3a, then presumably any balanced portfolio would have some lower yielding assets in it in any case, so just use your 3a for that part of your portfolio.

-Around 30% to 40% of your income on the SMI return is likely to be dividends in the long term, which are subject to income tax, which is compounded, on your non-3a investment.

-Withdrawals of your 3a investment are taxed at only around 4% in canton Zurich for a 100k withdrawal regardless of your tax bracket, and you can do it in stages.
I think you need to look at the highest risk portfolio available on a third pillar & also actual compound returns. The no's are not pretty & usually start with a 1 or 2. Your second Pillar will be not very different.

You can't break a 3rd pillar in stages, you need multiple 3rd Accounts.

You will notice that Bonds form the largest proportion investment of 3rd pillar, it's an asset class I would avoid with a barge pole, unless you believe that interest rates will fall until your retirement.

If you buy a 3rd pillar with any insurance attached, you will be lucky to get your premiums back at retirement.
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  #22  
Old 08.08.2013, 01:13
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Re: AHV and BVG for a dummy (me).

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475 in min yearly AHV
What kind of monthly pension would you get if you pay min contribution until your retirement age?
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  #23  
Old 08.08.2013, 01:25
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Re: AHV and BVG for a dummy (me).

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What kind of monthly pension would you get if you pay min contribution until your retirement age?
The Swiss pillar 1 is based on 44 years of contributions. The min payment for 44 years is 14040 a year. With higher payments Pillar 1 can reach 28080.
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  #24  
Old 08.08.2013, 01:41
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Re: AHV and BVG for a dummy (me).

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The Swiss pillar 1 is based on 44 years of contributions. The min payment for 44 years is 14040 a year. With higher payments Pillar 1 can reach 28080.
So say someone instead of 44 years contributed min for 30 years, would their pension then be 9572 per year? Is that how it works?

Btw how can someone survive on 14040 a year that also when old and weak? They are supposed to pay health insurance and rent from it too? So the min pension is not a realistic number is it from an actual survivability point of view?

Last edited by king chimp; 08.08.2013 at 01:54.
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  #25  
Old 08.08.2013, 07:09
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Re: AHV and BVG for a dummy (me).

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Could someone very kind and knowledgeable please help me understand AHV and BVG?

Firstly I would like to understand what each provides on retirement.

Secondly, in summer I am employed, so I get AHV and BVG taken out of my pay. In winter I am self employed. Last winter I just paid the AHV bill sent to me, but I have no idea how much I should be paying, if there is an option to pay top-ups and if I should do this. I didn't pay BVG last winter whilst self employed, is there an option to do this voluntarily, and should I?

Thanks for your help, I've tried to research it, but not really getting it.
I think this site might be helpful for you and some "experts" in this forum:
https://www.ch.ch/en/occupational-pension/
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  #26  
Old 08.08.2013, 08:33
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Re: AHV and BVG for a dummy (me).

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The Swiss pillar 1 is based on 44 years of contributions. The min payment for 44 years is 14040 a year. With higher payments Pillar 1 can reach 28080.
And what about those of us who haven't lived in CH since they were 21 & won't have 44 years? Do payments in the UK count? Or do you get a percentage?
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  #27  
Old 08.08.2013, 09:09
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Re: AHV and BVG for a dummy (me).

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And what about those of us who haven't lived in CH since they were 21 & won't have 44 years? Do payments in the UK count? Or do you get a percentage?
You get 1/44 for every year you work here.
Your best bet is pay voluntary UK contributions in the UK , 30 years gives a full UK pension plus any Swiss pension. It's a far better investment than any private pension although not tax deductible .
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  #28  
Old 08.08.2013, 09:11
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Re: AHV and BVG for a dummy (me).

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So say someone instead of 44 years contributed min for 30 years, would their pension then be 9572 per year? Is that how it works?

Btw how can someone survive on 14040 a year that also when old and weak? They are supposed to pay health insurance and rent from it too? So the min pension is not a realistic number is it from an actual survivability point of view?
That's how it works, if your only getting 14040 then you did not earn much when working.
Pillar 2 is for higher earnings .
Social payments kick in for the poor.
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  #29  
Old 08.08.2013, 09:19
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Re: AHV and BVG for a dummy (me).

My 3rd pillar sames me at least 2k in taxes due to the higher marginal rates here, and if I didn't have it locked away I'd blow it, so a good idea for me.

Tom
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  #30  
Old 08.08.2013, 09:56
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Re: AHV and BVG for a dummy (me).

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The worst investment I ever made was buying back years for my Pillar 2 about 10 years ago, total cost around 35k, its worth no more today. My non pension investments have more than doubled over the same period the younger you are the higher risks you can take as time reduces risk. Swiss pensions are too 'safely' invested , at great cost to you over time
You've mentioned this a couple of times. I know this is personal but what type of non-pension investments are you talking about?

You could setup a meet at a pub to explain this over a couple of beers
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  #31  
Old 08.08.2013, 11:36
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Re: AHV and BVG for a dummy (me).

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I think you need to look at the highest risk portfolio available on a third pillar & also actual compound returns. The no's are not pretty & usually start with a 1 or 2. Your second Pillar will be not very different.

You can't break a 3rd pillar in stages, you need multiple 3rd Accounts.

You will notice that Bonds form the largest proportion investment of 3rd pillar, it's an asset class I would avoid with a barge pole, unless you believe that interest rates will fall until your retirement.

If you buy a 3rd pillar with any insurance attached, you will be lucky to get your premiums back at retirement.
I think you need to compare like with like in terms of your portfolio composition. Personally I break down all of my funds that are inside or outside my 3a by sector and model my portfolio that way. If there's something that I want exposure to and I can do it by buying a 3a fund, then I will do so.

Bond prices already take into account that interest rates have only one way to go. Returns from bond investments are also substantially from coupons rather than from capital gains which is why they are less volatile and why they may benefit more from a tax shield in this country.
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  #32  
Old 10.08.2013, 21:55
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Re: AHV and BVG for a dummy (me).

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I think you need to compare like with like in terms of your portfolio composition. Personally I break down all of my funds that are inside or outside my 3a by sector and model my portfolio that way. If there's something that I want exposure to and I can do it by buying a 3a fund, then I will do so.

Bond prices already take into account that interest rates have only one way to go. Returns from bond investments are also substantially from coupons rather than from capital gains which is why they are less volatile and why they may benefit more from a tax shield in this country.
My personal portfolio is 100% stock market, 85% US, I don't wish to hold any bonds or property, so as you conclude I have no reason to ever put money into a 3a fund.

Your saying when interest rates hit 10% the capital value will be the same as today, I believe they will be substantially lower. of course you believe that interest rates & inflation will not take off
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  #33  
Old 10.08.2013, 22:00
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Re: AHV and BVG for a dummy (me).

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You've mentioned this a couple of times. I know this is personal but what type of non-pension investments are you talking about?

You could setup a meet at a pub to explain this over a couple of beers
essentially US quoted equities as they are the cheapest to trade, costs have a huge effect over time. 1.5% management charges & 1.5% expenses common on a mutual fund well eat up more than 50% of your investment over time however it's 'safe' because its diversified (not )
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  #34  
Old 26.04.2015, 20:32
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Re: AHV and BVG for a dummy (me).

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That's how it works, if your only getting 14040 then you did not earn much when working.
Pillar 2 is for higher earnings .
Social payments kick in for the poor.
Hi FTF,
I tried the online calculator at http://acor-avs.ch/?lg=en but whether you enter 50K or 200K as your income for the years worked/contributed the FINAL calculation of the estimated pension changes by about 5% as opposed to 3x(or similar multiple).
In short should one expect a similar pension(everything else being the same) whether one's AHV/AVS contributions are CHF 475 or CHF 10000?
Regards
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  #35  
Old 26.04.2015, 21:38
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Re: AHV and BVG for a dummy (me).

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Hi FTF,
I tried the online calculator at http://acor-avs.ch/?lg=en but whether you enter 50K or 200K as your income for the years worked/contributed the FINAL calculation of the estimated pension changes by about 5% as opposed to 3x(or similar multiple).
In short should one expect a similar pension(everything else being the same) whether one's AHV/AVS contributions are CHF 475 or CHF 10000?
Regards
Yes. AHV or first pillar or state pension is based on the years contributions are made, not how much is contributed, though there are minimums. It's the same in the UK...
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Old 28.04.2015, 20:55
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Re: AHV and BVG for a dummy (me).

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Yes. AHV or first pillar or state pension is based on the years contributions are made, not how much is contributed, though there are minimums. It's the same in the UK...
Thanks AbFab.

Depending on the citizenship or the country one is moving to, I have read(SocialBrochureAVS-sozialvers-e.pdf which I found on a link posted very kindly on this site) its possible to get the 1st pillar contributions returned less a small tax. The document also states AVS(OASI) which amounts to 8.4%(4.2 each from employee and employer) of ones salary is returned, but not the DI portion. Since the AVS=OASI/DI? deducted is 5.15%, it means the DI portion should be 5.15-4.2=0.95 or Am I missing something?..

There also seems to be cap on the amount returned as per 10., any idea what that cap maybe?

------------------------------------------------
OASI/DI pensions are not paid to foreign nationals abroad. You can, however,
apply for reimbursement of your accumulated OASI contributions8.
Reimbursement is only possible if you:
have paid OASI/DI contributions for at least one full year;
leave Switzerland permanently. Your spouse and children under 25 years of age
also have to leave the country9;
are not already receiving an OASI/DI pension.
Exception: Should you have received OASI or DI benefits and no longer
receive these after leaving Switzerland, you may nevertheless apply for the
reimbursement. Benefits already received will be deducted from the total
amount.
Please note:
Receiving the reimbursement means that you are no longer entitled to any
benefits from OASI/DI. Any OASI/DI payments will stop.
Only employees’ and employers’ actual contributions to the OASI are reimbursed,
without interest. Contributions paid by welfare are not reimbursed.
DI contributions are not reimbursed.
If the reimbursable OASI contributions exceed a certain sum(10.), the amount
is reduced.
In the event of your death, your spouse or your children11 may also apply for
reimbursement, provided they are eligible for a survivor’s pension.

8. OASI contributions amount to 8.4% of the gross salary (employer’s and employee’s contributions together).
10.
The so-called expectation of pension: this corresponds to the capitalized,
anticipated pension.
----------------------------------
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