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Old 20.05.2016, 14:01
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Very confused about pension withdrawl upon leaving! Help!

All of the information about Swiss pension withdrawal, and the sheer complication of the various salary deductions / pillars I am finding overwhelming. I would like to establish some basic points before I start digging deeper:


1) Upon departing Switzerland, can I withdraw all of my pension contributions or only some 'pillars'?


2) I am a UK citizen with ties to other non-EU countries. I could return to UK or non-EU country, which remains to be decided. Would this decision impact the amount I could withdraw?


Assumed circumstances: 30 y/o, worked in CH for 3 years, employed full time paying monthly contributions to pension. UK citizen.
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Old 20.05.2016, 15:14
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Re: Very confused about pension withdrawl upon leaving! Help!

I'm also very interested in following this subject.

How does one apply to withdraw from the pension fund? Is it a matter of dealing with HR, or do you need the deregistration forms and contact the pension fund directly?
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Old 20.05.2016, 17:12
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Re: Very confused about pension withdrawl upon leaving! Help!

Pension fund plus deregistration forms and you must be leaving EU
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Old 20.05.2016, 17:26
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Re: Very confused about pension withdrawl upon leaving! Help!

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Pension fund plus deregistration forms and you must be leaving EU
Incorrect, it's quite possible to get a CH pillar 2 when leaving for the EU. The question is if compulsory insurance is required in the country your going to, I am not convinced it is anywhere other than in CH.

UK, France, Germany, Italy & Malta no requirement for sure,

I even started a thread last year after cashing in mine, despite being told it was impossible by 2 insurance companies. (I had 2 pillar 2 pensions in CH).

Leaving to live in the EU & cashing in a Swiss Pension
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Old 22.05.2016, 14:42
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Re: Very confused about pension withdrawl upon leaving! Help!

Very simple high-level overview:

1st Pillar remains until you are 65 (men) or 64 (women) - then you need to apply and you should start receiving that piece

2nd Pillar you can take with you but need to pay tax - consider transferring to low tax kanton e.g. Schwyz before cashing out. Depending on amount can easily be more profitable than cashing out in high tax kanton. Many vendors offer this service.

2nd Pillar you can also leave to Switzerland to vested benefits account, which are free of charge etc. and would be then part of your pension later. You can also cash out later but then the taxes would have to be paid in the rate per country you then reside (most likely) - likely to be higher than in Switzerland.

This applies to EU countries and some non-EU European countries. I assume same applies for Pillar 3a should you have one.

So depends do you need the money now and if you think coming back here. And many other factors but there are quite a few options with Pillar 2.

Reloacting to US or for US citizens I do not know, seems like IRS is following the lead of Eritrea and taxing their citizens across the world...
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Old 22.05.2016, 14:47
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Re: Very confused about pension withdrawl upon leaving! Help!

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I'm also very interested in following this subject.

How does one apply to withdraw from the pension fund? Is it a matter of dealing with HR, or do you need the deregistration forms and contact the pension fund directly?
Your HR needs to inform the fund that your contract has ended and then you can discuss with the fund and/or bank depending what you want to do.

I transferred mine to vested benefits account in UBS and invested in funds as did not need the money now and there are a lot of benefits leaving here (no administration, selling etc costs, no taxation before cash-out etc). Risk is I need it at some point earlier to cash-out and do not live in Switzerland and am taxed higher. However my retirement is far away and hard to say how world changes by then - any profit during the next 10-20 years will offset the taxation so it is not straight forward and depends on your personal situation, time horizon, other wealth just to mention a fraction...

Maybe I move to Panama for 6 months and cash-out then
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Old 22.05.2016, 14:59
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Re: Very confused about pension withdrawl upon leaving! Help!

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Maybe I move to Panama for 6 months and cash-out then
There will still be Swiss withholding tax so I doubt you will save anything.
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Old 22.05.2016, 15:31
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Re: Very confused about pension withdrawl upon leaving! Help!

Would save the difference what would need to be paid in some higher taxation country to match that country's taxation, Swiss tax would be just taken into account to prevent double-taxation. But who knows in 20 years taxation can change in so many ways....
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Old 22.05.2016, 16:31
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Re: Very confused about pension withdrawl upon leaving! Help!

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Would save the difference what would need to be paid in some higher taxation country to match that country's taxation, Swiss tax would be just taken into account to prevent double-taxation. But who knows in 20 years taxation can change in so many ways....
It really depends on where your going to, but it's quite possible that there is no further tax to pay. As you say you don't know what taxation will be in 20 years, so your thoughts to leave it for 20 years is not that clever.
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Old 22.05.2016, 17:33
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Re: Very confused about pension withdrawl upon leaving! Help!

Now you are being naive. No one is committing for 20 years today, and should never do that. Let us take off our folio-hats and be clear fundamental changes in taxation rarely happen overnight in civilized world. And in case of war etc. better have your assets spread around. There are three options:

I cash-out now and pay only Swiss tax

I cash-out later, and pay only Swiss tax if country of residence allows that

I cash-out later and pay Swiss tax plus delta to whatever is tax level at country of residence

So the risk with option three is the delta. Why take the risk? Because it may better to pay tax later and invest all capital with zero costs than cash-out now, pay tax and invest with annual costs.

If moving to country where only Swiss tax to be paid and no immediate need for money option two is the best, you can always decide later and meanwhile let the capital including tax grow your wealth. You take option one only if you need cash now for any reason (buying house, better investment opportunties etc). With option three of course depends on delta, time horizon etc. but as in any investments you take calculated risk. High risk high yield, low risk low yield. One of the very basic rules of long-term investing is to maximize postponing tax and investing that money - basically works like interest on interest principle

Of course you can always cash-out now based on the principle better sooner than later and buy something nice, nothing wrong with that. My examples apply if in the long-term you wish to maximize your retirement etc. assets.

Capice, fat man
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Old 22.05.2016, 17:45
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Re: Very confused about pension withdrawl upon leaving! Help!

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Now you are being naive. No one is committing for 20 years today, and should never do that. Let us take off our folio-hats and be clear fundamental changes in taxation rarely happen overnight in civilized world. And in case of war etc. better have your assets spread around. There are three options:

I cash-out now and pay only Swiss tax

I cash-out later, and pay only Swiss tax if country of residence allows that

I cash-out later and pay Swiss tax plus delta to whatever is tax level at country of residence

So the risk with option three is the delta. Why take the risk? Because it may better to pay tax later and invest all capital with zero costs than cash-out now, pay tax and invest with annual costs.

If moving to country where only Swiss tax to be paid and no immediate need for money option two is the best, you can always decide later and meanwhile let the capital including tax grow your wealth. You take option one only if you need cash now for any reason (buying house, better investment opportunties etc). With option three of course depends on delta, time horizon etc. but as in any investments you take calculated risk. High risk high yield, low risk low yield. One of the very basic rules of long-term investing is to maximize postponing tax and investing that money - basically works like interest on interest principle

Of course you can always cash-out now based on the principle better sooner than later and buy something nice, nothing wrong with that. My examples apply if in the long-term you wish to maximize your retirement etc. assets.

Capice, fat man
Your missing the biggest risk that the Swiss will stop allowing any capital payouts from pension schemes. It's under discussion.

Your incredibly naive if you think it's invested at zero cost to you. You also should realise that the maximum equity investment is low in Swiss pensions, for long term investing you should be mainly in equities.

You seem to know some buzz words but little else.
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Old 22.05.2016, 17:58
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Re: Very confused about pension withdrawl upon leaving! Help!

Agree with FMF in that Switzerland funds are the worst for investments, overpriced and overgeared against bonds rather than equities.
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Old 22.05.2016, 18:27
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Re: Very confused about pension withdrawl upon leaving! Help!

This among many other things needs to be monitored. Would not still change option two being feasible and making decision once outcome is clear, very likely includes transition period. Of course option three becomes more risky as you may be taxed higher.

But really isn't this something that has been discussed over many, many times in the past also? Maybe there's tone this time I have missed, thanks for heads up, need to look more into it.

What comes to low level of equities there is relatively wide range of allocation options availble for vested benefits at least what I have seen, way beyond 50%. I am not sure this is low, quite standard I would say. The reality is most people do not understand the costs are easiest the biggest offset for future gains if allocation etc. is even remotely appropriate. True I have less options than on open market but very few of us can pick winners so we can only allocate sufficiently and minimize costs.

But what works for may not work for someone else, as said this is just some eggs in another basket for me. It maybe reasonable to take out now if this is all your life savings. And it maybe wise to take out now if you are confident re-investing will quickly offset 5% or whatever tax to be paid. However anyone arguing making >5% yield annually in consistent manner I would treat with healthy suspicion.

But regarding overpricing could you give some examples, comparison of funds internationally vs Switzerland? It is usually very, very hard to compare directly....
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Old 22.05.2016, 18:38
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Re: Very confused about pension withdrawl upon leaving! Help!

Have I understood this correctly? 1st Pillar is contributions to AHV/IV and is deducted from salary as OASI?

This link indicates that we can claim a refund on this.

https://www.ch.ch/en/refund-ahv-contributions/

Anyone who has worked in Switzerland and then left the country is entitled, depending on their nationality, to receive either a refund of the paid OASI contributions or an OASI pension.

If Switzerland has a social insurance agreement with the returnee’s home country, the OASI pension will be paid abroad. Some social insurance agreements also provide for a refund of contributions. If there is no such agreement, on request the OASI contributions may be refunded without interest.
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Old 22.05.2016, 18:43
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Re: Very confused about pension withdrawl upon leaving! Help!

And also looking for confirmation, is 2nd Pillar the contributions you and employer make to a pension fund on your salary deduction?
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Old 22.05.2016, 19:35
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Re: Very confused about pension withdrawl upon leaving! Help!

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This among many other things needs to be monitored. Would not still change option two being feasible and making decision once outcome is clear, very likely includes transition period. Of course option three becomes more risky as you may be taxed higher.

But really isn't this something that has been discussed over many, many times in the past also? Maybe there's tone this time I have missed, thanks for heads up, need to look more into it.

What comes to low level of equities there is relatively wide range of allocation options availble for vested benefits at least what I have seen, way beyond 50%. I am not sure this is low, quite standard I would say. The reality is most people do not understand the costs are easiest the biggest offset for future gains if allocation etc. is even remotely appropriate. True I have less options than on open market but very few of us can pick winners so we can only allocate sufficiently and minimize costs.

But what works for may not work for someone else, as said this is just some eggs in another basket for me. It maybe reasonable to take out now if this is all your life savings. And it maybe wise to take out now if you are confident re-investing will quickly offset 5% or whatever tax to be paid. However anyone arguing making >5% yield annually in consistent manner I would treat with healthy suspicion.

But regarding overpricing could you give some examples, comparison of funds internationally vs Switzerland? It is usually very, very hard to compare directly....
Lets look at historical yields of the S&P 500

since 1st January 1900 9.62% compound
100 years to date 9.98% Compound
50 years to date 9.63% Compound
25 years to date 9.21%

It's clear that one can expect greater then 5% returns if you invest 100% in the stock market over a long period of time, even world wars & depressions don't make a big difference. The market just goes up over time.
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