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Old 05.03.2008, 09:53
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Re: Freizuegigkeitskonto [vested benefit account]

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Ok, silly question perhaps. If you withdraw pillar 3a and pillar at the same time (after having left CH so paying only quellensteuer), are the totals added up and then taxed?

I am asking because kanton Aargau for example taxes in steps (per 1000 CHF) and under 25k they are cheaper than Schwyz but if you need to add pillar 3a and 2 together, and then go over 25k, then Schwyz at 2.5% is cheaper.
In answer to your question they are indeed. And you are quite right. Aargau is very cheap here for up to 35K. Coincidence?

35K is more or less your maximum amount after 5 years of 3rd pillar(see earlier posts). ie if you use your 3rd pillar for indirect amortization they will ensure the state keeps the least amount so they can nail you on the income tax in the long run...
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  #22  
Old 09.03.2008, 11:10
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Re: Freizuegigkeitskonto [vested benefit account]

Hello,

How's obligatory and non-obligatory part calculated form my 2nd pillar contributions? I started contributing late in swiss pension by 3 years. Now I am comtemplating to purchase back the years but I would like to do it only if it gives me some tax benefits ( I don't intend to retire in switzerland and would take this money with me).

I can see on my pension statements two parts - BVG and Total. I understand that BVG is the mandatory portion and Total-BVG, is the part that I can take out with me. Is this correct?

I read somewhere else that I need to fill holes in my mandatory pot first as I started contributing late. I am not sure if that hole is filled. How can I check that?

Thanks a lot!!!
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  #23  
Old 09.03.2008, 18:53
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Re: Freizuegigkeitskonto [vested benefit account]

The exact algorithm for calculating the obligatory part is explained in another thread, which you can search. It is the contribution for the salary between the lower limit (about 20K, verify!) and the upper limit (about 90k, verify!). You will see the calculation in your pension plan statement.

If you have a salary above the upper limit, then you would have vested benefits beyond the obligatory. Your pension-plan statement would reflect the contributions that accumulated in the supra-obligatory part.

Ask your pension-plan administrator whether there are any gaps in your pension plan. Based on their feedback, you can fill it up and claim deduction from taxable income. If you can, it is better to top-up split over several years, assuming you are going to be here.

When you leave Switzerland, the redemption of your pension plan depends on where you are moving to. The supra-obligatory part can be cashed out. The obligatory part can only be transfered to a pension-plan in your destination country, if the destination is a EU country. Otherwise, you can cash out the obligatory part, too.

Cash out redemptions are taxable in Switzerland! Hence, a detailed calculation is needed to determine whether a net tax benefit results. Usually, it is beneficial.

Moreover, your destination country may also want to tax the redemptions, unless there is relief envisaged in DTAA (Double Taxation Avoidance Agreements) between Switzerland and your destination country.
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Old 10.03.2008, 16:07
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Re: Freizuegigkeitskonto [vested benefit account]

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The exact algorithm for calculating the obligatory part is explained in another thread, which you can search. It is the contribution for the salary between the lower limit (about 20K, verify!) and the upper limit (about 90k, verify!). You will see the calculation in your pension plan statement.

If you have a salary above the upper limit, then you would have vested benefits beyond the obligatory. Your pension-plan statement would reflect the contributions that accumulated in the supra-obligatory part.

Ask your pension-plan administrator whether there are any gaps in your pension plan. Based on their feedback, you can fill it up and claim deduction from taxable income. If you can, it is better to top-up split over several years, assuming you are going to be here.

When you leave Switzerland, the redemption of your pension plan depends on where you are moving to. The supra-obligatory part can be cashed out. The obligatory part can only be transfered to a pension-plan in your destination country, if the destination is a EU country. Otherwise, you can cash out the obligatory part, too.

Cash out redemptions are taxable in Switzerland! Hence, a detailed calculation is needed to determine whether a net tax benefit results. Usually, it is beneficial.

Moreover, your destination country may also want to tax the redemptions, unless there is relief envisaged in DTAA (Double Taxation Avoidance Agreements) between Switzerland and your destination country.
Just a few corrections.

Under the current BVG legislation the transfer of 2nd Pillar savings outside of Switzerland is not allowed except to Leichtenstein. On leaving the choice is either to pay all of the pension fund savings out or to pay the super-obligatory part only. This is always available.

Double Taxation (Avoidance) Agreements apply almost exclusively to earnings and not to savings. Various countries notably Germany tax cashed in pension contributions whether taken with retirement or early as income and irrespective of the taxation situation in the country from which they are paid out... This is different to pension payments where tax treaties then cover the income.
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Old 11.03.2008, 15:38
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Re: Freizuegigkeitskonto [vested benefit account]

Hi,

According to calculations that I have on my pension statement - I have basically the contributions for the year + interest earned + surplus. Contributions for the year are the combined contributions from myself (what's deducted from my pay) and the company. I figured out that company's contribution is 4%.

On my pension statement, I see my pensionable salary which is equal to my current annual salary. As vested benefits, I see BVG portion and Total vested benefits. Line above it says that interest rate for BVG portion is 2.75% and extra-mandatory portion (Total - BVG portion) is 2.25%. My BVG portion is approx one third of total. Does it mean that I can take everything except BVG portion out? Or in other words, BVG is acually the mandatory part of 2nd pillar?

I tried to use the algorithm mentioned in another thread to calculate mandatory portion but it doesn't correspond to the BVG figure of my pension statement so that's why my question.

Thanks!!
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  #26  
Old 11.03.2008, 15:56
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Re: Freizuegigkeitskonto [vested benefit account]

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Hi,

According to calculations that I have on my pension statement - I have basically the contributions for the year + interest earned + surplus. Contributions for the year are the combined contributions from myself (what's deducted from my pay) and the company. I figured out that company's contribution is 4%.

On my pension statement, I see my pensionable salary which is equal to my current annual salary. As vested benefits, I see BVG portion and Total vested benefits. Line above it says that interest rate for BVG portion is 2.75% and extra-mandatory portion (Total - BVG portion) is 2.25%. My BVG portion is approx one third of total. Does it mean that I can take everything except BVG portion out? Or in other words, BVG is acually the mandatory part of 2nd pillar?

I tried to use the algorithm mentioned in another thread to calculate mandatory portion but it doesn't correspond to the BVG figure of my pension statement so that's why my question.

Thanks!!
BVG = 79,560 -23205 * x%
where x is the % stated in your policy.
Note this is a deduction not the value paid to your account.

Everything above 79,560 is super-obligatory. It can but must not use the same figure x as the percentage and again this is the deduction.

What is actually paid into your savings account part of the BVG is then dependent on the insured risk your policy defines. By risk I mean risk of death... This determines the pension your widow gets etc.

Your part of the equation is at most half of x.

Clear?
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Old 11.03.2008, 19:33
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Re: Freizuegigkeitskonto [vested benefit account]

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BVG = 79,560 -23205 * x%
where x is the % stated in your policy.
Note this is a deduction not the value paid to your account.

Everything above 79,560 is super-obligatory. It can but must not use the same figure x as the percentage and again this is the deduction.

What is actually paid into your savings account part of the BVG is then dependent on the insured risk your policy defines. By risk I mean risk of death... This determines the pension your widow gets etc.

Your part of the equation is at most half of x.

Clear?
Not so clear yet... somehow my calculations as per the policy doesn't fit well.

I checked into my policy (which is in french) and it indeed says that the "depense totale" for the prevoyance is composed of "bonifications de vieillesse", risk premiums and contribution for "fonds de garantie".

In terms of contributions, it says:
- employee contributes 50% of depense totale
- employee contributes vieillesse 6% and risk 1% of salaire assure.
- Employer contributes depense totale minus employee contribution

Also, I found a condition for libre passage which says I can take out sum accumulated for vieillesse.. But which sum is it? Bonifications de vieillesse?

The annual bonifications de vieillesse (for me, according to the age) is 11% of salaire assure.

With your formula of BVG calculation, the x comes out to be 7% for me.

Can you throw some more light? The typical french words doesn't help with translation
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  #28  
Old 25.03.2008, 19:44
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Re: Freizuegigkeitskonto [vested benefit account]

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Non-compulsary part (ueberobligatorisch): you can take with you; if you have not been here for decades, the calcuation is usually (your age - 20)*4 = % of your total accrued arbeitnehmerbeitrage. Example if you are 45, the % is 45-20 = 100%, if you are 33 it is 52%. Add your arbeitnehmerbeitrage itself, and substract the compulsory part.
Does it mean that I can touch 100% of my supra-obligatory benefits only reaching the age 45, otherwise I'll loose them?
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Old 25.03.2008, 19:57
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Re: Freizuegigkeitskonto [vested benefit account]

Yes, I think it means you lose that difference. I think this even applies if you stay in Switzerland until 45, but move pension funds in between if you switch jobs that do not have the same pension fund attached to them. So in that case, you lose some amount of the arbeitgeberbeitrage as per the calculation listed above. If you are a contracter, this loss can be quite real, because some of us actually paid this ourselves.

Last edited by muze7; 26.03.2008 at 01:11.
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Old 25.03.2008, 23:33
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Re: Freizuegigkeitskonto [vested benefit account]

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Yes, I think it means you lose that difference. I think this even applies if you stay in Switzerland until 45, but move pension funds in between if you switch jobs that do not have the same pension fund attached to them. So in that case, you lose some amount of the arbeitgeberbeitrage as per the calculation listed above. If you are a contracter, this loss is quite real, because some of us actually paid this ourselves.
Very surprised that those younger than 45 cannot repatriate the full super-obligatory part! Sounds very arbitrary and unjust. I was convinced that vested benefits are fully portable, which is why it is called "Freizügigkeit":

What is the source of your info?
Can you quote the pertinent Law and § which restrict repatriation?
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Old 26.03.2008, 01:07
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Re: Freizuegigkeitskonto [vested benefit account]

Why do I get a groan? It was my pension fund who told me this. I can look it up in the rules, but why would I if I am groaned at in advance?! I only seek to share information that might be useful to others. I thought sharing such things is partly what this forum is about.

Personally, I only groan at people if their statements are derogatory, discriminatory etc. which luckily is very rare on this forum, which is part of the reason why most people appreciate this particular community so much (imho!).

PS. I am not even complaining, not so long ago in many western countries, people who moved jobs stood to lose a much greater part of their pension funds, due to the system being more inflexible than it is now. So in many ways, progress has been made, especially for expats.
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  #32  
Old 26.03.2008, 10:47
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Re: Freizuegigkeitskonto [vested benefit account]

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Why do I get a groan? It was my pension fund who told me this.
Please accept my humble apologies. Obviously, I have misunderstood the forum etiquette. Sorry.
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Old 25.04.2008, 16:54
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Re: Freizuegigkeitskonto [vested benefit account]

I am a new member and hope someone here can help me. I had a friend whose residence was in Switzerland at my house. She lived here for about 20 years, had a C permit but split her time between here and Barcelona the last several years to be near her elderly parents. She died last year but I still receive post for her. Today I got a statement rergarding her Freizuegigskeit account. Does anyone know if her parents can inherit that money from her? They have all of the necessary documents to show that they are her heirs.
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Old 25.04.2008, 20:54
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Re: Freizuegigkeitskonto [vested benefit account]

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I am a new member and hope someone here can help me. I had a friend whose residence was in Switzerland at my house. She lived here for about 20 years, had a C permit but split her time between here and Barcelona the last several years to be near her elderly parents. She died last year but I still receive post for her. Today I got a statement rergarding her Freizuegigskeit account. Does anyone know if her parents can inherit that money from her? They have all of the necessary documents to show that they are her heirs.
Where was she legally resident at the time of death?
The inheritance rules of that jurisdiction prevail.
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Old 28.04.2008, 13:16
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Re: Freizuegigkeitskonto [vested benefit account]

My friend who died was a legal resident in Switzerland. Although she owned an apartment in Spain, she paid her taxes and kept her residency in Zurich.
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Old 02.05.2008, 18:32
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Re: Freizuegigkeitskonto [vested benefit account]

I would call the fund that holds that account and ask them what they should do. I imagine they need to fill in a form and attach the documents needed (probably including a death certificate as well as status of the parents).

I am sorry about your friend. I hope you manage to help the parents receive this money.
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  #37  
Old 02.05.2008, 21:47
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Re: Freizuegigkeitskonto [vested benefit account]

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Very surprised that those younger than 45 cannot repatriate the full super-obligatory part! Sounds very arbitrary and unjust. I was convinced that vested benefits are fully portable, which is why it is called "Freizügigkeit":

What is the source of your info?
Can you quote the pertinent Law and § which restrict repatriation?
Ok, I found some more info on this. Perhaps you have a different type of pension fund than I do. According to Saldo Ratgeber (Gut Vorsorgen by H. Stauffer) two main types are Leistungsprimat and Beitragsprimatkasses. What this means is that if yours is a Beitragsprimatkasse, you can usually take everything into a Freiz. konto.

However, Leistungsprimatkasses give you a percentage of your income upon retiring, and require constant adjustment of premiums. Therefore, they have a different calculation when you leave them. In this case, there are the three standard methods (Barwert vs Mindestensbeitrag etc.) and they pay whichever method results in the highest amount. Now as different funds have different Barwert factors, this amount differs per person. For people under 45 however, it is usually a lesser amount than the amount that results from the age rule (4% times your age minus 20).

So my understanding is that for Beitragsprimatkassen, they will likely pay out the super-obligatory part according to the 4% age rule, and if you are less than 45 years old, this equates to less than 100%. As this amount is paid from your arbeitgeberbeitrage (employer contrib.), this means you will lose the difference. Example, I am 33, so if I leave this year then 4% times 33-20 is 52%. I will get what I paid myself plus 52% of my contributions. However, since I paid 8.4% of my income and as a contracter, I also paid 10.4% of my income on behalf of my employer, this means that I not only lose 48% of my contributions, I lose more because the employer costs that I contributed were higher.

When I raised this, my pension fund said specifically, well the amount you leave behind will help our fund pay other people.

In terms of references, my pension fund refers to Artikel 7 FZG, does that help?
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Old 05.05.2008, 12:35
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Re: Freizuegigkeitskonto [vested benefit account]

Excellent post Muze7! thanks.

To summarise my understanding.. (Experts here, Please feel free to correct me if I am wrong, pardon my ignorance if any, since all this is so new to me)

Assuming I had totally contributed 'x' amount towards my pension fund and my employer had totally contributed 'y' amount towards my pension fund. (assume Y> X) My earlier understanding was that 'x+y+accrued interest' should be the 'vested termination benefits' when I leave or when it goes to the Freizuegigkeitskonto.

Now, upon reading your detailed/useful post, am I right that when I leave,

1. if I am less than 45 say for example 40 years of age, I will be getting 4% times 40-20 which is 80% of the employer's contribution PLUS 100% of my contribution PLUS the interest as vested termination benefits.

2. If I am 45, I get totally 200% of my contribution plus interest as vested termination benefit (that is, 100% of my contribution PLUS 4% times 45-20 which again is 100% from the employer contribution PLUS interest). Even, if the employer had contributed more than me (Y> X), I will ONLY get 100 % of my contribution as the 'employer's contribution' and not more )

3. If I am 50, I get 100% from my contributions and 120% from the employer's contributions (4% times 50-20 which is 120%).

Are 1, 2 and 3 right?

In the cases 1 and 2 above, can I assume that the 'loss' goes towards my 'risk share'.

Thanks in advance.
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Old 05.05.2008, 18:32
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Re: Freizuegigkeitskonto [vested benefit account]

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1. if I am less than 45 say for example 40 years of age, I will be getting 4% times 40-20 which is 80% of the employer's contribution PLUS 100% of my contribution PLUS the interest as vested termination benefits.
No It s 80% of the employee's contribution (yours), the only thing is this will be paid from the employer contribution. Yes it should be 80%.

You do not get interest, only on what you bought into on top of the basic requirement, einkaufen they call it. If you did not do that, you get no interest, but perhaps this differs again with the type of pension fund, so ask.
Quote:

2. If I am 45, I get totally 200% of my contribution plus interest as vested termination benefit (that is, 100% of my contribution PLUS 4% times 45-20 which again is 100% from the employer contribution PLUS interest). Even, if the employer had contributed more than me (Y> X), I will ONLY get 100 % of my contribution as the 'employer's contribution' and not more )
No you will get the above minus interest. The rest is correct I think, but any experts please correct if not.

If over 45, you have other calculations, like barwert. Check out the book I mentioned, or find the barwert factors in your pension fund rules, as they differ much amongst pensions.
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Old 05.05.2008, 18:37
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Re: Freizuegigkeitskonto [vested benefit account]

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No It s 80% of the employee's contribution (yours), the only thing is this will be paid from the employer contribution. Yes it should be 80%.
Ok , thanks.

I still do not get the bold part.. Can you elaborate please..
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