Have read lots about this but am still confused! I understand that as UK nationals, once we leave CH we can cash in our 3rd pillar contributions (minus tax) is that right? But can we cash in anything from pillar 2, the employer's pension scheme? I understand it can be left completely in CH or transferred to a UK pension fund, but other than the 3rd pillar is there an element of the employer/employee pension contributions that can be taken as cash?

Any one know? Thanks!

Steph

AFAIK you're out of luck. They changed the rules of pensions a few years ago (I managed to get mine out just before they did so) and although at the time you got to take it all - including all the employer contributions - out as cash (minus a small admin fee), after the cutoff date it either had to be kept in CH until maturity or transferred to an official state recognised scheme.

I think that there might still be an exception for taking the money to buy a primary residence - I'm sure someone who actually knows about this stuff can give better info.


It's a pity - stuffing the pension to the max used to be a fantastic tax dodge for contractors who knew that they would be leaving CH in the not so far future.

... I wonder how many ended up staying longer than they thought they would (got married etc) and saw their tax-avoidance scheme locked down?

I have answered this a few times on different threads, but here goes again...

The principle around the current agreement is to coordinate (amongst EU and EFTA states) the concept of compulsory occupational benefits, such that when you move between jurisdictions you remain covered if required. Note that a key fact in these rules is whether there is a requirement to belong to the pension insurance scheme of the destination State. It is not a matter directly of your citizenship or any other such detail.

re: pillar 3 - this is an optional tax efficient saving (intended to provide additional funds for old age) - as it is not compulsory, this can be withdrawn when permanently leaving switzerland, even for EU citizens moving to EU destinations

re: pillar 2 - simplistically, this is the compulsory occupational benefits part of the insurance system, so it is intended that you must retain this when moving jurisdictions. However, pillar 2 may consist of 2 parts - the BVG 'mandatory' (ie compulsory) part and additionally, if you have made additional purchases, a non-BVG 'non-mandatory' part.

The mandatory BVG part of pillar 2 must remain in a blocked account or vested benefits account in switzerland (I have heard that it may be possible to transfer to an approved scheme abroad, but the link below does not support that). However, do note from the link "If there is no State social insurance obligation, the pension scheme may pay out the entire occupational benefit savings capital in cash"

The non-BVG part of pillar 2 (if you have made extra contributions) may still be cashed in for any purpose - see section 3, page 3 "The component of the vested benefit which exceeds the statutory minimum benefit amounts (non- compulsory part) is not affected"

Both the BVG and of course the non-BVG elements may be used for the purchase of your own residence within the EU or EFTA country.

In all the above, remember that there are the general rules (as in the document below), but there could be pension-scheme specific restrictions on withdrawals which restrict what you may do. Also bear in mind that any withdrawal will attract taxation.

For details see this link:
http://www.verbindungsstelle.ch/docu...version-en.pdf

thanks for this = really helpful however, i notice the document you provide the link for is dated 2007 - haven't rules changed since then?

no, the rules changed in June 2007 as stated on the link - I am not aware of any substantive changes since then.

so, if you move to the UK for example, you can't move the BVG to a UK pension, it must stay in Switzerland but you CAN move it to a UK property? Seems weird.

UK bricks better bet than UK pension companies ?

I'm leaving Switz after 26 years and returning to the UK at the end of the year. I'm 56, so I've a good while until I reach retirement age. I've read through reams of stuff concerning pension funds, consulted a legal advisor and despite sometimes conflicting information, have come to the following conclusion and question:

I can withdraw the non-obligatory part of the pension when I leave, but the obligatory part is blocked in CH until retirement age unless HM Revenue and Customs report back to the BVG, 120 days after I officially leave CH, that I do not have a compulsory pension fund ("nicht obligatorisch rentenversichert") in the UK. So far, I have been unable to discover what this means exactly. Does this mean that if I am employed in the UK, the obligatory part of my pension stays blocked in CH, while if I am self-employed, it doesn't?

I intend to buy property in the UK, but as far as I have found out so far, this is irrelevant.

You have a good point and one which is often missed. I mentioned it in my first post above. It is not your nationality that matters and it is not just which country you are moving to which matters. It is whether that country (signatory to the accord) requires you (according to your circumstance) to have compulsory pension insurance. I do not know the rules around this either, but it may well be that self employed are exempted. I did hear something recently that the UK is introducing the right to company pensions for all employees - this seems to imply that it currently is not mandatory, and as the new rules allow opt-out by the employee it implies it will not be mandatory even after the new rules.

Would be interested to know any answers you get.

Separately, although you have a few years yet, don't delay too long as according to p4 of the link i provided above:

"In a majority of cases, the savings capital cannot be withdrawn in cash as a retirement benefit less than five years before reaching the ordinary pensionable age (59 for women and 60 for men)."

I don't think this is the case. Under the rules you can use the whole amount of your pension (not just the surplus above LOB) to purchase your own permanent residence, and this is not affected by the change in 2007.

As far as purchasing is concerned, my current understanding is that all control over the release of the obligatory part of pensions is governed by the agreement between CH and the other country.

Makes sense - obviously, the UK authorities are not keen on the possibility of someone returning from country X, splurging all their foreign pension and then relying on the state in their old age.

I can only see a property purchase being acceptable if the UK have agreed on this. Another question is how much of the pension you would have to spend on property in order to get it released.

I've requested an appt with the manager of my company's pension fund, maybe he can help, I let you know further developments...

Well, my understanding is that it is agreed, as the rules (which both sides agreed to) allow this.


I don't think it works like that. You get released the amount you need for your property - it's not all or nothing.

Please remember there are various restrictions/implications to all of this:
1. your BVG provider must support early withdrawal within it's own rules
2. there is an age restriction as i mentioned earlier
3. there is a 3-year blocking after making additional purchases within the pension - i'm not sure if it's a real blocking, or just has further tax implications

Have you actually seen this rule written out anywhere official? I've searched and searched on UK gov sites and not found anything to that effect.

Thanks for pointing out the other rules.

What I did find searching at lunchtime:

http://www.zentralstelle.ch/xml_3/in...on/d51/f62.cfm

- scroll down until you get to the paragraph "Departure for the UK"

Here's the Swiss info page in English on the UK: http://www.verbindungsstelle.ch/docu...blattUK-en.pdf

- scroll down and you will see "If you have compulsory pension insurance in the United Kingdom, cash payment of your vested benefits will not be possible..." - the vested benefits being presumably the compulsory pension fund.

Here's the "Application form to determine social insurance liability" which you have to submit: http://www.verbindungsstelle.ch/docu...mularUK-dt.pdf which UK Revenue & Customs fill in 120 days later. Near the bottom:

To be completed by the competent foreign body:

The competent body confirms that the above person on ....... (date of examination)

□ is subject to the State pension insurance scheme (or)

□ is not subject to the State pension insurance scheme

- so apparently, depending on which box UK Revenue & Customs tick, the Swiss either pay out the compulsory bit or don't.

So what I need to know is, under what circumstances am I not subject to the State pension scheme ?

I checked UK sites too..

If(still not totally clear to me) the payment of NI contributions constitute what the Swiss call a "compulsory pension insurance", then the only way to get the non-obligatory pension is to earn nothing or very little and hopefully get an NI exemption certificate (see below). It looks like you have to pay NI contributions whether you're employed or self-employed:
http://www.adviceguide.org.uk/index/..._contributions

If you are an employee and under pension age

If you are an employee under pension age, you have to pay Class 1 national insurance contributions on part of your earnings. The amount you pay depends on how much you earn. You might not have to pay any contributions if your earnings are lower than a certain amount called the primary threshold....

If you are self-employed and under pension age

If you are self-employed, you have to pay national insurance contributions unless your earnings are very small and you have applied for a certificate which exempts you from paying national insurance


If this is so, then I wonder what they do in the UK when you grab your foreign pension and suddenly aren't poor anymore. They can't tax it under the other rules, but do they demand that you now pay a massive NI contribution or what?


Phew, hard work, getting further slowly but more questions appearing... moving outside Europe would probably be simpler as far as the pension is concerned ;-)

Still busy gathering info and re-reading what I have.

Jaudi, you said This is correct: according to the BVG's statement of the new rules at http://www.verbindungsstelle.ch/docu..._infoDruck.pdf :

As a peculiarity of Swiss benefit law, early drawing in favour of owner-occupied home ownership continues to be possible within the range of the compulsory occupational benefit even if the residential property is located in the new EU or EFTA country of residence.

However, I have found no form to submit to the BVG in this regard. Does anyone know what the procedure is if I want to buy property in the UK?

Erm, sn't this a Catch 22 situation? Presumably I would have to supply proof of a finalised property purchase to the BVG in order to release the funds, on the other hand, I would need the funds available in advance to make the purchase - or am I missing something?

Thanks for the very informative posts.
Does the above apply if you want to stay in Switzerland at retirement? ie can you request 5 years before retirement age to be paid your pension fund in cash?

Okay, I've got a bit further.

When you leave Switzerland, you are de facto no longer part of a Swiss pension scheme as such, and your pension funds are distributed as follows:

- non-obligatory part is paid "cash" to the bank of your choice (takes 4-6 weeks apparently)
- obligatory part is paid to a vested account of your choice (also usually in a bank) where it usually sits until you reach retirement age.

You also get taxed nicely, in my case this will be about CHF 17'000 on the non-obligatory part alone. Apparently I cannot claim this back against tax under the CH/UK double taxation agreement. Sigh.

You can't touch the vested account unless you apply the Swiss exception from the rule and buy a home. This exception also applies when buying a house in the EU/EFTA countries.

Because the obligatory pension fund goes into a bank, you have to deal with whoever administers pension funds within that bank to look into getting it released.

I've talked to someone at my current bank, announced my intentions and enquired how the proviso when drawing the money (that this is noted in the property deeds) works - in Switzerland, you would get a "Grundbucheintrag" which prevents you from selling the property unless you pay your pension back. They are checking on that and will get back to me.

As far as tax when drawing the obligatory part is concerned, this depends on where you live - but it may be possible to transfer my money from the pension fund into an account somewhere with a more favourable tax rate like Canton Zug or Schwyz - I'm investigating that too.

Regarding whether I will be "subject to a compulsory insurance scheme" or not, I have contacted several people including "Technical Officers" at HMRC in the UK and they seem to have no knowledge of the bilateral agreement but suppose this means NI contributions. However, they also seemed to think that if I wasn't working, I wouldn't be paying NI, so wouldn't be part of the scheme. This seems ludicrous to me - what happens if they report back to the BVG that I'm not, and then I start working a week later? I strongly suspect they were ad-libbing heavily.

Anyway, I've written to someone who has been very helpful so far at the BVG Verbindungsstelle and asked him which section of HMRC the BVG send the form to, so I can contact them directly...

I have now received the contact details of the UK office responsible to decide if someone is "subject to a compulsory insurance scheme" :

HM Revenue and Customs
Charity, Assets & Residence, Residency
Room BP1301
Benton Park View
Newcastle-upon-Tyne NE98 1ZZ
Tel: 0845 915 4811

The dept. is actually the Dept. for Work & Pensions (DWP), although this is not reflected in the address. The contact details above are from the DWP website.

You're doing some great work there - thanks for sharing. This will become invaluable for many.

I appreciate your tenacity. Please keep us informed.

The worst of it is that most of the people who pick up phones or e-mail and are supposed to help you can't, and to get anywhere useful you have to reach the stage of knowing more than they do and cite chapter and verse so that they finally admit they aren't in the picture and pass you on to a "Technical Officer" or similar who actually knows anything apart from the minimum required to answer everyday questions.

It's taken weeks of doggedness to get this far - the words "terrier" and "bulldog" come to mind ;-)

My bank (ZKB) got back to me - well sort of. The lady I had spoken to on the phone sent me two little factsheets explaining all the stuff I already knew and had told her, and completely ignored my question about how they handle things when someone buys a home in the UK... sigh