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  #101  
Old 05.12.2008, 20:02
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Re: 3rd Pillar Pension Fund

Hi all

Hubby's just come home and said that he was chatting to someone at work about the 3rd Pillar (hubby has an appt next week to open one) and that Someone said that he'd heard the law was changing as regards withdrawing the money if you leave Switzerland.

Has anyone else heard of this? The Someone is French, so presumably hasn't made a mistake in translation, but on the other hand he's only around 30 so perhaps isn't fully clued up on pension provision rather than, say, fast motorbikes. Is he perhaps confusing it with not being able to withdraw your 2nd Pillar contributions if you move to an EU country?

Thanks for any light you can shine.

kodokan
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  #102  
Old 05.12.2008, 21:11
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Re: 3rd Pillar Pension Fund

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Hi all

Hubby's just come home and said that he was chatting to someone at work about the 3rd Pillar (hubby has an appt next week to open one) and that Someone said that he'd heard the law was changing as regards withdrawing the money if you leave Switzerland.

Has anyone else heard of this? The Someone is French, so presumably hasn't made a mistake in translation, but on the other hand he's only around 30 so perhaps isn't fully clued up on pension provision rather than, say, fast motorbikes. Is he perhaps confusing it with not being able to withdraw your 2nd Pillar contributions if you move to an EU country?

Thanks for any light you can shine.

kodokan
Not heard of such an impending impediment. Hubby should ask at the appointment. We are all curious.
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  #103  
Old 06.12.2008, 12:16
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Re: 3rd Pillar Pension Fund

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=The maximum tax-deductible contributions in 2008 are:=
  • CHF 6,365 for those who belong to a Pillar 2 occupational benefits plan
  • CHF 31,824 for gainfully employed persons who do not belong to a Pillar 2 plan (maximum of 20% of the net income from gainful employment)
just in case anyone was searching like me
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  1. Tax deduction on 3a contributions is only possible from income that was subject to AHV. If you paid no AHV, then no income deduction for 3a.
I am intrigued that you have income but escaped AHV!
1. Does anyone else, who is not part of pillar 2 based on the filed E101 form, have any experience of whether 3a contribution can be made or not and if so, what the maximum amount is?
2. What is the procedure for withdrawal after you leave Switzerland, i.e. how soon after can you access the money?
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  #104  
Old 09.12.2008, 00:04
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Re: 3rd Pillar Pension Fund

Anyone versed in the tax law as pertains to those of us blessed with the opportunity to pay homage (and hence taxes) the the gov of the US of A for all eternity? Particularly interested in saving on the 3rd pillar tax front here in CH only to find my lords and masters at the IRS choose to charge me tax anyway.
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  #105  
Old 11.12.2008, 01:33
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Re: 3rd Pillar Pension Fund

Well, no responses to my posting so I sought "professional" help. Please not that this posting is not meant in any way to advise anyone in their own situation, but is just a record of the advice given to me in my situation. Please seek your own "professional" advice should you need assistance in this area. (Disclaimer disclaimer disclaimer, etc.).

For me, contributing to the 3rd pillar isn't going to offer much benefit. The tax I save here in CH will only be charged to me in the US, therefore I receive no taxation benefit. For my own situation, the policies my company have taken with the pension are structured such that I receive no additional benefits with additional contributions, i.e. my disability and death benefits do not increase should my contributions to the fund increase. Therefore with no tax benefit, and no additional benefits, I chose not to invest in the 3rd pillar as any monies invested would not be available to me at will, but would be heavily restricted and thus given virtually no benefit, the cost of subjecting investments to regulatory restrictions is unjustifiable.

Although this is in no way intended to be advice to anyone, I hope someone finds it helpful.
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  #106  
Old 11.12.2008, 10:12
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Re: 3rd Pillar Pension Fund

Thanks for sharing this with us. Certainly other US expats are alerted to the pitfalls.

You refer to the 3rd pillar (voluntary) in the same context as the company pension plan (2nd pillar and mandatory). So, the message is that any voluntary payments may provide tax relief in CH but additional taxes in the US.

Would the US IRS view Swiss 3a contributions as equivalent to US 401k?
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  #107  
Old 23.12.2008, 15:06
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Re: 3rd Pillar Pension Fund

hello all, i am looking at moving from the UK and have a question regarding 3rd pillar pensions in switzerland - as far as i see maximum annual contributions are CHF 6k but i have a already quite large uk pension i would like to port to switzerland - have the following questions:

can i move my uk private pension over to switzerland and if so is it 3rd pillar equivalent?

if 3b is it subject to any tax in switzerland upon moving?

can it be used in the usual swiss pillar 3 way to buy primary residence property

is there a maximum size that can be transferred into a scheme? if so how much?

many thanks in advance for any help recieved on this as have been surfing for days and can find clarification.
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  #108  
Old 23.12.2008, 21:34
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Re: 3rd Pillar Pension Fund

Hello!

I moved to CH September 2007 and still have savings accounts etc. in the UK. I'm all ready (as is this week) to pay the maximum CHF 6,365 into a third pillar account because it's supposed to be such a great deal with the tax refund etc., but it seems to me that that money would earn more over the next couple of decades if I transferred it to a high-interest (say 5%?) savings account in the UK.

Am I missing something?

Would be grateful for any advice as I'm nervous about locking away over CHF 6,000 if the third pillar is not the best place for it.

Thanks in advance!
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  #109  
Old 23.12.2008, 22:09
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Re: 3rd Pillar Pension Fund

Question is...how much longer do you think you'll get 5% in the UK?

Guess it all depends on whether you think you might need the money or not. Or whether the money is now in Swiss Francs or GBP. It's a great time to be moving francs into pounds...but what happens if you need to change those pounds back into francs? You're at the mercy of FX rates.

In the end, it all depends on your own circumstances and only you can decide!

Hope this helps!
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  #110  
Old 23.12.2008, 23:02
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Re: 3rd Pillar Pension Fund

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Hello!

I moved to CH September 2007 and still have savings accounts etc. in the UK. I'm all ready (as is this week) to pay the maximum CHF 6,365 into a third pillar account because it's supposed to be such a great deal with the tax refund etc., but it seems to me that that money would earn more over the next couple of decades if I transferred it to a high-interest (say 5%?) savings account in the UK.

Am I missing something?

Would be grateful for any advice as I'm nervous about locking away over CHF 6,000 if the third pillar is not the best place for it.

Thanks in advance!
So Jens are you comparing like with like?
How does 6k that costs u 6k in the UK (as it's not tax-deductible) @ 5% increase faster than 6k that costs u circa 4k after deductions (best case, depends on your own circumstances) @ 2.75% with postfinance for example and no capital gains, not included for asset taxes and no 35% interest deduction but you remain liable for 18% in the UK @ current rates (unless in an ISA).

So do you want to earn more but give it to Gordy or earn a little less, it costs you less, and Gordy and Metzger get nout.
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  #111  
Old 23.12.2008, 23:04
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Re: 3rd Pillar Pension Fund

Quick question on moving one's pre-existing fund to another provider: even when I take one out for the amortisation of a mortgage, I don't need to have it necessarily with my mortgage provider right? (I just need to have it period).
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  #112  
Old 06.01.2009, 14:51
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Re: 3rd Pillar Pension Fund

As you might have seen from anoither post, we are thinking of purchasing a property within the next 2 years and we will probably be using our 2nd pillar for the downpayment. I've checked out our documentation and it seems we can pledge virtually all our 2nd pillar. However, this would leave us starting our pension from scratch again. I'm thinking it would be a wise investment to take out a 3rd pillar scheme to make up the shortfall? Is this what many people do anyway? We'll probably never leave CH (applications for Naturalisation are just getting underway).
Another question, how easy is it to transfer our UK pensions to CH (when the exchange rate improves, of course)? Would it automatically be added to our 2nd pillar? Or can we choose where it would go?
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  #113  
Old 04.02.2009, 21:59
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Re: 3rd Pillar Pension Fund

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As you might have seen from anoither post, we are thinking of purchasing a property within the next 2 years and we will probably be using our 2nd pillar for the downpayment. I've checked out our documentation and it seems we can pledge virtually all our 2nd pillar. However, this would leave us starting our pension from scratch again. I'm thinking it would be a wise investment to take out a 3rd pillar scheme to make up the shortfall? Is this what many people do anyway? We'll probably never leave CH (applications for Naturalisation are just getting underway).
Another question, how easy is it to transfer our UK pensions to CH (when the exchange rate improves, of course)? Would it automatically be added to our 2nd pillar? Or can we choose where it would go?
You cannot over-fund your pension-plan. So your pension-plan cannot accept transfer from the UK, unless you have a deficit. Withdrawals for house/flat purchase are not considered a deficit.
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  #114  
Old 04.02.2009, 22:02
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Re: 3rd Pillar Pension Fund

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Quick question on moving one's pre-existing fund to another provider: even when I take one out for the amortisation of a mortgage, I don't need to have it necessarily with my mortgage provider right? (I just need to have it period).
Legally, you can have your 3a at any recognized Swiss financial institution. Your mortgage provider might twist your arm, however!
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  #115  
Old 04.02.2009, 22:10
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Re: 3rd Pillar Pension Fund

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As you might have seen from anoither post, we are thinking of purchasing a property within the next 2 years and we will probably be using our 2nd pillar for the downpayment. I've checked out our documentation and it seems we can pledge virtually all our 2nd pillar. However, this would leave us starting our pension from scratch again. I'm thinking it would be a wise investment to take out a 3rd pillar scheme to make up the shortfall? Is this what many people do anyway? We'll probably never leave CH (applications for Naturalisation are just getting underway).
Another question, how easy is it to transfer our UK pensions to CH (when the exchange rate improves, of course)? Would it automatically be added to our 2nd pillar? Or can we choose where it would go?
Pledging doesn't diminish your pension or it's growth, so you wouldn't be starting from scratch. It's a risk issue where you take out life insurance on the pledged amount (as in a normal death there wouldn't be a payout for the financial institution).

You are right to start funding 3a fund as this can also be taken into account and pledged. Be aware that your mortgage provider might twist your arm for a payout but you lose too much growth, and you pay tax on the widhdrawal. The lien notary fees and life insurance premiums are cheaper.
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  #116  
Old 04.02.2009, 22:14
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Re: 3rd Pillar Pension Fund

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You cannot over-fund your pension-plan. So your pension-plan cannot accept transfer from the UK, unless you have a deficit. Withdrawals for house/flat purchase are not considered a deficit.
Indeed but you can transfer your UK pension fund into a free standing account pending retirement.

By Swiss standards if you came to CH after 25 then you have a Swiss gap that you can plug subject to limits (set by your local tax office).

Ask for pre-approval first. In addition some companies funds (like Swisscom's Complan) allow you to pay additional Additional Voluntary Contributions (AVCs), this can help to catch up/plug gaps.
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  #117  
Old 05.02.2009, 09:39
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Re: 3rd Pillar Pension Fund

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Indeed but you can transfer your UK pension fund into a free standing account pending retirement.

By Swiss standards if you came to CH after 25 then you have a Swiss gap that you can plug subject to limits (set by your local tax office).

Ask for pre-approval first. In addition some companies funds (like Swisscom's Complan) allow you to pay additional Additional Voluntary Contributions (AVCs), this can help to catch up/plug gaps.
I was 26 and my wife was 32 when we moved to Switzerland, so we should have some gap (esp my wife).
Is it possible to transfer it to a 3a account?
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  #118  
Old 06.02.2009, 20:13
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Re: 3rd Pillar Pension Fund

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I was 26 and my wife was 32 when we moved to Switzerland, so we should have some gap (esp my wife).
Is it possible to transfer it to a 3a account?
No cannot transfer into 3a.

You can fill a gap in your pension-plan (so-called Pillar 2). Ask your HR to calculate whether your pension plan is underfunded.
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  #119  
Old 17.02.2009, 12:08
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Re: 3rd Pillar Pension Fund

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I was 26 and my wife was 32 when we moved to Switzerland, so we should have some gap (esp my wife).
Is it possible to transfer it to a 3a account?
3a is just a very special savings account (~2.75 compound interest per year, cannot access the funds until you retire, leave CH or pledge it to a mortgage), and as I understand it you can but as much as you like in there. 6566 CHF (for 2009) is the maximum tax benefit you can obtain per year! There is nothing to stop you adding more to the account, you just dont get the tax break!

bill
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  #120  
Old 28.02.2009, 12:21
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Re: 3rd Pillar Pension Fund

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Legally, you can have your 3a at any recognized Swiss financial institution. Your mortgage provider might twist your arm, however!
Just opened a 3rd Pillar with Postfinance and filled in another form for my existing 3a to be transferred there. Made it clear the account was dedicated to the indirect amortization of a mortgage (PF rates now 2.75% vs. 2.25% with ZKB).

Just got a letter back from the Kantonalbank where I still have my mortgage and they say it has an "unmittelbar Verbindung" with my mortgage therefore they won't comply.

So my only option is to change mortgage providers? (Or send in the lawyer?).
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