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Old 22.11.2017, 16:13
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Second Pillar Inheritance?

In the event of a person dying before they reach pension age, what happens with their second pillar pension contributions? Can the second pillar be inherited by the beneficiary of the deceased person's will?
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Old 22.11.2017, 16:16
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Re: Second Pillar Inheritance?

Mine says there is a "Ehegattenrente", pension for husband/wife/partner and for children. In addition to that a "Todesfallsumme" (sum to be paid out when the beneficiary dies)
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Old 22.11.2017, 16:27
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Re: Second Pillar Inheritance?

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In the event of a person dying before they reach pension age, what happens with their second pillar pension contributions? Can the second pillar be inherited by the beneficiary of the deceased person's will?
The second pillar is an insurance.

Like other insurances, the amounts paid into the scheme are not there, waiting, as a lump sum, to be passed on to heirs in general. Those who never need to claim anything against the scheme, or claim only some, are providing the network of security for those who do.

The contributions go towards covering
  • a disability pensions for the insured person if he/she becomes too ill to earn his/her own living (and in that case also children's pensions),
  • an old-age pension if the insured person reaches old age up until his/her death
  • in the event of death of the insured person, a pension for the deceased's minor children (or those still in schooling) and,
  • with some restrictions, a pension for the deceased's spouse
  • in some cases, lump sums upon one of these events.

The amounts for these pensions are based on actuarial calculations with the assumption that not all the insured persons will end up having to draw all the possible types of pensions. The scheme would crumble if each person could freely bequeath his/her amassed contributions.

Last edited by doropfiz; 22.11.2017 at 16:29. Reason: adding info
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Old 22.11.2017, 16:51
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Re: Second Pillar Inheritance?

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Can the second pillar be inherited by the beneficiary of the deceased person's will?
Yes.

BTDT.

Tom
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Old 22.11.2017, 16:52
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Re: Second Pillar Inheritance?

Thanks for your detailed answer, doropfiz. However the second pillar contributions can be withdrawn to purchase property which in the case of death can be inherited. Is that not a contradiction?
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Old 22.11.2017, 16:53
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Re: Second Pillar Inheritance?

Could you please explain, Tom? Do you mean that the capital sum was passed on on the will? Not "just" a pension, or a defined lump sum?
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Old 22.11.2017, 16:56
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Re: Second Pillar Inheritance?

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Thanks for your detailed answer, doropfiz. However the second pillar contributions can be withdrawn to purchase property which in the case of death can be inherited. Is that not a contradiction?
Partly, one could see it that way. However, one can't withdraw the contributions to purchase property, just like that, for free. No, in doing so one also agrees to lower potential benefits (pensions and lump sums).

The collective is kept safe, in the same sort of actuarial balance, because the insured sum(s) are reduced.
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Old 22.11.2017, 16:58
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Re: Second Pillar Inheritance?

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Do you mean that the capital sum was passed on on the will?
Yes.

Tom
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Old 22.11.2017, 16:59
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Re: Second Pillar Inheritance?

Tom, how did that work?
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Old 22.11.2017, 17:30
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Re: Second Pillar Inheritance?

In my employer's plan, the surviving spouse can claim a lump-sum instead of a spouse’s pension. They will receive no less than the value of the person’s savings account.

Our scheme is not a collective, insured arrangement.

The rules are different if they were unmarried.
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Old 22.11.2017, 17:35
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Re: Second Pillar Inheritance?

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Thanks for your detailed answer, doropfiz. However the second pillar contributions can be withdrawn to purchase property which in the case of death can be inherited. Is that not a contradiction?
Thats an interesting question, especially if death happens before retirement, if the property is sold before retirement the money needs to go back to the pension scheme.
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Old 22.11.2017, 17:35
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Re: Second Pillar Inheritance?

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In my employer's plan, the surviving spouse can claim a lump-sum instead of a spouse’s pension. They will receive no less than the value of the person’s savings account.

Our scheme is not a collective, insured arrangement.

The rules are different if they were unmarried.
Thanks, HIAO. This is very interesting.

That "instead of" is another way in which a surviving spouse is thereafter out of the scheme, i.e. that makes the risks somewhat more quantifiable.

If your pension plan runs under the BVG (the law governing the second pillar), then how is it not a "collective, insured arrangement"? Or do you perhaps work for a foreign company which has a pension scheme exempt from the BVG law?

What are the rules for an unmarried person?
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Old 22.11.2017, 17:37
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Re: Second Pillar Inheritance?

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What are the rules for an unmarried person?
No rules & zero entitlement, children would get a pension.
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Old 22.11.2017, 17:44
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Re: Second Pillar Inheritance?

Yes, fatmanfilms, that's what I thought, under the BVG.
For a single, childless person, the contributions made are either lost entirely upon death(just as any other insurance premium would be). This is because the risks that insured person poses, to the scheme, are over when he/she dies. The contributions were paid to cover a risk. When the duration for which they were paid is over, without any risk event occuring, that's that. Alternatively, there may a be a single lump-sum payment (Todesfallsumme) as Roegner mentioned.

HIAO's scheme seems to be different from what I understand the BVG to prescribe. That's why I'd be interested in knowing that scheme's rules.
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Old 22.11.2017, 18:00
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Re: Second Pillar Inheritance?

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Could you please explain, Tom? Do you mean that the capital sum was passed on on the will? Not "just" a pension, or a defined lump sum?
It is up to the pension provider to specify what can happen with money in case the pension holder passes away and there are now beneficiaries according the law.

Anything, from freely attributable to anyone (but not the community) down-to all falls back to insurance provider is possible.
Art. 20a BVG https://www.admin.ch/opc/de/classifi...ndex.html#a20a

In some scheme you must explicitly specify and name such a beneficiary with the insurance provider. Just mentioning them in the will might not be enough.
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Old 22.11.2017, 18:04
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Re: Second Pillar Inheritance?

In OH's plan, the heirs can collectively only inherit 42% of the account, making the retirement plan even more of a boondoggle than it already is. So rather than taking care of your own family in the event of your early death, the money you scrimped and saved for goes back to the company.

The inheritable portion is quite a bit less than what OH has paid in, by the way.

Several of my widowed friends didn't know this restriction, and now rather than the comfortable Lebensabend their husbands thought they had provided for them they were surprised to inherit less than a quarter of the account. (Half of the inheritable half is theirs, the rest going to the children.) My friends are now struggling to make ends meet.

---

Best thing one can do is to cash out the whole pension upon retiring, get it under your own control. Even if that means a slightly smaller lump sum you, or your family, will be far better off than losing 58%. You can certainly do better in the markets yourself than the abysmal investment returns anyway.

Yet another example of why Switzerland is not the financial paradise many think it is.


And Americans, it only gets worse. You will have paid US tax in the full amount, including the 58% you may never see. Good luck sorting that out.
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Old 22.11.2017, 18:04
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Re: Second Pillar Inheritance?

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if the property is sold before retirement the money needs to go back to the pension scheme.
If the property were sold by someone who had inherited it, how would the pension scheme ever find out?
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Old 22.11.2017, 18:09
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Re: Second Pillar Inheritance?

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It is up to the pension provider to specify what can happen with money in case the pension holder passes away and there are now beneficiaries according the law.

From freely attributable to anyone (but not the community) down-to all falls back to insurance provider is possible.
Art. 20a BVG https://www.admin.ch/opc/de/classifi...ndex.html#a20a
Thanks, aSwissInTheUs, for this.
Die Vorsorgeeinrichtung kann in ihrem Reglement neben den Anspruchsberechtigten nach den Artikeln 19 und 202 folgende begünstigte Personen für die Hinterlassenenleistungen vorsehen:

I did not realise that a pension plan has all these options.
Those possibilities (my italics) are a part of the puzzle that I was missing. I'd be interested to know whether it is common practice, in the current rules of second pillar plans, to make use of the possibilities prescribed in this article of the law.
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Old 22.11.2017, 18:11
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Re: Second Pillar Inheritance?

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If the property were sold by someone who had inherited it, how would the pension scheme ever find out?
It is noted in the land and building registry (Grundbuch).
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Old 22.11.2017, 18:15
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Re: Second Pillar Inheritance?

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In OH's plan, the heirs can collectively only inherit 42% of the account...
@Meloncollie, is this inheritable portion, like in HIAO's scheme, an option that the surviving spouse can elect instead of a life-long spouse's pension?

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In my employer's plan, the surviving spouse can claim a lump-sum instead of a spouse’s pension.
Her scheme seems to be more favourable than your OH's, though, since
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They will receive no less than the value of the person’s savings account.
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