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Old 09.04.2020, 15:14
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Are Pillar 2 pensions inherited?

I was wondering what is the inheritance status of Pillar 2 assets. Can PII assets be inherited, e.g. when I pass, will my children have any stake in

( assets accumulated - assets spent as private pension payments )

also is there any differentiation between

a. someone who's only paid contributions and passed before pension age
b. someone who's paid contributions and is receiving pension/is at or above pension age.
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Old 09.04.2020, 15:19
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Re: Are Pillar 2 pensions inherited?

Children who are still being supported by the parent (whether the parent themself has already retired, nor not) will receive an orphan's pension when that parent dies. They do not, however, inherit the amassed pot of contributions to the pension plan. That's because becoming an orphan while needing support, like becoming disabled or reaching normal retirement age, is an insured event, i.e. once one of those happens, the beneficiaries become eligible to the pensions.
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Old 09.04.2020, 15:20
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Re: Are Pillar 2 pensions inherited?

If I pass when I'm 90 and children no longer supported, do they get anything ?
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Old 09.04.2020, 15:23
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Re: Are Pillar 2 pensions inherited?

No. From your reaching normal retirement age, up until your death, you will be drawing a pension, i.e. gaining the benefits from having lived into the insured event.
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Old 09.04.2020, 15:28
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Re: Are Pillar 2 pensions inherited?

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If I pass when I'm 90 and children no longer supported, do they get anything ?
I've just looked at the life expectancy table for males in Switzerland. Currently it is 84.25. This means that a 90 you will have had 5.75 years too much. Your estate may well be presented with a bill to cover the over payment.

Edit
Of course it is not true that you are penalized for having a few extra years, however if you want to leave money to your children, for example, then that is certainly a major consideration before making additional payments into the pension fund. There may be some things you can do to protect this, in the case of an early death. (German: ) https://www.vermoegenszentrum.ch/rat...todesfall.html
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Last edited by me.anon; 09.04.2020 at 15:45.
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Old 09.04.2020, 15:30
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Re: Are Pillar 2 pensions inherited?

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No. From your reaching normal retirement age, up until your death, you will be drawing a pension, i.e. gaining the benefits from having lived into the insured event.

To add to doropfiz's post, some pensions may have rights of survivorship. Some pensions can be paid out as capital at time of retirement.
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Old 09.04.2020, 17:32
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Re: Are Pillar 2 pensions inherited?

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To add to doropfiz's post, some pensions may have rights of survivorship. Some pensions can be paid out as capital at time of retirement.
Thanks everyone, this does make a case to get a capital payment out of the fund indeed.

Does the same apply to pillar 3? or pillar 3 assets are 100% inheritable regardless of whether I am in or before retirement age?
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Old 09.04.2020, 19:06
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Re: Are Pillar 2 pensions inherited?

There is, however, the scenario of your withdrawing your pension fund contributions as a capital payment, and then possible having to spend the entire pot before you die, such that your children will be left having to decide whether they can and want to support you. Not comfortable for them or you.

I've known of several cases where the capital evaporated long before life was over. I think it depends on how well you (and advisors around you) know what to do with it, how to invest it wisely, on your level of self-discipline, etc.

On the other hand, I knew someone who knew that he was terminally ill, and by withdrawing the capital before he reached old-age, he was able to leave a tidy sum to his adult children.
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Old 09.04.2020, 19:14
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Re: Are Pillar 2 pensions inherited?

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No. From your reaching normal retirement age, up until your death, you will be drawing a pension, i.e. gaining the benefits from having lived into the insured event.
Unless you take the pension as cash.
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Old 09.04.2020, 19:17
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Re: Are Pillar 2 pensions inherited?

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Unless you take the pension as cash.
Yes, in that case there is no pension, not for the old-aged person, nor for their children, nor for their widowed spouse.
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Old 09.04.2020, 20:03
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Re: Are Pillar 2 pensions inherited?

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To add to doropfiz's post, some pensions may have rights of survivorship. Some pensions can be paid out as capital at time of retirement.
Indeed.

But some with rights of survivorship limit the amount the heirs may inherit. In OH's plan, the heirs may only inherit a total of 42% of the pension (to be split among them). The 58% goes back to the company pension fund.

Which, when you think of it, makes a Swiss salary less attractive. Pension payments, both his contribution and the company's are part of OH's total comp. But because of the pension structure, in reality it could turn out that a not insignificant portion of OH's hard earned comp might not end up his.

Oh, and the gotcha for us: OH has already paid US tax on the pension, as it is not a qualified investment in IRS eyes. So were he to (doG forbid!), shuffle off this mortal coil before he gets his marching orders from the company, he will have paid a large amount in taxes on money he - or his estate - never sees. There is likely some kind of adjustment process, but the thought of weeding through that with the IRS makes me blanche.

Because of all these limitations OH will take the lump sum on retirement. Taking the money as a pension would be financially ludicrous in our situation; especially as given the poor returns at present he can certainly do better investing the money on his own.

YMMV.

Last edited by meloncollie; 10.04.2020 at 09:56. Reason: Correction
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Old 09.04.2020, 20:17
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Re: Are Pillar 2 pensions inherited?

Regarding P3, P3 is cash, so always inheritable.

And you can empty them once you hit 60 (59 for women).

Tom
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Old 09.04.2020, 21:02
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Re: Are Pillar 2 pensions inherited?

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Regarding P3, P3 is cash, so always inheritable.

And you can empty them once you hit 60 (59 for women).

Tom
I meant Pillar 3 funds ( not cash ), is a funds pillar3 account inheritable ?
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Old 09.04.2020, 21:11
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Re: Are Pillar 2 pensions inherited?

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I meant Pillar 3 funds ( not cash ), is a funds pillar3 account inheritable ?
Of course, who do you think owns the fund? If you have bought an annuity then it depends on the terms you agreed.
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Old 09.04.2020, 21:55
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Re: Are Pillar 2 pensions inherited?

3P funds count as cash.

Tom
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Old 10.04.2020, 01:35
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Re: Are Pillar 2 pensions inherited?

The amount youve accumulated in your 2nd pillar retirement savings is usually communicated to you by your employer once a year. Many pension schemes allow early retirement from age 58, otherwise the statutory retirement age of 64.

That means, that you have the choice to take out your retirement savings as a lump-sum, or to take monthly income from your savings from this age.

If you take it as a lump-sum, then its on your account, and you can do with it what you want (you will pay wealth tax on it - not a lot). If you die, then anything left is a part of your will to distribute. When its gone its gone.

If you opt for a pension, then your accrued pension assets will be paid out in a fixed monthly payment until you die. This income will also be taxable. And when you die, anything left in your pot will stay in the pension fund, and it wont be possible to distribute anything remaining to your loved ones.

At least thats my understanding
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Old 10.04.2020, 05:24
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Re: Are Pillar 2 pensions inherited?

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If you opt for a pension, then your accrued pension assets will be paid out in a fixed monthly payment until you die. This income will also be taxable. And when you die, anything left in your pot will stay in the pension fund, and it won‘t be possible to distribute anything remaining to your loved ones.
If, when you die, you have a spouse, they may well be entitled to a survivor's pension, until they die. The same is true for an orphan's pension for any children still needing support. These (like the main person's option of a pension) are insured benefits.

Taking the money out, cash, means that the employee's spouse and children can inherit whatever remains of the cash payout, i.e. what the employee did not spend between date of payout and date of death.

On the other hand, taking the cash payout cancels the insurance component.

This leaves not only the employee him/herself without an old-age pension (but with the freedom to invest/spend the capital as he/she sees fit), but it also leaves the widowed spouse without an old-age pension, which would have been received lifelong, and leaves the childen without an orphan's pension, which would have been received up till they have finished their first post-school qualification.

Last edited by doropfiz; 10.04.2020 at 11:28. Reason: grammar
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Old 10.04.2020, 07:45
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Re: Are Pillar 2 pensions inherited?

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This leaves not only the employee him/herself without an old-age pension (but with the freedom to invest/spend the capital as he/she sees fit), but it also leaves the widowed spouse without an old-age pension, which would have been received lifelong, and leaves the childen without an orphan's pension, which would have been received up till they have finished their first post-school qualification.
This is where one needs to do individual calculations.

In OH's plan, the survivor's pension is so tiny as to be laughable, even if it went on for decades, insignificant in comparison to what would be lost by leaving money in the fund. It would be financially foolish to take even the employee's pension as an annuity.

The OP should, as ZuriRollt says, get a copy of his annual statement, make sure he understands the projections.
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