Questions about pension

sjwprc · #1 11.06.2021, 10:11

Hi,

I have some questions about pension (2nd pillar).

1. My pension company tells me that the insured salary is less than gross salary, e.g., the yearly income is 100k chf, but the base number used for calculating 2nd pillar is only 80k chf, is that normal?

2. I ask them how to calculate the pension gap for voluntary purchase, the info from them are
A. the gap is calculated from age 25, is it correct, someone tells me should be 22?
B. the basic algorithm is use your current insured salary (assumed 80k chf), times the pension rate depending on the age
- 25 to 33, 11%
- 34 to 45, 15%
...
Example, one guy is 40 years old, the expected 2nd pillar would be: 80k*8*0.11 + 80k*7*0.15 = 154.4k chf (the interest is ignored here)

Is such calculation make sense, or if any critical info is missing?

Thanks a lot!

newtoswitz · #2 11.06.2021, 10:18

1. Yes, they subtract the amount you could get from pillar 1

2. Sounds about right, but in the end what they tell you is what matters.

More generally, think seriously about whether buying P2 is the best option vs self-investing. The tax benefits can be very quickly overtaken by the relatively poor performance of P2 investments; on the other hand, P2 does give more security particularly for dependents.

sjwprc · #3 11.06.2021, 10:31

Hi, thank for your quick reply.

I am just curious, I saw one example (my friend), who has gross salary ~ 130k chf (meaning insured salary would be ~ 110k), with similar age, but the expected pillar 2 is 400k, if gap is filled. How the difference is so big?

BR

fatmanfilms · #4 11.06.2021, 10:53

	Quote:	sjwprc
	Hi, thank for your quick reply. I am just curious, I saw one example (my friend), who has gross salary ~ 130k chf (meaning insured salary would be ~ 110k), with similar age, but the expected pillar 2 is 400k, if gap is filled. How the difference is so big? BR

Legally salary above approx 86k does not need to have pension contributions paid on, so your friend is getting more than the legal minimum.

Landers · #5 11.06.2021, 13:57

	Quote:	newtoswitz
	1. Yes, they subtract the amount you will get from pillar 1

They deduct the maximum amount you could get whether you will get it or not.

peaky · #6 11.06.2021, 14:19

I understand that the amount you can voluntarily pay depends on the pension scheme you are in. So your numbers and calculations are probably correct if its the legal minimum, which your company/scheme may pay.

But if for example your company/pension scheme paid 15% from 25 years old. Then its something like this

80k*15*0.15= 180k

So you would be able to pay more in compared to the guy on the company scheme paying the legal minimum