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Old 25.02.2007, 16:04
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New Pension Movement laws (1-Jun-07)

Hi all,

I recently received a very clear open letter from my agent (I'm a contractor employed for a fixed term) concerning changes in Swiss law concerning pension funds. Since I often see questions here about this subject, I'm attaching it as a PDF file.

Please don't call the contacts at the bottom of the document as obviously they'll only want to assist their own employees!

RS
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File Type: pdf 0706 Changes in Swiss Pension Laws.pdf (742.1 KB, 808 views)
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Old 25.02.2007, 19:32
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

Quote:
Hi all,

I recently received a very clear open letter from my agent (I'm a contractor employed for a fixed term) concerning changes in Swiss law concerning pension funds. Since I often see questions here about this subject, I'm attaching it as a PDF file.

Please don't call the contacts at the bottom of the document as obviously they'll only want to assist their own employees!

RS
Yep - just for anyone who isn't clear, if you're a citizen of an EU country then after the first of June this year you won't be able to take your pension out as a cash payment when you leave Switzerland to return to an EU country.

At the mement, you can request that you get back all pension payments. You can then put this into another fund of your choice, investments, any property you like, a month in Vegas ... A lot of ex-pat people have used their pensions to act as tax-efficient havens for their earnings so it could affect them adversely, possibly prompting a bit of an ex-pat exodus.
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Old 25.02.2007, 20:14
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

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... possibly prompting a bit of an ex-pat exodus.
I'm praying for it.
Rates will go up...
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Old 08.03.2007, 13:08
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

I am trying to research the changes to the pension laws in Switzerland and have come accross this site. There appears to be a lot of hearsay and conflicting information out there so was thus wondering if anyone could help clarify my situation.

I have been in Switzerland for over five years now so have accumulated reasonably significant AHV and personal pension fund balances.

I am an Australian citizen (sole passport) and am planning to move to an EU country (Britain) in July this year on a UK Ancestory visa. Will the fact that I am moving to an EU country after 1 June 07 mean that I cannot claim the refund of the AHV or my personal pension cotributions even though I am not an EU citizen (or citizen of another country with a social agreement)? The PDF file in the above link appeared to indicate this.

I guess I could leave Switzerland at the end of May and even go to Australia for a little while if it was financially benficial to do this - I am many years off 65!

I would appreciate if anyone could or point me in the direction of a professional advisor in Zurich.
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Old 08.03.2007, 13:16
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

I read it like you would have to accept the transfer to pension fund within the EU.

I would move to Oz, even just for two months if you have to. But check, because I think Australia is negotiating the same thing, or has done already...(an agreement precluding you from taking out the cash).

Last edited by muze7; 18.08.2007 at 01:42.
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Old 29.03.2007, 00:33
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

Does someone know what happens in the reverse, when you are moving from the EU to CH. Have you taken your EU pensions with you?
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Old 29.03.2007, 10:59
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

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Does someone know what happens in the reverse, when you are moving from the EU to CH. Have you taken your EU pensions with you?
Ah Shit I suppose I should clear up a few myths here...

Firstly, it is a change in the law in Switzerland to bring them in line with EU regulation. To understand how this affects you, you need to understand the Swiss pension set up.

In Switzerland you have 2 and 2 halves pension funds

AHV which is the state pension
BVG O which is the standard company pension for the first 106K per year
BVG üO which is the company pension for income above 106K per year
3rd Pillar which is your private tax beneficial saving scheme.

AHV rules do not change - you can carry on paying in Switzerland or you can transfer it to your state pension scheme.
BVG O can be frozen for a period of 5 years or can be transferred into an equivalent scheme in the EU country you move to.
BVG üO is not covered in the legislation
3rd pillar is not covered in the legislation

So the relevant part is the BVG Obligatorisch and this is now covered under the general rules of pension transfers within the EU for EU citizens. So if you are from Oz you are not covered. Similarly if you are coming from an EU country you can transfer the money from your current policy into a receiving policy within Switzerland. Note here that if you are moving from a country such as Germany, France... where there is a large bankrupt state scheme and ask them to move your contributions they will laugh at you...

Questions?
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Old 29.03.2007, 19:56
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

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Ah Shit I suppose I should clear up a few myths here...

Firstly, it is a change in the law in Switzerland to bring them in line with EU regulation. To understand how this affects you, you need to understand the Swiss pension set up.

In Switzerland you have 2 and 2 halves pension funds

AHV which is the state pension
BVG O which is the standard company pension for the first 106K per year
BVG üO which is the company pension for income above 106K per year
3rd Pillar which is your private tax beneficial saving scheme.

AHV rules do not change - you can carry on paying in Switzerland or you can transfer it to your state pension scheme.
BVG O can be frozen for a period of 5 years or can be transferred into an equivalent scheme in the EU country you move to.
BVG üO is not covered in the legislation
3rd pillar is not covered in the legislation

So the relevant part is the BVG Obligatorisch and this is now covered under the general rules of pension transfers within the EU for EU citizens. So if you are from Oz you are not covered. Similarly if you are coming from an EU country you can transfer the money from your current policy into a receiving policy within Switzerland. Note here that if you are moving from a country such as Germany, France... where there is a large bankrupt state scheme and ask them to move your contributions they will laugh at you...

Questions?

Thanks Richard - have been very bad really and am very badly informed on pensions and the whereabouts of my money...one of these days I will have to grow up and start learning a bit more about it. Do I gather that the Germans will be wanting to hang on to my pension contributions (and likely give me a no pay out in my old age because their system has crashed)? Even though I´m not German can they force me to keep my pension there? As the Swiss system seems better do you think it would be better to attempt moving my pension into the Swiss system? I don´t know how long I´ll be in CH (will see how it goes) and may end up back in another EU state (but not Germany). As a separate but related question I read on some site some time back that it was worth to work in an EU country for 5 years because then this country would have to pay out once you reach retirement, and what I gathered was that if you were working 5 years in different EU states then you could end up getting payments from each of them but I don´t know whether this is specific to non-EU people. I will miss my 5 years in Germany by a few weeks...
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Old 29.03.2007, 20:02
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

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Ah Shit I suppose I should clear up a few myths here...

Similarly if you are coming from an EU country you can transfer the money from your current policy into a receiving policy within Switzerland.
Questions?
Richard, I posted on this the other day & didn't really get any feedback. If I am looking to move a pension from UK to Switzerland, is it obligatory for me to put this into another pension fund (AHV, 3 Pillar) or can I realise the cash for other things ? ... She Who Must be Obeyed has her eye on an SUV ....

Thanks P
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Old 29.03.2007, 23:53
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

There's no doubt, for expats, proper pensions management is even more of a nightmare than taxation.

I do think that within the EU, contributions to the national state pension schemes should be treated as if you were paying into the UK system, and this is also starting with the new Swiss rules.

Most savings based pension schemes will go into deferred mode. IE your savings to date will continue to accumulate even if you save no more and you will be able to claim pension in due course. Albeit, probably not enough to retire on..

However, these are generalisations...

Daniel
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Old 30.03.2007, 10:33
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

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... If I am looking to move a pension from UK to Switzerland, is it obligatory for me to put this into another pension fund (AHV, 3 Pillar) or can I realise the cash for other things ? ... She Who Must be Obeyed has her eye on an SUV ....

Thanks P
Personally, if there was any chance of my removing funds from any country's state pension scheme and investing it elsewhere in a completely private fund, I'd do so. Like many other Brits, I had a modest pension fund, which was then pillaged by Brown with his special taxes in pension companies. I'm just thankful I still own a house in England that is steadily increasing in value while a succession of tenants pay my mortgage! But I wait for the day Brown or his successor figures out a way of taking the profits that from me too.

Pretty well all state pension schemes, Swiss included, have been heavily borrowed against by the state concerned and use your current contributions to pay today's pensioners. Lord knows who will pay our pensions when we get to that age. As far as I can see the Swiss are not as bad as most other countries in that respect.

An SUV? - Daft - sorry! You'll regret that when you hit 65 and look at your tiny pension. Buy a house, some bonds, a private pension, anything other than an environmentally unfriendly toy.

Incidentally, I'd never voluntarily add to any Swiss pensuion scheme, state or otherwise - the returns are just too low. Every year I'm informed that since I arrived in Switzerland only a few years ago I'm behind on my Swiss state pension and I am offered the chance to "catch up" by paying in up to SFr 80'000 tax free. No thanks! If I did have 80K free, I'd buy another property in the UK.

Richard S
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Old 30.03.2007, 11:38
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

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Incidentally, I'd never voluntarily add to any Swiss pensuion scheme, state or otherwise - the returns are just too low. Every year I'm informed that since I arrived in Switzerland only a few years ago I'm behind on my Swiss state pension and I am offered the chance to "catch up" by paying in up to SFr 80'000 tax free. No thanks! If I did have 80K free, I'd buy another property in the UK.
Im not sure I agree with the logic here. Even under the new rules, your additional saving is tax deductible, and when you leave you can transfer the funds into a higher yielding UK fund. So lets say you are here for 5 years and your 2.saule pension pays the statutory 2.5%.

Pay-in 100kchf, invest over 5 years at 2.5% thats 13kchf return
Save 25kchf of taxes (depending on where you live), turn into GBP and save at 4.5% thats 31kchf better off.

So in 5 years you will have transformed 100kchf into 144kchf assets you can transfer(113)/pay(31k) into a UK fund... thats about 7.6% effective return.

Daniel

Last edited by dannyt986; 30.03.2007 at 12:11. Reason: Additional precision.
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Old 30.03.2007, 11:53
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

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I read on some site some time back that it was worth to work in an EU country for 5 years because then this country would have to pay out once you reach retirement, and what I gathered was that if you were working 5 years in different EU states then you could end up getting payments from each of them but I don´t know whether this is specific to non-EU people. I will miss my 5 years in Germany by a few weeks...
When I left Germany three years ago, I was not able to transfer my state pension across into the Swiss system because I had worked in Germany for (just!) over five years. I was told then that five years is the cut-off point - if you've worked there for less than five years, you should be allowed to transfer the pension wherever you're going when you move, but check it out with the state authorities. I am an EU citizen and worked as a state civil servant, but I don't think that should make a difference.

I now have three different pensions in three different countries with three different currencies - and still 35 years to go before retirement. . . Madness.
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Old 30.03.2007, 12:29
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Re: New Pension Movement laws (1-Jun-07)

The original post to this message stated in the PDF that you were leaving the country you could use your fund to purchase a property if the property was to be your main residence. Does anyone know if this is actually correct?
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Old 30.03.2007, 12:48
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

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Ah Shit I suppose I should clear up a few myths here...</snip>

Questions?
Thanks once again Richard. I was awaiting your contribution to this topic.
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Old 30.03.2007, 12:50
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Re: New Pension Movement laws (1-Jun-07)

... and happy birthday too!!
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Old 31.03.2007, 10:17
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Re: New Pension Movement laws (1-Jun-07)

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The original post to this message stated in the PDF that you were leaving the country you could use your fund to purchase a property if the property was to be your main residence. Does anyone know if this is actually correct?
I think is almost certainly true because it is also a permitted reason to withdraw cash if you are still in Switzerland.

Actually if you read the note, there are quite a lot of ways in which you still can withdraw the cash, particularly if you are a contractor and continue to be so when you leave. You on earth are they really going to control some of these conditions are met?

I will see if I can find the advice received from our fund, Servisa, and see if its consistent with the SwissLife advice of RSargeant.

Daniel
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Old 31.03.2007, 13:49
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

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When I left Germany three years ago, I was not able to transfer my state pension across into the Swiss system because I had worked in Germany for (just!) over five years. I was told then that five years is the cut-off point - if you've worked there for less than five years, you should be allowed to transfer the pension wherever you're going when you move, but check it out with the state authorities. I am an EU citizen and worked as a state civil servant, but I don't think that should make a difference.

I now have three different pensions in three different countries with three different currencies - and still 35 years to go before retirement. . . Madness.
Hi Kat,

Thanks for the info - silly question but where did you go to find out the information regarding moving your pension from Germany- Finanzamt? It is all a bit of a nightmare when you spend time moving about, isn´t it. I´m looking forward to being back in a country where I at least have some knowledge of the language and so I will be able to at least read (if not understand ) documents relating to such financial stuff - this is one of the major drawbacks of not being fluent in the language of the country you´re living in!
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Old 14.04.2007, 00:53
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Re: New Pension Movement laws (1-Jun-07)

I will continue living in Switzerland and will remain registered after the 1 June 07 although I am not currently employed. If I de-register in 08 (or after June 07) and start working under ‘self employed’ status in the UK (as per point 1 one of the letter) and then re-register or marry my Swiss partner for example to come back would this be a way to get the pension money in cash to invest in my new business? Or because the date has gone does it get locked here until I’m grey?

If this is a possibility then is it advisable to get it paid out into a second pillar account in the bank? (rather than leave it with the pension company)

I was of the understanding from various meetings with Swiss officials and my pension fund company that if I had it paid into a second pillar bank account before 1 June 07 then I would be able to access the cash even if I stayed on in Switzerland (for a while longer before de-registering). Until today that was! I could do with this money to assist my new business venture in its infancy..

Please help if you can.. eeek! ANYONE?!
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Old 14.04.2007, 02:10
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Re: Information about changes in Swiss law concerning Pension funds, as of June 1, 20

For some reason, when it comes to dealing with financial stuff, my brain refuses to make sense of the information presented to it.

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In Switzerland you have 2 and 2 halves pension funds
Huh? 2 + .5 + .5 = 3 So?

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AHV which is the state pension
BVG O which is the standard company pension for the first 106K per year
BVG üO which is the company pension for income above 106K per year
3rd Pillar which is your private tax beneficial saving scheme.
Uh huh. So does AHV = pillar 1, BVG O and BVG üO = pillar 2?

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AHV rules do not change - you can carry on paying in Switzerland or you can transfer it to your state pension scheme.
But you just said that AHV is the state pension. So the sentence above reads (to me) like "you can transfer the state penion to the state pension". Do you mean "you can transfer Swiss state pension to the state pension of the country you leave Switzerland to go to"?

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BVG O can be frozen for a period of 5 years or can be transferred into an equivalent scheme in the EU country you move to.
BVG üO is not covered in the legislation
3rd pillar is not covered in the legislation

So the relevant part is the BVG Obligatorisch and this is now covered under the general rules of pension transfers within the EU for EU citizens. So if you are from Oz you are not covered. Similarly if you are coming from an EU country you can transfer the money from your current policy into a receiving policy within Switzerland.
Uh huh.

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Note here that if you are moving from a country such as Germany, France... where there is a large bankrupt state scheme and ask them to move your contributions they will laugh at you...
Who will laugh at whom? And why?

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Questions?
See above .
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