My company is proposing a new job in Switzerland, moving from a local UK contract to a local Swiss contract.
I am now trying to find out what is will mean to move my UK company pension into the Swiss company pension.
The information that I am getting so far is that firstly people are not sure if any transfer is possible and secondly if a transfer is possible the money being transfered might be taxed by the UK at 40%.
I am trying to transfer about 9-10 years of UK pension.
Does anybody have any experience with this matter and any good advice or contacts?
If money would be taxed, any examples of big or small companies would would compensate for this?

A former colleague of mine transferred his UK "Money Purchase" pot to the Swiss company pension scheme so there is no legal impediment. You may find resistance from the Swiss scheme rules and trustees though.He bought Swiss pension years and did not have a UK tax penalty as the money was transferred to an accredited scheme. He will work to retirement here something you may not do depending on age.
You should get expert advice,try Willian H Mercer in the UK - google it
cheers

Thanks for your feedback.
My employer has now advised me that my best option is to leave the pension in UK. However this does not address the gap that would occur.
We decided to address this by an adjustment of base salary.....
Still interested in any other view or solution on this matter where even big companies seem to struggle and government regulation is difficult.

Hi Just to say the movement of pension funds tax free to another countries scheme is covered under EU legislation to which Switzerland is a party. Your employer is possibly not giving you best advice. It really depends how old you are and how long you intend to stay in CH. If you are under 50 and intend to stay long term(over 5 years) the best advice is to move it...

Richard

I am curious as to your logic? I think we are all assuming it is a money purchase scheme and not final salary.. that being the case, if you intend to return to the UK eventually arent you better off avoiding the currency risk and getting an interest rate better liked to UK inflation by leaving it in the/an UK based scheme?

Daniel

Hi Daniel,

There are several things to consider here when making such a call.

1. Your age today and the intended age of retirement.
2. The level to which you have actually contributed in the UK.
3. The status of the pension scheme in the UK when you move to Switzerland
4. The type of scheme in the UK and potentially the underlying investments.
5. Currency risk.
6. Potential interest rate.

If you are still "young" the system in Switzerland is quite advantageous tax wise with respect to possibilities, but only if you declare your pension planning to be in Switzerland.

If you are on an international assignment it is entirely possible to devoid yourself of the Swiss system and carry on in the UK with a fully active pension planning. However, your contributions are limited to £3,600 per annum.

If you are on the short term (under 5 years) trip then it is probably better to continue contributing to the UK scheme and opting out of the Swiss system.

If you are on a longer term trip then I would have a careful think and not go for the easy option.
If you decide to defer your pension in the UK and start afresh in Switzerland then you will need to check on the UK pension schemes rules for deferral.
If on the other hand you transfer your pension scheme then you are deemed to have started at 25 and can buy additional cover tax free.

Your contributions here are very likely higher than the 15% maximum in the UK and if they are not then you can surely buy additional units.

No matter which scheme you choose in the UK there are legal restrictions placed on the level of payout it can provide. Here you have the availability of the full pot for payout if you so which.

Furthermore there is more flexibility as to when you can actually use your pension scheme and for what it can be used.

As far as currency risk is concerned this is dependent on where you believe the respective exchange rate will be in x years and where you finally intend to retire. You also have to take into account the rate of return on the investment which is not the same as a straight interest rate comparison.

And finally you need to consider your family if you have one. What are the benefit comparisons if you run under a bus? What does your wife/children get in this case. If you have a starting Swiss salary then it is very little. If you have contributed since you were 25 or for some years then it is not a trivial amount.

Without actually comparing side for side the two policies it is not possible to say which route you should take which was the sentiment of the first mail at least that was the way it was intended...

And finally UK Pension law has changed so much in the past few years that there is hardly anyone who actually can provide you with the best advice. Swiss pension laws have remained the same since the year dot...

That's a really great and comprehensive answer.

You are right about difficulty of finding good advice on international pensions issues. If we think tax is bad... pensions is worse. My father retired last year after a career fairly evenly spread between UK, Belgium, France, Switzerland, Germany and the USA, across 45 years. He has spent the first year of retirement trying to work out who should pay him what...

Your comment re transfering your UK pension to get the retrospective credit is based on the new rules right? I did a big top up last year but have never transferred any credit to CH.

My only frustration with the CH system is the difficulty of selecting your own investment vehicles for employee second pillar contributions, and the return on eg a Servisa fund is peanuts (ok so its guaranteed 2.5% tax free but still). Of course normally pension savings should be "safe as houses", but if you are in a position to take more risk due to other portfolio considerations, I would much rather take the risk and reward on the tax free side etc.

Daniel

I have been through this process...hmm or rather failed to get through it.

In order to transfer your pension the pension scheme you are transferring to has to be a QROPS (Qualified registered overseas pension scheme) or something like that.

My company pension is with BCV. Which unfortunatly are not a QROPS recognised scheme. If you look at the Customs and revenues page for the UK you can find out which ones are in Switzerland the list is not very big unfortunatly. My UK pension scheme said I wouldnt be taxed but it was never clear if this was compeltely true or not, however in my case the amount of money in the pension was only around the 10000 pound area.

Someone since has suggested to me that it maybe possile to open a pension scheme with a QROPS registered provider. Transfer the money into ti and then transfer it into my company one as apparently this is fairly easy to do when it is in the country.

Hi,
I've been through a similar situation, resident here but working across Europe. Providing that your UK pension is transferred to a scheme recognised by the UK authorities (HMRC) there is no tax charge unless you have funds or benefits that exceed the lifetime limits there.

Once you have achieved six years non-residency all UK rules fall away and you can use your funds or withdrawal them without UK taxes. I'm almost near my six years and my advisers were brilliant - hence this note - as you do not need to move this money to a Swiss arrangement or a new employer's one. I've got an approved fund in another country where I can access my UK funds (90% as cash) as soon as I reach full non-UK residency.

The company are [moderated, suspect advertising/spam] - but I probably shouldn't give their details away without asking. The key fact missed all the other advisers I spoke to, this that you can move UK funds anywhere in the world, its just a question of finding the right one to suit you.

Wow, didn't expect to be talking pensions on my first post, but I reckon the UK revenue will crack down on this.

Anyone, know where I can locate an expert on property in Bulgaria?

There you are quite right you get what you are given so to speak. There are though the advantages that you can use the money to purchase a house which has other benefits that are not available in the UK unless you are self employed. For the high risk stuff you use the 3rd pillar which does give you "exotic" options...

Thanks for all the feedback. A lot very interesting.

NB as I am in final salary scheme I hope for the company that they invest wisely and have good returns, but in theory it does not affect my payout.

We looked at this for my father , be aware you can only tranfer once and at the curent exchange rate , means your pension will be fixed from today , where as if you leave it in the uk it will vary with the index rate .. up or down.. we decided not to risk it..

I'm afraid I do not agree with all the advice you have been given. The law is perfectly clear on this subject. It is not possible to transfer accumulated pension from the UK into a Swiss pension (2nd piller) plan. The Swiss federal law on vested benefits only allows transfers of vested benefits from one Swiss institution to another.

but you are allowed to use the UK pension money to buy a gap in the Swiss pension plan (ie. from a Swiss legal/tax perspective it would be treated no different than making a payment in cash from your UK bank account to cover the gap). No?


and most mid career movers have a pretty significant gap in a Swiss pension plan-

May I disagree with the disagreement - this is covered under the implementation of the free movement agreement which has gone now into full force since the first of June. Or isn't it?

see my reply to Dakman...

Which is? Maybe I'm slow today... but since the law governs transfers from Swiss institutions to European institutions (and among European institutions as far as the European body of law is concerned) in case of moving, I fail to see why the reciprocal transfer would not be allowed.

There is no possibility under current law to transfer pension funds from Swiss funds outside of the "Swiss/Li economic area". The Swiss will need to amend their pension law later in 2008 perhaps 2009 when the effect of the ruling by the European Court of Justice, on the illegality of disallowing cross border transfers is made into an EU wide law as part of the free movement of people to which the Swiss are a signatory. Also to the best of my knowledge, there is nothing in the BVG or FZG which prohibits the payment of funds in from foreign funds.

That's the part I was commenting upon since Derek was mentioning that

I was just re-reading this thread and noticed this for the first time. I have spent 20 mins looking the HMRC site and not found any mention of that even in situations where it would be relevant. Anyone other than Astrudmunster aware of this?

Also anyone actually know of a QROPS approved freizugigkeitskonto that I can use as an intermediate step to move my UK pension to an non-QROPS CH pension?

Daniel