Hi All. I read somewhere that if you start working late in Switzerland (I at 35), one could pay money into the pension fund for the lost years which could then be used to reduce tax. I live in Basel and would appreciate if anyone could help me with information on this subject. Thanks in advance. Ashish.

Yes indeed. You must do this before the end of november. All you need to do is decide how must you want to and can afford to pay in and off you go. There is limit which you will see on your Pension statement. You can pay in any amount up to this but will have some difficulties if the figure seriously distorts your tax liabilities. ie you end up not paying anything...

Thanks Richard and just one more question. To organise this payment, is there any papers to be filled and approval of any organisation need to be obtained before the money is paid into the account. Ashish.

Hi Ashish,
firstly, as a newbie you might not know the following: although it does not bother me instead of thanking in the post thank through the thanks button and or the reputation button. Some people might get a kick out of seeing lots of thanks against their name or a high reputation

I am assuming you are employed and not self employed. In that case you will receive every year, usually in June/July a statement from your pension fund showing your contributions and how much capital is available if you die, how much pension your decendents will receive, how much is available to buy a house and how much you can pay in. The last point is usually at the bottom. As a late starter it is calculated by assuming you have paid fully in at your current salary from the age of 25. Until 25 Risk (ie life assurance) is your only contribution (exceptions are possible but not the norm). This figure is usually noted as something like " BVG Einkaufssumme".

There are certain points you need to be aware of!
1. If you are intending to retire in the next 5 years AND take the sum from the pension fund as a capital payment then you need to be aware that this will be partially taxed - under these conditions it is viewed as a method to avoid paying tax.
2. If you have come from abroad and are starting a pension fund then you are restricted in the first 5 years to paying a maximum of 20% of your income.
3. If you leave the country within 3 years of making an additional payment then this money cannot be taken immediately but is held in a frozen account.

How do you do it. When you have a possibility to pay additional contributions you contact the fund and ask them for a payment slip to do this. Dependent on your situation this might be directly to the fund or through HR. You need to make the contributions before December of the year in order that they are registered as paid in that calendar year. Here proof of payment is not proof of receipt!

If on the other hand you are self employed then the world is completly different...

Hi Richard,

I still don’t know where to find the thanks button … even still thanks again and I would continue looking for the thanks button … I have another question, for which I seek again Ur help.

Before I started working in Switzerland a year ago, I was working in France for several years and was making regular contributions to the French pension fund. I am a non-EU and due to my long stay in France, I hold a 10 year French residency card. For my situation, does this 20% restriction applies (“If you have come from abroad and are starting a pension fund then you are restricted in the first 5 years to paying a maximum of 20% of your income”). Is it possible for my situation to include the period that I worked in France to get out of this first 5 years limitation clause?

The insurance certificate that I got in Feb from Helvetica reads in English (last point) under a heading titled “Additional benefit plan information” – Maximum purchase amount under the regulations = X amount.

Ashish

it looks somewhat like this:

You're on your own now.....

Hi. I'm logged-in now and unfortunately, I don't see the icon. At the botton of the display window (right side) I see 4 icons - Edit, Quote, mult-quote this message, quick reply to this message and top of the display window (right side) - three other icons unrelated to thanks button.

Sorry I'm bit lost on this. Evenstill, thanks to all who help me with replies. Asish

Hi, Well to the best of my knowledge France is abroad so the answer will be a big yes and to your second question no.

However, what would be worth knowing is what you actually paid into in France. If that was the state scheme only then you can kiss goodbye to the money. If it was a company scheme you can check with the French scheme if they allow international transfers. In that was you can avoid the 20% limit. The state schemes almost without exception do not transfer which makes life might difficult ie you have worked in 6 countries and made pension contributions. Assuming the state schemes have money in the pot you can then collect from 6 countries 10 beer tokens per week - simpler would be simply to transfer into one pot...

ah, maybe now when you have 10 posts a process will run on the server and they will magically appear

Thanks Lob that does explain a lot I see em and others don't. that said where the hell are they again, which button was it, I can see groan does that mean thanks. Na best leave it I'm out of 'ere
Well thats a B me own posts I can't thank...

Hi. I started seeing the Thanks button today and I don't know why it wasn't before, although I logged-in. Anyway, thanks to all who helped me with replies. Ashish.

Hi

Would you help me answer clarify this doubt I have in my mind – does the money paid into to the pension fund (including the additional pay-in’s to reduce tax) is lost (or nor refunded) if one leaves Switzerland and work in another EU country.
Thanks & kind regards
Ashish

I do not believe that the money is lost, you would get the option to get the money back out of the plan, however the taxation at that point could mean that you lose a lot of the value, eg if you move to a country with higher marginal tax rates. It may also be in the pension plan rules that you may lose some of the interest credits, however I don't think that would usually be the case, so if there is any contact information on your pension statement and you can ask them.

There are three sections to the company pension fund contributions. These are:
Risk
Obligatory part
non-obligatory part.
The risk is there to cover the eventuality that you die and they need to pay out the death insurance part and potentially to cover permanent disability meaning early pension.
The obligatory part covers the pension contribuions made on the first 79560 of your salary.
The over obligatory part is that made on everything over the 79560 limit.

When you make your voluntary contributions this will be first used to fill holes in your obligatory pension contributions. Once this is complete it will carry over to the parts of the salary over the limit, if any.

When you leave Switzerland and move to another country within the EU, your obligatory contributions are then frozen but can be transferred to a similar fund in an EU state free of tax. Depending on the country in question you may or may not want to do this. The risk part is not paid on voluntary contributions anyway so does not apply. The over obligatory part can be paid out cash as prior to the change in law.

If you choose to freeze your fund then it is frozen until you reach 65 or whatever the official retirement age is when you get there.

Any questions?

Hi Richard,

I would need a clarification on this phrase « When you make your voluntary contributions this will be first used to fill holes in your obligatory pension contributions. Once this is complete it will carry over to the parts of the salary over the limit, if any”

Since, I started to work late in Switzerland, will the additional voluntary contributions would be first used to fill the back years (like if I would have started working since I was 25 years old; now I’m 36), in which case I stand to loose … Furthermore, every month from my salary a fixed amount is taken automatically and transferred to this pension fund, which I guess is the obligatory part …. So there shouldn’t be any need for filling-in the holes in the obligatory part if the calculations don’t apply to back-years. Am I right?

From the second part of your response, I infer that if one leaves Switzerland and starts working in another EU country then I could choose whether to transfer my Swiss pension fund into that EU country or not. So this means, I am given a choice to have my money frozen in Switzerland and not automatically transferred to the EU country of residence.

I very much appreciate your responses and thanks in advance

Ashish

Hi Richard,

Would appreciate your response, please.

Thanks in advance and kind regards, Ashish

Hello Richard,
You mentioned that if you leave the country within 3 years, of additional payment then the account is frozen. Is this rule only for the EU nationals or all countries. I am an Indian, on L permit in Zurich, who started working here 3 months back and planning to invest additionally in pillar 2 but also know that I might go back to India as soon as next year. Would my account be frozen or I can withdraw the money immediately whn I leave Swiss. The customer service guy from Swisslife said I will get it back within one week of filing a form. But then I have only as much trust on the customer service. Thanks in advance.

Not sure whether you still in CH or even come to this forum...if you do, I am curious whether you did the additional contributions anyway before you went back India? Do you think it is a good thing to do?