YOUR PENSION FUND AND RETIREMENT WITH m3

 

The Swiss retirement scheme is based on the three pillar principle. Pillar 1 consists of Old age and Survivors’ Insurance (AHV), Invalidity Insurance (IV), as well as supplementary benefits (for situations where pensions and income do not cover the basic cost of living). The 1st pillar is compulsory and should cover basic living expenses. Pillar 2 consists of an occupational pension (pension fund), which is also compulsory. The 3rd pillar is a voluntary private pension 

 

1st pillar : state pension  

 

The 1st pillar is funded through Old Age and Survivors’ Insurance (AHV). It also includes Invalidity Insurance (IV), insurance for loss of earnings during military service and maternity (EO) and unemployment insurance (ALV). Contributions for the first pillar are compulsory and deducted from your salary slip. Employer and employee for both part (5.125% employer and 5.125% employee).

 

 

Second pillar : occupational pension

 

The second pillar is the pension fund, occupational old-age, survivors' and invalidity insurance (LPP) and the Accident Insurance Act (LAA). Contributions for the second pillar are compulsory for all employee and contributions are shared between the employer and the employee. Each person who has contributed can receive the savings on a monthly pension or with a lump sum one shot. The objective of the first and second pillar is to jointly cover at least 60 per cent of the salary last withdrawn and to ensure the customary standard of living from the time of retirement.

 

In line with Swiss regulation requirements, the pension plan protects Employees and their dependents from the financial consequences of loss of income in case of retirement, disability or death. Once a year, Employees receive a pension fund statement of the contribution made and of other amounts calculated on the basis of personal data. Incyte provides greater pension fund benefits than the one required by law.

 

To know our great retirement benefits and how to read your pension fund certificate please click here

Third pillar: private pension

 

Anyone earning an income can pay a set amount into the 3a pillar pension plan with their bank or insurance company. This amount can be deducted from your taxable income in your tax return. A distinction is made between:

  • people without an occupational pension plan (generally self-employed), who can pay in a higher amount or

  • people already paying into an occupational pension plan (generally employed).

 

The maximum amount that can be paid in is set each year by the Federal Social Insurance Office and published on its website. In 2017 employed persons with an occupational pension plan can pay a maximum of CHF 6'768 into the 3a pillar. Self-employed persons without an occupational pension plan can pay in up to 20 % of their annual earned income, but a maximum of CHF 33'840. The annual contribution must be booked into the relevant pension account by the end of the year in question. Be sure to take account of the holidays and make the payment in good time. Detailed information can be obtained through our broker. Pensioners who continue to work can still pay into a pension plan up to five years after reaching the official retirement age. You can still pay in the maximum deductible amount even if you are unable to work for a time (e.g. due to military service, unemployment etc.). You do not have to pay wealth tax on your pension plan savings. Nor do you have to pay income tax or withholding tax on interest and capital gains.

You can only withdraw money from a 3a pillar pension plan before reaching retirement age if you want to use it to buy or build a residential property, go abroad to live permanently, or set up your own business. You can also withdraw your savings if you are unable to work and you draw full invalidity benefit.

You can withdraw money from your pension fund up to five years before the official retirement age, but the full amount must be withdrawn by this time. If you continue in employment,  you must withdraw the full amount up to five years after the official retirement age. Contact your third pillar scheme for the amount of money saved and the terms of withdrawal. There are no special conditions regarding 3b pillar private pension funds.

 

If you withdraw funds from a 3rd pillar pension plan before you reach the official retirement age, these will be taxed at a much lower rate and separately from other income. There is a one-off tax which corresponds to the amount that you would pay in one year on this income, however, it is calculated at a reduced rate..

Your retirement ?

From the age of 64 for women and 65 for men, the swiss retirement scheme system - 1st pillar called AHV allows employees to receive a retirement pension allowance from the AHV (swiss social security). The purpose of this pension is to guarantee an income to everyone who can stop a lucrative activity while maintaining his current standard of living. This pension is calculated at the end of the working life and the years of service in Switzerland. This retirement pension begins on the first day of the month following the month in which the age limit has been reached and is not paid automatically. . If you want to calculate a future pension, you can access the form by clicking on the link below:

 

Ask a simulation to AHV 

 

If you will be retired soon, you can ask starting the process directly on the link below :

 

Start the process here

In line with the  Swiss regulation requirements, m3 provides a great pension plan who protects Employees and their dependents from the financial consequences of loss of income in case of retirement, disability or death. Once a year, Employees receive a pension fund statement of the contribution made and of other amounts calculated on the basis of personal data.

For any questions, please contact our broker here

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