You have been involved with occupational pensions for many years, including as an active member of BVG-Auskünfte, the independent provider of free pension information. Can you think of a consultation session you have had that stands out as particularly interesting or moving?
Manuel Gerhard: There’s something unique about every consultation, because the issues involved are highly individual in nature. And that’s what makes being active in BVG-Auskünfte so enjoyable. I recall, in particular, consultations with employees who receive termination notice shortly before retirement, after over 20 years with their employer. In one case, the employee took a payout of her vested benefits, which disqualified her from receiving unemployment insurance benefits. To avoid things like that, it is essential to seek advice from BVG-Auskünfte as early as possible.
Carlo Hitz: Sixteen years ago, I was driving home after a meeting with Martin Hubatka, who was the Chairman of the Foundation Board at that time, and he was telling me about how he had founded a non-profit organization providing free consultations for pension fund insureds; he was the organization chair and offered consultations himself there. As we drove on for a bit and he told me more about it, I really got enthused by the idea, and I’ve been involved ever since.
I’ve had many memorable counseling sessions and heard several moving stories. I recall, in particular, an elderly woman who had worked all her life, but only part-time. She wanted me to tell her what her pension would look like. She only worked part-time, so she had no money in the pension fund, and she was unable to save privately. Her pension outlook was, therefore, not good, and right before retirement there’s not much time left to do anything about it. Her only option was to apply for welfare assistance and supplementary benefits from the local government. Conversations like that really give me pause.
What kind of questions do people usually ask? What are the important issues for people when talking about retirement pensions?
Manuel Gerhard: It occurs fairly often that people face a challenging situation when they receive a termination notice just before retiring, and they have a lot of questions about how their retirement pension will be affected. Under Article 47a of the Occupational Pensions Act (BVG), which came into effect at the end of 2020, pension plan insureds over the age 58 get to remain within their pension scheme if they are terminated. This gives them breathing space to plan their next retirement steps properly. However, the insured usually do not know about it, which makes our task all the more important. Flexible retirement options are another important topic that people are interested in finding out about.
Carlo Hitz: We get quite an array of questions, it would be hard to categorize them all. I get a lot questions about pension benefit buy-ins (for topping up), the conversion rate, working after the age of 65, invalidity insurance benefits and lump sum versus pension payout. Self-employed individuals sometimes come to us and ask what they should do if no pension fund will accept them. Everyone has their own unique life situation, so everybody has different needs, and you could go on and on, listing all the questions we get. Many people have already obtained information from their pension fund and now are looking for a reliable second opinion from us as an independent non-profit.
3) How well-informed are people in general?
Manuel Gerhard: Generally speaking they are not well-informed. But that is understandable to some extent, because nothing about social security and occupational pensions, in particular, is taught at school, nor is the public broadly educated at any point later on. There is much to be done in terms of education. The non-profit mission of BVG-Auskünfte is to close these knowledge gaps. We only reach a fraction of the population, unfortunately, but I think it’s great how Zurich and Vita are involved in these efforts. Every single person we are able to inform and educate is a win for us.
Carlo Hitz: I would agree that people are not well-informed, lacking a grasp of the key factors involved. This tends to become clear when talking to the public about potential legal changes affecting occupational pensions. Such discussions are necessary, but people find the topic highly complex. Many people don’t yet see retirement savings as an urgent issue, thinking "that’s still a long way off"— so it’s not seen as a priority.
Fairplay study confirms knowledge deficits among the public
What are the consequences of this awareness deficit? What control do I as an employee have over my occupational pension?
Manuel Gerhard: The lack of public knowledge has tremendous retirement implications. By the time people get around to thinking about it, in many cases it’s too late. As a rule, the earlier you start thinking about pension provision the more flexibility you can enjoy, which is important because needs can change over the course of your life. Kids should really receive education about retirement and social security early on, even in primary school. I think it’s excellent how Vita is already very active with campaigns for educating the public about occupational pensions.
Retirement plan insureds can have more influence over their employer’s occupational pension plan than they may think, by the way, as they can approach the foundation board or administration committee for their pension plan with any concerns. They can also campaign for appointment to the foundation board or administrative committee of their pension plan.
Carlo Hitz: A lack of knowledge can have serious consequences. Those who only look into their pension situation just before retiring, after losing their job, or in cases of death or disability will often find that their pension will not be sufficient. This is unfortunate and therefore all the more important for employees to bring up and talk about pension benefits as early as when interviewing an employer. The interview represents a key opportunity to find out about the pension plan of one’s future employer, so the prospective new hire can decide whether taking the job is a good idea.
Retirement benefits not usually a topic in recruiting
The need for education in this area is apparent. What role can employers play in promoting education? What possibilities do they have for raising employee awareness regarding retirement saving?
Manuel Gerhard: I have made it a point to tell friends and family that they should definitely bring up the topic of occupational pensions when interviewing for a job and get information on what benefits the employer offers. However, it has been my experience that employer representatives themselves are not very knowledgeable about the company pension plan in many cases, being poorly prepared to address such questions. One possibility is to give HR staff specific training on occupational retirement saving, so they can provide regular education seminars for employees participating in the company retirement plan. We conduct annual info seminars for the employees of several corporate clients I look after. We go out and educate their staff about the Swiss pension system, focusing on occupational pensions. We explain how pension plan participants accumulate benefits, pointing out the various options they have as to when and in what form they may start drawing down their savings.
Carlo Hitz: I believe employers have a key role to play in raising awareness among their employees. The job interview represents the first of many opportunities to communicate information about the company pension plan and pro-actively discuss the additional benefits comprising part of the employee’s pay package. There are more such opportunities in the post-recruiting phase, including
- holding info seminars for employees
- providing pension plan informational materials
- advising employees of the "BVG-Auskünfte" website.
How do companies benefit when they advocate for robust occupational pensions?
Manuel Gerhard: It demonstrates social responsibility towards employees. Employers who offer above-average pension benefits should not miss any opportunities to communicate this clearly, as it supports recruiting efforts while promoting employee retention. Information on the company plan and benefits must be communicated clearly and accurately if employees are to be made properly aware of how their employer is adding value.
Carlo Hitz: I believe offering more than the minimum in the company’s occupational pension plan makes recruiting good staff easier; it should be stated in job ads what more the employer offers. Employers benefit too, by contributing more than the required minimum, as all company contributions to the pension plan represent tax-deductible business expenses pursuant to Article 81 of the Occupational Pensions Act (BVG).
Staff info seminars offered by Zurich and Vita
- Staff info seminars provide your employees with detailed information on the Swiss pension system, which can enable them to make the right decisions for a successful financial future.
- We offer direct access to experts on occupational pensions and personal retirement planning. Whether it be general information or individual needs – we have the answers to your questions.
- These seminars will help you to position yourself as a socially responsible company that provides well for its employees.
- And you help your pension fund fulfill its obligations to inform employees pursuant to the Occupational Pensions Act (BVG). Any and all questions are answered at these employee info seminars. We are also available to employees for confidential consultations on their individual retirement planning situation.
- Did you know ... Vita Mobil staff info seminars are available not just to our clients but to all interested employers throughout Switzerland.