Daniel starts paying into the pension fund for the first time as a young employee
18 at last! Daniel celebrates his birthday on January 6. He recently started the third year of his apprenticeship as a bricklayer at an SME construction company, and is glad that he is already earning 1,862 Swiss francs a month. At the end of January, however, he notices that he has been paid a few francs less than in the previous month. Yet he wants to go skiing with friends.
Astonished, he goes to his superior. She sends him to the HR department. The personnel manager explains to him why the deduction was made: from now on, he has to pay risk contributions to the occupational pension scheme. As a generous employer, the construction company pays 60 percent of these contributions. This is used to finance disability and death benefits.
This gives Daniel food for thought: he has never given any thought to the fact that he might become disabled or die before he is old. He is relieved that he is now covering these risks.
An employee pays risk contributions to the occupational pension scheme for the first time
The risk contributions to the occupational benefit scheme for the risks of death and disability are mandatory from January 1 of the year in which the employee reaches the age of 18. This applies to all employees who exceed the entry threshold of 21,510 Swiss francs. As an employer, you are required by law to pay at least 50 percent of the contributions. If you want to offer more, you can increase the employer's contribution to 60 percent, for example.
The amount is deducted directly from the salary and is passed on to the pension fund by you as the employer. The starting point is the insured or coordinated salary, depending on the salary definition in the pension plan. Normally, this is the relevant AHV annual salary minus the coordination deduction.
Companies have the option of choosing a "Sparen ab 20" (Saving from the age of 20) pension plan. This makes it possible to improve the employees' retirement provision. Because of the compound interest effect, starting to save early is particularly worthwhile.
Daniel starts to pay into the pension fund from the age of 25, and is thus making provision for his old age
After completing his apprenticeship, Daniel continues to work in the company and is promoted to foreman after three years. Soon after his 25th birthday, he again notices that less money is being paid into his account than in the previous month. Once again, he asks the personnel manager, who informs him that from now on the employer will pay additional monthly savings contributions to the pension fund for his personal retirement provision. The company will now pay 60 percent, while Daniel pays 40 percent of the contribution. This money will be available to him upon retirement, either as a lump sum or as a pension. For most employed people, these retirement assets make up the lion's share of their retirement provision.
If Daniel wants to make even better provisions for his old age, his company offers him the option of paying in a higher savings amount. Daniel decides to take this option. He asks the personnel manager during the meeting: "How does this work? Will I always pay the same amount towards the occupational retirement provisions for the rest of my life?" The personnel manager explains to him that the percentage in the BVG increases every ten years: For him as a 25-year-old this is 7 percent; from the age of 55 it is as high as 18 percent.
This arouses Daniel's interest: from now on, he no longer turns the page when he sees something about "pension funds" in the newspaper. He gathers information on the topic, as well as resolving to cast his vote in political votes concerning pension provisions from now on. To optimize his retirement provision even further, he opens a 3a retirement savings account and pays a small amount into a fund savings plan every month.
Interesting facts for employers
If you want to position yourself as a responsible and attractive employer, one way you can do this is through the occupational retirement provision. On the one hand, you can provide better retirement or risk benefits for your employees beyond the BVG mandatory coverage. On the other hand, it is possible to offer employees optional savings plans to increase their retirement savings. This allows them to accumulate more retirement capital in their personal occupational retirement provision. In this event, the employer's contribution is always the same, and any additional amount is paid by the employee.
In any case, it's worth regularly informing employees on how to read the pension certificate, what benefits are insured and how the three pillars of occupational retirement provision interact. Basic knowledge of these issues is essential for every employee.
Daniel fulfills a dream and goes on a world tour for six months
Interesting facts for employers
Good employees are valuable – for this reason, many companies offer the option of a sabbatical. In the event of unpaid leave between one and twelve months, occupational retirement provision can be continued – either solely with risk benefits or unchanged including savings benefits. In both cases, the insured person bears all of the costs. If savings benefits are suspended, it will probably be possible for the insured person to make a purchase later. In the event of absences of up to six months, accident insurance can be continued via so-called "insurance by special agreement." If this is not the case or in the event of absences of longer than six months, the employee must insure the risk of accidents privately within their health insurance.
After a reorganization, Daniel is no longer happy with his company and therefore decides to resign
Major changes have occurred in Daniel's company: the SME has been taken over and as a result the corporate culture changes significantly. Daniel no longer feels happy in the new environment. During the summer holidays, he decides to resign and take some time off. Once again he consults the personnel manager, who explains to him that his previously saved retirement assets must now be transferred to a vested benefits institution as an account or custody account. He can choose the institution himself; possible providers include banks, insurance companies or wealth management companies.
When he joins a new company, he will transfer this amount to the new pension fund and continue to accumulate his retirement assets there.
During his time off, Daniel looks into the topic of retirement provision again and decides that he will ask about the pension fund solutions of his potential employers during his job interviews, because he is aware that there are definitely differences there.
Interesting facts for employers
You must inform employees who are leaving the company that they must take their retirement assets from the pension fund with them and transfer them to a vested benefits institution before they start a new job. If there is only a short interruption, the retirement assets can also be transferred directly to the new employer's pension fund.
As a responsible employer, you should inform your employees that their risk coverage in the event of death or disability will be worse during the transition phase between two jobs. If the interruption lasts longer than four weeks or the person subsequently works less than eight hours per week, the accident risk must be included in the health insurance policy. Additional cover in the event of disability or death can also be useful.
Daniel finds a cool new job with a high salary
Daniel doesn't stay unemployed for long, but uses the opportunity to climb the career ladder. He finds a great position as a customer advisor at a manufacturer of construction machinery and starts with a significantly higher salary. During the job interview, the HR expert points out to him that the salary increase gives him the option to buy into the pension fund, i.e. to pay in additional money and thus increase his retirement assets.
Daniel does not have any money left for this at the moment, but plans to make the purchase next year. One thing that particularly catches his eye is that he can deduct the purchase amount from his taxable income in his canton of residence.