Financial lexicon

Coordination deduction

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The coordination deduction is the part of your OASI-liable income on which you do not pay contributions to the occupational pension scheme. It amounts to ⅞ of the maximum single AHV annual pension, i.e. CHF 25,725 (as at 2024). The pension fund uses the coordination deduction to calculate your insured salary in the mandatory scheme.

The upper BVG limit for your annual salary determines how much of your income is insured under the mandatory occupational benefit scheme. On the other hand, the coordination deduction and the minimum coordination deduction also play a role.

  • The upper limit, also known as the maximum pensionable BVG salary, will remain unchanged at CHF 88,200 as of January 1, 2022. It is always calculated as three times the maximum AHV retirement pension (=3 * 29,400). Only income below the upper limit is subject to the BVG statutory regulations. The respective regulations of your pension fund apply to income components above this amount.
  • To ensure that parts of your income are not insured twice in AHV and occupational benefits insurance, the coordination deduction is deducted from your income in the mandatory 2nd pillar. The coordination deduction is always ⅞ of the maximum AHV retirement pension and is CHF 25,725 as of January 1, 2024.
  • For income just above the BVG entry threshold of up to CHF 29,400 (= coordination deduction + minimum insured salary), a BVG minimum salary is always insured (also known as the minimum insured salary ). From January 1, 2024, this will be CHF 3,675. So if you work part-time and are just above the entry threshold, you will be insured for at least CHF 3,675 under the BVG. Incidentally, the threshold amounts and the coordination deduction apply regardless of your workload.

The insured salary (also known as the coordinated salary) is one of the four important factors that determine the amount of your future pension. To determine its amount, the pension fund deducts the coordination deduction from your gross annual salary. This is because you only have to pay BVG contributions on your insured salary. The deduction therefore avoids double pension contributions. If you only receive between 75% and 100% of the AHV individual pension as your annual salary (i.e. between CHF 22,050 and CHF 29,400 per year, as at 2024), the pension fund will insure you with the BVG minimum salary of CHF 3,675. Otherwise, you can remember that your annual salary minus the coordination deduction equals your insured salary.

Outlook: The BVG21 reform will adjust the coordination deduction. Instead of an absolute amount, the amount of the coordination deduction will in future depend on the salary subject to AHV contributions. The coordination deduction should therefore amount to 20% of the AHV salary in future. The so-called “minimum coordinated annual salary” of currently CHF 3,675 would no longer apply.

If you would like to know more, you can read the article on“Preventive care”.

Last update: 17.09.2024 08:33

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Thomas verfügt über mehr als 30 Jahre Expertise als Privatanleger in fast allen Anlageklassen und zwei Vorsorgesystemen. Er gestaltet seit vielen Jahren einfache Kunden- und Serviceerlebnisse, bewegt Menschen und Organisationen und hat ein tiefes Verständnis für die Herausforderungen von Menschen bei Finanzthemen gewonnen. Thomas bringt mit seinem Background als Doktor in Wirtschaftswissenschaften Themen einfach und pragmatisch auf den Punkt.
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