{"id":8718,"date":"2017-09-10T06:45:51","date_gmt":"2017-09-10T04:45:51","guid":{"rendered":"https:\/\/www.smolio.ch\/wissen\/focus-on-the-2nd-pillar-for-the-pension-fund-more-is-more\/"},"modified":"2024-09-17T08:35:05","modified_gmt":"2024-09-17T06:35:05","slug":"focus-on-the-2nd-pillar-for-the-pension-fund-more-is-more","status":"publish","type":"post","link":"https:\/\/www.smolio.ch\/en\/wissen\/focus-on-the-2nd-pillar-for-the-pension-fund-more-is-more\/","title":{"rendered":"Focus on the 2nd pillar.\nFor the pension fund, “more is more”"},"content":{"rendered":"Lesedauer<\/span> 3<\/span> Minuten<\/span><\/span>\n

The NZZ headlines “Many Swiss have no idea about old-age provision” <\/span>1<\/a><\/sup>and SRF 10vor10 reports on a pension fund model that provides for temporary pensions – in the extra-mandatory scheme.\nWe think it’s time to take a closer look at the pension fund.\nBecause that’s what matters. <\/span><\/p>\n\n\n\n

While the\n1st pillar – AHV is intended to provide us with social security, the\n2nd pillar – the BVG occupational pension scheme – serves to build up assets for old age.\nThe AHV is financed on a pay-as-you-go basis and capped.\nIn the best case scenario, you will receive a maximum pension of CHF 2,450 per month from the AHV for individuals (as at 2024) and one and a half times this amount for married couples – CHF 3,675 (= CHF 2,450 * 1.5).\nThe occupational benefit scheme is capital-financed.\nIt pays out what you and your employer have paid in, plus interest. <\/span>So “more is more” applies here. The pension fund usually makes up the lion’s share of your pension income, so let’s take a closer look. <\/span><\/p>\n\n

In Switzerland there are around <\/span>1,700 pension funds, <\/b> with which over four million people are insured for their retirement.\nYour employer chooses the pension fund. <\/span><\/p>\n\n

How pension funds calculate: Defined contribution, mandatory, coordination deduction and conversion rate<\/strong><\/h2><\/div>\n\n

Most pension funds operate according to<\/strong> the defined contribution<\/strong> model.\nYou and your employer make contributions to the pension fund.\nYour assets accumulate there with interest.\nThe more you pay in, the more you will have in old age.\nYour pension fund assets belong to you. <\/p><\/div>\n\n

In the compulsory scheme<\/strong><\/a> compulsory contributions are paid on income from the BVG entry threshold up to the BVG upper limit.\nThe thresholds depend on the maximum AHV pension and change every two years.\nYou can find the valid values for 2024 in this specialist article<\/a>.\nCompulsory contributions apply to all pension funds – it is compulsory.\nIn addition, voluntary contributions can be paid into many pension funds on income above the BVG upper limit.\nThese are extra-mandatory<\/a> benefits. <\/p>\n\n

There is also the coordination deduction<\/strong><\/a>.\nThis is an amount of your annual income that is already insured in the AHV and is therefore not insured again in the pension fund.\nIt is deducted from your annual income to determine your insured salary.\nIf you earn little (your income is between the BVG entry threshold and the coordination deduction), the pension fund insures the so-called minimum insured salary<\/strong> – that is a few thousand francs.\nAbove this, the following applies: income (up to the BVG upper limit) minus the coordination deduction equals your insured salary. <\/p>\n\n

When you retire, you will receive your effective interest-bearing assets either paid out in full or at a certain conversion rate<\/a><\/strong> as a lifelong pension or as a combination of pension and lump-sum payment.\nThe regulations of your pension fund determine whether you are free to choose this.\nThe minimum interest rate is redefined each year by the Federal Council.\nYou can find the current value in this specialist article<\/a>.\nYour fund may, but does not have to, pay higher interest on your assets.\nThe amount of your contributions, the interest rate and the conversion rate therefore determine how much money you get out. <\/p>\n\n