Calculating Pension for 20 years working in Switzerland?

Finance, Taxes, Banking, Insurance and Retirement
1
Hi all,

Ok a bit of a weird question, but I'm doing a bit of research about various pension amounts you would end up with if you were working full time in Switzerland for 20 years - does anyone know what the base amount would roughly be if you were working in Switzerland for 20 years? Ie what would be the annual contribution or does anyone know the official figures or a website I could go to that would help me calculate this roughly?

I'm wanting to compare how much you would end up retiring with if you were working in Switzerland for 20 years as opposed to Australia or USA or NZ...Its a bit of an assignment and I'm just trying to gather data and info at this point :-)

I would use the theoretical values of 130,000 and 150,000 CHF per year as a rough salary guide to base the pension contribution amounts for each year on.

Thanks for any help if anyone loves numbers and spending random time on helping me figure this out ;-)

What else to do while in lockdown eh?

2
You could calculate the compulsory BVG contributions by age against the Superannuation fund in another country. In Australia, for example, all people contribute a compulsory 9.5% of salary. From age 25, 20 years working at 150k would be 255k in contributions. Sounds about right as we did 16 years there from age 27. Our employers matched our contributions sometimes too.

BVG contributions by age: https://www.comparis.ch/umzug-schwei...ohnnebenkosten

Comparing more accurately you need to also look at pension fund returns, tax, Admin fees, Contribution Fees, Indirect cost ratios and Investment Return Fees, as well as what pension you will get from that amount. Swiss pensions probably win hands down.

3
Consider that there are variations by pension funds for each company too. So agree with above that using the minimum is a good way. Also don't forget that "Pension" in Switzerland is made up of different "Pillars" so you need to consider all to be able to do a fair comparison.

https://www.axa.ch/en/pension/pension-system.html

4
I am just about to retire in almost exactly this situation.

The AHV will be roughly half way between the min and the max

Pillar 2 will depend on your salary, the particular pension fund and how much you buy into it before retiring. Your fund can give you approximate numbers.

Pillar 3 depends totally on what you save.

Swiss pensions are much more generous than NZ or Britain and the pension funds are more stable: however, who knows what is going to happen in the next twenty years?

Aren't you a little young to be thinking about pensions -there is a whole lot of life to be lived beforehand

5
I think state pension would be along the lines of

20/44 x 2,300 = 1,045 CHF monthly (the 44 maybe 42 or 45, but a rough idea)

Company pension, well, really depends on who you work for. And age (company pension here grows as you are older), I would suppose somewhere between 20-40k a year in company pension, so maybe take an average of 30k a year 30 x 20 = 600k

And most here would take out a third pillar, which has tax benefits but a private fund. Assuming the max you can pay in, I would take an average of 7k a year.

7 x 20 = 140k

Based on you living 20 years in retirement that would give you about 50k CHF a year pension

6
is there also a rule which reduces the pension if you retire to a country not having a pension agreement with switzerland?

7
There definitely is! But we are also wondering the same as we weren't really able to have any savings until our mid thirties. Will our pension be enough to live on?

8
Hold on, hold on. The amount highly depends on age and pension scheme.

The very bare minimum pillar 2 contribution is:

https://www.ahv-iv.ch/Portals/0/adam...tab_2020de.pdf

Employer and employee pay half of the contribution.

In addition the very bare minimum (a.k.a mandatory part) is just for part of sallary between CHF 24'885 and CHF 85’320

In the worst case the annual pillar 2 contribution is just CHF 4230.

The mandatory part is currently awarded with an interest of at least 1% https://www.bsv.admin.ch/bsv/de/home...tzinssatz.html

At pension age you can request (given some conditions) a pension of 6.8% (BVG conversion rate) of the accurred mandatory part amount. Other wise you will get the lump sum. https://www.bsv.admin.ch/bsv/de/home...lungssatz.html .

If your 20 years are from 25 to 44 you end up with around 140k at pension age (which you most likley must take as a lumnp sum).

If your 20 years are from 45 to 64you end up with around 220k at pension age.

That is the bare minimum. A particular pension plan might have better interest, interest might be lower in the follwing years, the mandatory contributions might change, the conversion rate might change, the conditions when you can request a pension instead of a lump sum might change, the condition when you can request a lump sum instead a pension might change, the pension age might change.

In addition to the bare minimum there is a so called non-mandatory part which covers your income above CHF 85’320, and in some cases also bellow CHF 24'885 (this is normally assumed to be covered by pillar 1, and is known as Koordinationsabzug/déduction de coordination). Just the bare minimum is very, very unusual.

Contribution for the non-mandatory is around the same as for the mandatory part (actual values depend on pension provider). Interest can be 0%. Conversion rate at pension age can be 0%. Depending on pension provider it is currently around 5 - 6 % https://www.pensionskassenvergleich....etze/index.php

In addition some employer pay a larger share of the contribution than the usual 50/50 split. And as said, nothing is fixed all of that can change in the future.

Comparing employer pension plans could make a huge difference. Employers with good pensions plans are for example Swisscom, Roche, or the City of Zurich. Things to check: Past performance (interest rates of mandatory and non-mandatory part, as well as funding ratio of a pension fund), contributions tables, employer/employee split of contribution, conversion rate of non-mandatory part, if there is a Koordinationsabzug/déduction de coordination.

9
Wow you guys are awesome - lots to chew on here....

Thanks for the compliment about being too young to think about this (haha - I'm 40!)

But I'm married to a very logical Swiss thinker who likes to have all his ducks in a row...and I'm trying to convince him its best to move back to Switzerland rather than live in AUS or NZ longer term as we would have a better quality of life now, and higher wages, and also then more for retirement later on (hopefully!) So I'm grasping at any straws possible to lure him back...hehehe....the amount we would contribute towards retirement later on being one of them since he is already thinking about this himself, in terms of him being able to provide for the family best (we have 4 kids ;-)

So doing rough estimates in each country helps me build a case for why we should come home to the land of Cheese and Chocolate ;-) My fav place on earth! Any other positives to help me build my case - fire away! ;-) hehe thanks everyone :-)

10
Remember, marriage negatively affects the pension here. You will get less. Its a system build for purpose in the 1940s or something daft when the woman was a house wife.

Basically single people lets say get 2k each month, each person, from the state pension. A married couple would get 3k total for the house hold.

So it is great if the wife didnt work and looked after the children throughout the working career, youll have an extra 1k a month. But if you both paid into the system equally you loose 25% or so

This is EF, so I am sure my figures will be corrected, but thats the rough idea. Retiring being married is a financial burden here

11
what if you get a divorce just prior to pension age?

12
But since we can change it at any time with a referendum and have not, suggests it is not a big issue for the Swiss...

13
Which is the reason that he is not here with 5 dependants. Are you employed in NZ? How much pension have you accummulated there, you said you are 40.

Unless you are Celine Dion or Tina Turner, or our own Odile, actually, I forgot, people do not come here to retire.

Unless you at your age get an extremely well paid job right at your arrival, and your spouse too. It doesn't mean, unfortunately, that both of you keep that high flying career for the next 20 years. Things are pretty shakey as we type.

I know this sounds unfriendly and honestly wish it did not but this amazing place of cheese and chocolate has a reason behind its stable and secure appeal. And it doesn't work so well for those who opted out of contributing to it.

14
Each get their respective share. You can also divorce after pension age. Some do, but be aware about inheritance tax and other draw backs which could mean a divorce just to get a bit more of AHV/OASI is not worth it.

Roughly corrected. The rule is that a married couples combined pension is capped at 1.5x of a full pension (*). Full AHV/OASI pension is currently 2370 CHF/month. Be aware that this rule only applies to pillar 1 AHV/OASI.

https://www.ahv-iv.ch/p/3.01.e

(*) I am not sure how the rule is applied when there is a lack of contribution years.

15
It's a very complex calculation, but generally the state pension is going to be significantly less than what you get from your company pension (2ième pilier). It will also depend on your partner's contributions.

My wife retired 18 months before me (at 64 and she's older than me), got a full AVS for those 18 months and when I retired they recalculated the lot, she gets a little less, I benefit somehow from part of her contributions (I arrived here when I was about 30). You can try and do the calculations yourself, but it's not at all obvious. I get a few dribs and drabs from the contributions I made to the UK, French and German systems.

16
Found this for the AVS (1st Pillar) calculator. http://acor-avs.ch/conditions

It looks to be working pretty ok but this will be the smaller amount that you get.

17
Not sure, maybe the generation that will fully get the impact of this has not yet realized/done something about it. Generalization thatthe previous generation had the more "standard" couple model and this one different.

I personally find it annoying that in a couple where we both worked we will only get 1.5... not at all logical to me. We contributed like everyone and also already got taxed more why also cut a portion of the pension?

1000 CHF a month might be worth that divorce idea afterall....

18
The increasing pillar 2 contributions incentivize companies to push out older workers in their late 40's early 50's to cut costs. I have worked for both of the "big 2" Swiss banks and am always surprised by how few workers there are above 50 on the floor. A pension system based on a retirement age of 65 only works if you don't get pushed out in your 40's!

19

Quite a few 50+ working in non-management positions at ZKB

20
what if you are unmarried and both have full maximum swiss pension.

2 years prior to retirement, you get married, you basically lose 0.5x a pension.

what if you then divorce 1 year before retirement? do you regain the 0.5x?

what if you then divorce 1 year after retirement? do you regain the 0.5x?