First Pillar contributions for a 'housewife'

Finance, Taxes, Banking, Insurance and Retirement
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Hello All,

First off, I’m a newbie to this forum so please don’t bite ☺

My husband and I live in London but are planning to relocate to Switzerland (Zurich in all probability). My husband will work there and I will be a “housewife”. My husband’s gross salary will be in the region of CFH 100k-120K.

I have been reading this website avidly (as well as all the other sources of info I can find on the net) to try and understand the Swiss tax system/health insurance/pension system.

I have many unanswered questions but I won’t bother you with them all, don’t worry.

The question which is bothering me the most at the moment concerns the amount of “first pillar” contributions which I will be asked to pay as a Swiss resident who is not gainfully employed.

I have found a very useful document published by the “Office & State Secretariat for Economic Affairs” (dated January 2011), which explains the system in some detail. However, on the issue of a housewife/ spouse who is not in employment’s contributions to the First Pillar, even this document is hazy.

For example the document says :

Persons who are not gainfully employed must also pay AVS contributions. However, they are exempt from this obligation if their gainfully employed spouse/civil partner pays at least double the minimum AVS contribution, which is CHF 475 per year. (page 22)

Hence I would not have to pay AVS (because, I figure, my husband would pay twice the minimum)

Then on page 24 the document says:

In the case of individuals who are not in gainful employment, the AVS compensation fund office sets the contributions to be paid according to their assets and twenty times the income received in the form of pensions or benefits. For married individuals or civil partners, contributions are calculated on the basis of half of the assets and benefits of both spouses/partners. As a general rule, contributions are based on a tax assessment at cantonal level. The annual AVS contribution varies between CHF 387 to CHF 8,400, according to social circumstances of the individual.

This is very confusing. It seems to suggest that I will have to pay AVS, which contradicts what was said on page 22 (?). Also, I don’t understand how the ‘twenty times’ rule would work in practice –what would the calculation be? And I don’t understand what the Swiss define as ‘assets and benefits’.

To cut a long story short I would really appreciate it if any of you could provide me with any information to what I thought was a very simple question: as a housewife whose husband earns approx. 100,000/120,000 CHF per year, how much must I personally contribute to the Swiss ‘First Pillar’?

Hopefully there will be other non-working spouses in the forum in similar situations who can help me shed some light on the matter.

Thank you very much for reading this, and I wish you a very good day (incredibly, the sun is out here!)

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Welcome to the Forum

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Good morning.

Welcome to the forum.

In theory, those people that are "house-spouses" are entitled to half their partners income by Swiss law. Upon retirement, you would both be living off this retirement fund that "they" paid in. Upon divorce, as I understand it, half of this gets paid out to you- into your personal government pension fund.

S/he will also be paying your compulsory health insurance. At 100- 120k this will automatically be deducted at source, just like tax.

Check out the first page of this website - on the right of the screen - there are sometimes some pretty decent jobs going Keeps ones brain occupied, and soul busy.

If s/he has a work permit and you are married, I think you are entitled to one too. But just give it a go anyway (!)

And if you read too much about this, you will know more than the locals

Don't worry about coming here - its going to be an adventure

4
Only if they don't have a separation of assets agreement, and even then, only half of what is left after the bills are paid.

But anyway, to answer your question, if you are married and your spouse has a full time job, then you will NOT have to pay.

Only half of the amount acquired during the marriage, not the total (regardless of separate assets or not, unless you've got communal assets, which my wife's lawyer told me that in thirty years of lawyering he's never seen anyone choose)

Tom

5
yes that is my experience also. my wife did not pay anything whilst here. you can of course continue to pay NI in the UK for up to 6 years as I recall and you can pay at a much reduced rate in order to maintain your contributions towards your UK pension.

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WOW thank you all for your answers, this is much appreciated!

A few comments if I may:

So as I understand it, I will not have to pay any ‘first pillar’ myself (because my husband employment taxes/deductions will cover us both).

Hence what I’m left with in terms of things I HAVE to pay is the private health insurance (which is fair enough, and I’ve budgeted to spend £7200 -approx. CHF 10000- per year for health insurance for both of us –hope it’s enough).

Then I could (voluntarily) contribute to a Second and even a Third pillar form of pension if I wanted to.

Obviously, as you have suggested, I may be able to find employment for myself once we are in Switzerland, hence I would no longer count as a ‘housewife’ (I keep putting the word in quote marks as somehow it doesn’t seem right for someone who considers herself a liberated woman!).

I agree, it would be ideal if both of us could work in our own right, and I am going to explore all job opportunities once I’m there.

However, I’m the kind of person who likes to hope for the best but plan for the worst... it’s better to prepare my Switzerland budget on the basis of a single salary (that way if I get a job the extra money will really feel ‘extra’ and can be used for fun and leisurely stuff) rather than assume we will have 2 salaries and then get a nasty shock if I have difficulty getting employed. Hope that makes sense!

By the way, I’m budgeting on the assumption that out of a 100000 CHF salary we will be able to take home about 75000 CHF (after taxes but before we pay for health insurance). Does that seem realistic to you?

Anyway, I would like to thank you all again for your very prompt replies, it’s nice to know there is a virtual community of English-speakers in Switzerland as the system is indeed very different so making head or tails of it is not all that easy...

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Come again? I have never heard of health insurance premiums for an employee or their spouse being deducted at source. Can anyone else please add to this?

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Glad this topic has come up...

So - in my incarnation as a dilettante Hausfrau here in Switzerland, I have not worked. (Well, let's just say I don't earn a salary, shall we?)

My husband pays well over the required 2x 475 per year, meaning I do not have to pay separately into AHV. If upon reaching retirement age I were to collect AHV, what amount would I receive - based a contribution of 475 per year, or based on half of what my husband actually pays in?

And, how would my collecting affect what my husband is entitled to? Is his entitlement cut in half?

Curious because if the former, collecting AHV would likely leave me poorer off than not collecting at all, thanks to Uncle Sam's Windfall Elimination Program. (Gotta love that blue passport. ) If AHV were based on 1/2 of what my husband has actually paid in, that might be a different ball o' wax...

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About "Then I could (voluntarily) contribute to a Second and even a Third pillar form of pension if I wanted to."

What you can contribute to a Third pillar form of pension is based on a %ge of your own earnings; I believe the same applies to second pillar.

But if you get dvorced you get 50% of your spouses second pillar payments regardless of who is at fault in the divorce.

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Marton,

thanks for pointing my mistake out. I had interpreted the Third Pillar to be the equivalent of an UK SIPP or Stakeholder Pension meaning I can elect to put money into it even if it's not money that comes from salaried employment.

For example, I have an UK SIPP (mine only) and I have moved some savings and money gifted to me from family into it.

Doesn't Switzerland allow a non-working spouse to have a private pension in her own name?

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No. Never heard of any such thing. If you don't sign up for health insurance the commune will enroll you in one. Better to enroll yourself because they will just pick one that you might no like. Where do you get the idea that it's taken out of your salary? Maybe this is specific to your employer?

Yes. You can. We do. I'll have to ask later which pillar exactly. But if you are not planning to stay, you may be better off paying into your home pension instead. Check into that.

ETA: Ok, I asked. We did contributed to the 3a when I was self employed in Switzerland. As a "house wife" you can only contribute to 3b as Monkeyboy says below.

Also, for your health insurance you'll need to add accident insurance. Your husband does not. I don't know if they do this automatically. Best to remember to ask when you look for health insurance.

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I'm not really sure about this, but my understanding was...

1st pillar AHV is a tax taken from your salary 2nd pillar is taken from your salary and paid into your employers pension 3rd pillar is a voluntary contribution So if you have no income, this would rule the first two pillars out.

Then for the 3rd pillar, from the UBS website [1]:

the UBS Fisca retirement savings programme for tax-privileged saving (pillar 3a). It is available for all taxpayers with an AHV-liable income.

This only leaves you with the option of a 3b pension (and I'm not sure you can even pay into it if you have not used your 3a). The 3b pension has no tax advantage, so you might as well pay into a standard saving account or some kind of fund purchase account. At least this way you have access to the money should you decide you need it.

As I said, I'm not completely sure about this, but it is the way I read things...

[1] http://www.ubs.com/1/e/ubs_ch/privat...a/savings.html

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As I understand, you would only collect if you have your own earnings/contributions into the system. If zero, you would get nothing on your own, and when your spouse retired, he would get a bigger payout, individual + spouse allowance (assuming you are alive).

Looking at it the other way, this happened to someone I know. Wife worked for about 5 years before marriage, then was housewife for 20+ years. When she turned 62, she collected her pension, based on her earnings some 20 years ago for 3 years until her husband retired at 65. When he retired, his account plus spouse allowance was greater than her small amount, so it replaced hers. If she were dead at that point, he would still collect his higher amount but without the spouse allowance.

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but what counts as 'acquired during marriage' if you buy a house but pay off some of the mortgage, would that be during the marriage. perhaps a proportion equal to the repayments.

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Well this has been enlightening. I can't say I understand the system now (FAR from it) but you've all given me some good pointers and things to think about.

I'll mull over it.... and probably bother you again if I get stuck

Thanks again, this forum feels like a good 'community' and I can't wait to be fully part of it!

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Regarding the health insurance, as far as I am aware, the accident insurance is part of your salary (employer pays a part and the employee pays a part, so can be seen as being "deducted") and you should be given a SUVA card if you work. I am presuming that if you do not work, you will need to have accident insurance added to your cover. If you decide to work part-time, you should find out how the SUVA accident insurance covers you.

The health care is private, and as was mentioned in other EF member messages, if you don't get your own within the required time (I can't remember exactly, but it was around the time I received my permit that I received a letter asking to declare my health insurance to the local commune/ canton), then they will allocate you with one, which will be more expensive.

As I live within the more tax friendly Canton of Valais , I am fortunate to have lower health insurance, compared to neighbouring Vaud where I work. It all has to do with where you live with B and C permits, as opposed to where you work. I am within Assura for private health insurance, which are the cheapest for my needs in Valais. My husband is with Group Mutual. He is swiss and has been with them for years. I joined Assura long before we were married and it is still the cheaper one. Mind you, I have never been sick enough to spend more than my "franchise".

I recall comparis.ch being helpful, when I first arrived in CH , but they may well be more helpful sites recommended on the EF site.

Good luck!

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There is no limit to paying in the uk , 1 paid for 15 years after coming here so I now have paid 30 years into the uk system so will get a full uk pension, if they still exist when the time comes .

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& you will get 25CHF/year if exchange rates continue to follow the same pattern

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Gosh, I somehow missed your answer back in October; as it's too late to hit the Thanks button now - I just wanted to say 'Thank you, Runningdeer.'

(It's raining here on the Dark Side, so instead of our annual New Year's Day hike, I'm cleaning the office. Filing tax papers led me to this question, hence the thread revival. )

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Does anyone know if a "housewife" can contribute to 3a if she has uk property rental income?