Pillar 1 pension calculation

Finance, Taxes, Banking, Insurance and Retirement
1

AVS pension calculator doesn’t give me a result so wanted to check this working theory.

Pillar 1 full contribution is 44 years, from age 21 to 65. Any missing year will lower the pension by ~2.3%. Currently, the minimum old-age pension for a single person is CHF 1,225.- per month, and the maximum pension, CHF 2,450.-.

For example, working in Switzerland for 10 years would result in minimum Pillar 1 pension of CHF 278 month / CHF 3336 per year (1225 * 10/44) taxed at 13.25%, therefore the net amount is CHF 2893 per year. Does this seem accurate?

If the person retired in an EU country, say Spain, the Swiss Pillar 1 pension is still being paid by Switzerland and not credited to the Spanish pension, is this correct?

2

  1. I think your pension calculation is correct

  2. If still living in Switzerland, if that was your only income, the tax would be zero

  3. If you had moved to another EU country, the CH pension would then be subject to tax in that country, not in Switzerland

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3

Thanks for clarifying the tax obligations. Is it fair to assume that Swiss Pillar 1 pension will still be paid separate from any Spanish/EU pension?

4

I think so -if you have been here 10 years you will receive that Swiss pension paid into whatever bank account you nominate.

5

I’m not 100% sure about Spain but it is paid separately from French, Belgian, German and UK pensions so there is no reason to think Spain would be any different.

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6

It depends on your nationality (EU or non-EU), whether you live in Switzerland or Spain when you reach Swiss pension age, and whether you have paid contributions (worked) in Spain during your life and/or right before retirement (after leaving Switzerland).

It is explained in the following 3 links :
But in all cases as far as I know it will be separate from the Spanish.
PS: Note there is the issue about which country will cover health insurance, eg if you live in Switzerland at the moment you retire, you must continue to pay swiss LaMal insurance (for ever) even if you later on move in Spain.

https://www.zas.admin.ch/zas/en/home/particuliers/demander-une-rente-de-vieillesse/nationalite-suisse-ue-aele.html
https://www.zas.admin.ch/zas/en/home/particuliers.html

7

Well yes, but it is a little more complex than that…

  • You will be the responsibility of only one countries social services system
  • When you reach retirement age, you apply through the social services system in the country you are resident in, regardless of which state has to pay the pension. And you will remain the responsibility of that service for all time.
  • They are then responsible for collecting all the data about your contributions through out the EEA and applying the set of agreed calculations to maximise the pension you can get based on those combined contributions
  • Once they have calculated the max pension they inform each state how much they need to start paying you
  • The next thing you need to look at is healthcare. The rule is that unless you qualify for healthcare by another means, the state that pays the largest part of your pension is responsible for your healthcare
  • Depending on the country you decide to retire to and your circumstances you could still be required to pay Swiss health insurance going forward
8

My understanding is that some countries (and Spain is one of them) have a special agreement and you can choose whether to stay insured in Switzerland (and you will pay special premiums) or Spain.