The employee benefits insurance (BVG), which aims to enable the insured to maintain their current standard of living after retirement, is only compulsory for employees whose salary exceeds three-quarters of the maximum AHV pension. Other employees and self-employed individuals can join the employee benefits insurance voluntarily. The employee benefits insurance is funded as a level-premium system. This means that every insured individually saves his or her retirement capital, which is then used to finance the pension payments when a claim arises.
Employees who earn an annual salary of more than CHF 21'150 (for 2018) are subject to the compulsory employee benefits insurance. The risks of death and disability are covered from 1 January of the year following the 17th birthday, and retirement benefits are also covered from 1 January of the year following the 24th birthday. If the insured has worked for an employer for less than one year, the annual salary is deemed to be the salary which the insured would have received if he or she had worked for an entire year.
Under certain conditions, employees of temporary employment companies are insured with immediate effect. This applies if the employee is deployed without interruption for more than 13 weeks, if the contract is concluded for an unlimited period or for more than three months, if the employee is responsible for the maintenance of children, or generally upon request of the employee. If deployment was originally agreed for a shorter period but is prolonged past 13 weeks, the employee is admitted to the BVG insurance from the 14th week (with all periods of deployment with the same employer within a 12-month period counted together). The same applies if extension of deployment is agreed with the same temporary employment company and the original period of work plus the period of extension exceed a period of 13 weeks.
An annual salary from CHF 24'675 to CHF 84'600 is insured. The maximum pensionable salary is CHF 59'925. The pensionable salary is CHF 3'525 for employees who earn an annual salary between CHF 21'150 and CHF 28'200. The employer is, of course, also at liberty to take out extra-mandatory insurance for its employees, in which case there is no coordination deduction and/or upper BVG salary threshold.
At the latest from 1 January of the year following the 24th birthday, the insured starts accruing capital to finance the retirement benefits. The statutory scale for the savings contributions rises step by step according to age. Naturally the employer is at liberty to take out extra-mandatory insurance for its employees, in which case the scale for the savings contributions would be higher than the statutory minimum and barriers such as the coordination deduction and upper BVG salary threshold will not be taken into account.
The retirement assets earn interest at an interest rate determined by the Federal Council, which is currently 1 % p.a. The retirement assets are increased by the retirement credits, the vested benefits brought into the pension fund, any purchases of additional benefits, interest and surpluses paid by the foundation. The retirement capital is reduced by advance withdrawals under the promotion of home ownership scheme (WEF) or partial payouts as a result of divorce or semi-retirement.
On retirement in 2018 at the age of 65 (men) or 64 (women), the accrued retirement assets are converted into a lifelong pension at a universal conversion rate of 6.0%, i.e. CHF 100,000.00 in retirement assets equals an annual pension of CHF 6,000.00.
An insured is considered to be disabled if a doctor provides objective proof that the insured is partly or totally unable for reasons of illness or unintended bodily injury to exercise his or her profession or to perform other gainful employment appropriate to his or her circumstances, expertise and abilities, i.e. the insured is disabled as defined by the Federal Disability Insurance (IV). The disability pension is paid after a waiting period of 12 months. If the insured is covered under a group health insurance policy, the waiting period is extended to 24 months. The full disability pension equals the sum of the accrued retirement assets and future retirement credits (without interest) multiplied by the applicable conversion rate. As the accrued retirement assets can be reduced, many employers insure their employees for a disability pension equalling a fixed percentage of the pensionable or effective salary.
An insured who receives a disability pension and has children who are younger than 18 or have not yet finished their education is entitled to a disabled person’s child’s pension. This claim lapses at the latest when the child reaches the age of 25. The statutory disabled person’s child’s pension equals 20% of the statutory disability pension per eligible child. Employers are at liberty to insure a higher disabled person’s child’s pension.
After a waiting period of three months, insured who are unable to work no longer have to pay any contributions but their insurance coverage remains intact.
If an insured person dies, the surviving spouse has a statutory claim to a surviving spouse’s pension equalling 60% of the disability or retirement pension. Under certain circumstances the divorced spouse is also eligible for a pension. At Tellco pkPRO, a registered partnership that has been notified to Tellco pkPRO is treated the same as a marriage. The employer can insure higher pensions.
Orphan’s pensions generally fall due if an insured dies and is survived by children who are younger than 18. If the children have not yet finished their education, an orphan’s pension can be paid until the age of 25. The statutory orphan’s pension equals 20% of the disability or retirement pension per child. The employer can insure higher benefits.
A death lump sum falls due if no surviving spouse’s or surviving partner’s pension must be paid or if an additional lump sum payable at death has been insured.
The total contribution comprises the contribution for the retirement credits, the cost for the risks of disability and death and a contribution to the administrative costs. The contribution for the administrative costs includes the contribution to the LOB Guarantee Fund and the contribution for the adjustment of the statutory survivors’ and disability pensions to the increase in the cost of living. The employer’s contribution must equal at least the total contributions of all employees together.
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You receive your personal pension certificate from your employer every year. This certificate contains important information on your personal insurance situation at retirement age and in the event of disability or death. You can use our explanations to learn more about your personal pension situation.