Tied Private Pension Scheme
Gebundene Selbstvorsorge
Coverage
Voluntary insurance
- Employed and self-employed persons with an income that is subject to contributions to the old age and survivors’ insurance scheme, thus including persons who live abroad but work in Switzerland.
- Persons who receive a daily allowance by the unemployment insurance, and persons with partial invalidity receiving an income subject to contributions to the old age and survivors’ insurance scheme.
Financing
General finances
- Fully funded personal pension plans based on personal contribution payments and capital revenues.
Contribution payments
- Persons provide contribution payments and decide upon its amount individually.
State support & incentivising strategies
- Revenue is not subject to income tax. The entirety of savings accumulated through contributions is not subject to wealth tax.
- Employed and self-employed persons may fully deduct their contributions from their income when paying direct federal, cantonal and communal taxes (up to CHF 6,826 per year if the person is part of an occupational pension scheme; up to 20% of their earned income for a maximum of CHF 34,128 annually if the person is not part of an occupational pension scheme).
- Preferential interest rates apply.
Administration
- Tied private pension schemes are allowed in two forms only: tied pension insurance policies offered by insurance agencies, and tied insurance arrangements with bank foundations. The respective institution manages pension funds and pays out benefits. Contract models for both forms require the approval of the Federal Tax Administration.
- The cantons determine the responsible supervisory institution. Supervision regulations are the same as those for the occupational pension scheme.
Qualifying Conditions
- Benefits may be paid out five years before reaching the regular retirement age as defined by the old age and survivors’ insurance scheme at the earliest, and, in case of continuous pursuit of employment, five years after reaching the regular retirement age at the latest (age 64 for women, 65 for men).
- A premature payout is allowed for legally defined purposes, such as giving up a self-employed activity in favour of another self-employed activity; funding of residential property for one’s own use; amortisation of mortgage loans; permanent emigration; invalidity and death.
- The insured person may terminate the policy or arrangement if they use their pension capital to buy into a tax-exempt pension fund.
- Contributions may be made until five years after reaching the regular retirement age as defined by the old age and survivors’ insurance scheme.
Benefits
Pension payments
- Accumulated capital through contribution payments and investment yields.
- Only a one-time lump sum payment. May be circumvented (to reduce taxation impact) by spreading contributions across multiple accounts or policies.
- Depends on the chosen solutions (e.g. savings account, bonds, stock, investment funds, insurance policies).
Taxation and social security contributions on pension payments
- Payments are fully subject to income tax according to general tax rules. Lump sums are taxed at a reduced rate separate from the remaining income; the same applies to premature lump sum payments.
- Payments are not subject to social security contributions.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Voluntary insurance
- Employed and self-employed persons with an income that is subject to contributions to the old age and survivors’ insurance scheme, thus including persons who live abroad but work in Switzerland.
- Persons who receive a daily allowance by the unemployment insurance, and persons with partial invalidity receiving an income subject to contributions to the old age and survivors’ insurance scheme.
General finances
- Fully funded personal pension plans based on personal contribution payments and capital revenues.
Contribution payments
- Persons provide contribution payments and decide upon its amount individually.
State support & incentivising strategies
- Revenue is not subject to income tax. The entirety of savings accumulated through contributions is not subject to wealth tax.
- Employed and self-employed persons may fully deduct their contributions from their income when paying direct federal, cantonal and communal taxes (up to CHF 6,826 per year if the person is part of an occupational pension scheme; up to 20% of their earned income for a maximum of CHF 34,128 annually if the person is not part of an occupational pension scheme).
- Preferential interest rates apply.
- Tied private pension schemes are allowed in two forms only: tied pension insurance policies offered by insurance agencies, and tied insurance arrangements with bank foundations. The respective institution manages pension funds and pays out benefits. Contract models for both forms require the approval of the Federal Tax Administration.
- The cantons determine the responsible supervisory institution. Supervision regulations are the same as those for the occupational pension scheme.
- Benefits may be paid out five years before reaching the regular retirement age as defined by the old age and survivors’ insurance scheme at the earliest, and, in case of continuous pursuit of employment, five years after reaching the regular retirement age at the latest (age 64 for women, 65 for men).
- A premature payout is allowed for legally defined purposes, such as giving up a self-employed activity in favour of another self-employed activity; funding of residential property for one’s own use; amortisation of mortgage loans; permanent emigration; invalidity and death.
- The insured person may terminate the policy or arrangement if they use their pension capital to buy into a tax-exempt pension fund.
- Contributions may be made until five years after reaching the regular retirement age as defined by the old age and survivors’ insurance scheme.
Pension payments
- Accumulated capital through contribution payments and investment yields.
- Only a one-time lump sum payment. May be circumvented (to reduce taxation impact) by spreading contributions across multiple accounts or policies.
- Depends on the chosen solutions (e.g. savings account, bonds, stock, investment funds, insurance policies).
Taxation and social security contributions on pension payments
- Payments are fully subject to income tax according to general tax rules. Lump sums are taxed at a reduced rate separate from the remaining income; the same applies to premature lump sum payments.
- Payments are not subject to social security contributions.
Legal Basis: Federal Constitution of the Swiss Confederation (Bundesverfassung der Schweizerischen Eidgenossenschaft [BV]); Federal Act on the Occupational Old Age, Survivors’ and Invalidity Pension Scheme (Bundesgesetz über die berufliche Alters-, Hinterlassenen- und Invalidenvorsorge [BVG]); Ordinance on Tax Relief on Contributions to Recognised Pension Schemes (Verordnung über die steuerliche Abzugsberechtigung für Beiträge an anerkannte Vorsorgeformen [BVV 3]); Federal Act on the Vesting of Occupational Old Age, Survivors’ and Invalidity Benefits (Bundesgesetz über die Freizügigkeit in der beruflichen Alters-, Hinterlassenen- und Invalidenvorsorge [FZG]).