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Purchasing pension fund benefits

Closing pension gaps

How are your retirement assets affected if your salary increases, you enroll in a pension fund after your 25th birthday, or you take time off to look after children?


Avoiding pension gaps

Whether your salary increases, you enroll in a pension fund after reaching age 25, or you take time off to care for children, your savings with your occupational benefits insurance may be reduced as a result. You can, however, close a pension gap and improve your coverage by purchasing additional benefits.

Your advatages
  • Close pension gaps
  • Improve retirement benefits
  • Tax savings
How do pension gaps come about?

The maximum amount that you could have in retirement assets is generally higher than the amount that you actually do have because the savings contributions you have been paying into your pension fund since age 25 have been based on a lower salary or may be missing altogether if you took time off from work. Gaps may also arise when you change from part-time to full-time employment, if your pension fund improves the plan, or if you change your job.
Purchasing additional benefits allows you to make up the difference between the actual and potential retirement assets, which means that you avoid the prospect of lower benefits on retirement.



Retirement without pension gaps

"My pension fund" contains important information on how to top up your retirement assets so that you are fully prepared for a possible benefits case.

  • When is it possible to purchase benefits?

    In principle, a purchase is possible at any time, provided that this is permitted under your pension fund regulations. However, you must first repay any pension fund assets you may have withdrawn early to finance residential property before you can purchase additional contribution years.

    Exception: This restriction does not apply if you are going to retire in less than three years or if you intend to purchase benefits to close a gap that resulted from divorce.

    If you retire early, you can also partially or fully close the resulting pension gap by purchasing additional benefits. We recommend that you contact your pension fund for further information.

  • How do I calculate the amount in benefits I am allowed to purchase?

    Compare the maximum possible retirement assets with the amount that is currently available. The difference is the maximum purchase amount.

     

    The maximum in retirement assets is calculated based on:

    • Your current pensionable salary
    • The regulatory table on savings
    • The period from the start of the savings process as defined in the regulations (generally from age 25) to the date on which the purchase is calculated
    • The interest earned

    The effective retirement assets consist of the current retirement assets plus amounts derived from any vested benefits accounts or policies you may have.

  • Saving on taxes
    Deducting the amount of your purchase from your taxable income means that you will have additional cash at your disposal.
    You can carry out a provisional calculation by using the Swiss Federal Tax Administration's tax calculator.

 

For persons insured with an AXA pension fund

Steps for purchasing benefits

Have you decided to purchase additional contribution years? If so, you can notify us directly. Thanks to AXA's online Forms service you only need to complete the following steps:

  • Print out the form
  • Fill in the form and send it to AXA
  • AXA will notify you of the maximum purchase amount and send you a pre-completed payment slip.

To access the service you only need your contract number, which you can find on the personal certificate you receive annually.

Provisional benefit calculation for purchasing contribution years

Would you like to know how your benefits will improve after you've purchased additional contribution years? You can use our online calculator to find out. The access code is printed on the personal certificate you receive every year.

Online calculation

If you're unable to access the application, you can ask your employer for the calculation.



Frequently asked questions: Purchasing pension fund benefits

A good pension plan results from good preparation. You can take an important step in this direction by closing any gaps you may have in your Pillar 2 pension. AXA Winterthur will help to resolve any uncertainties you may have. Our experts are there to provide answers to frequently asked questions about pension funds.

  • Using assets from Pillar 3a
    Am I allowed to transfer my Pillar 3a assets into my pension fund?

    Yes, you can purchase additional pension benefits by using assets from Pillar 3a. The assets you transfer will not affect your tax situation.

  • Pension assets from abroad
    I previously worked abroad and would like to transfer the pension assets that I accrued there into a Swiss pension fund as vested benefits. Is that an option?

    No, in principle that's not allowed. However, you can transfer the funds by purchasing additional contribution years from your Swiss pension fund.

  • Pension gap following divorce
    Can I purchase benefits in the amount that was deducted from my pension fund following divorce?

    Yes, that's possible.

  • Period for purchasing benefits after a divorce
    Bis wann ist der Wiedereinkauf nach einer Scheidung möglich?

    Ein Wiedereinkauf in die Pensionskasse ist grundsätzlich bis zum Eintritt eines Vorsorgefalles (Pensionierung, Invalidität oder Todesfall) möglich.

  • Benefits purchase in the event of disability
    Can I purchase missing contribution years in my pension fund if I'm already fully disabled?

    No. In this situation that's no longer possible. As the insured, any scope that you had to adjust your pension situation ends with the onset of a benefit case (e.g. disability).

  • Purpose of a benefits purchase
    What's the purpose of a benefits purchase?

    In principle, there are three main reasons for making a purchase.

    1. Missing contribution years

    If, for example, your pension has gaps because you were abroad or didn't work for a certain period, you can make up for the missing contributions by purchasing benefits. This way you can reach the same benefits as you would have otherwise.

    2. Increase in pension in the event of early retirement

    Your pension will be reduced if you retire early. It is therefore possible for those who retire early to purchase benefits to compensate for this shortfall and thereby increase their pension.

    3. Pension gap following divorce

    Retirement assets are divided up following divorce. The retirement assets that are paid to the divorcee may lead to a gap in the retirement account. In this case, purchasing benefits will compensate for the shortfall.

    Restrictions

    Have you made any advance withdrawals from your pension fund in order to finance residential property? If so, you must repay these amounts before you can purchase any benefits for additional contributions years or early retirement.

    This rule does not apply to benefits purchases in the context of divorce.



Explanation of important terms

Benefits case

A benefits case occurs when a person reaches retirement age, becomes disabled, or dies.

 

Interest on occupational benefits

The Federal Council sets a minimum interest rate for retirement assets kept in Pillar 2 accounts. The foundation sets the interest rate for the extra-mandatory assets.

 

Pensionable salary

Pensionable salary is the portion of your annual salary that is used for calculating your occupational benefits. Here, a distinction is made between the pensionable salary components that must be insured by law and those that are exempt from this requirement. See "BVG salary" and "Coordinated salary" for more information about pensionable salary.

 

Occupational benefits fund regulations

Every occupational benefits institution issues its own regulations that define the scope of its occupational benefits insurance.

All pension fund regulations must specify at least the following:

  • The range of benefits (e.g. on retirement, disability, death)
  • The way that benefits are financed (e.g. annually, quarterly, payments in arrears)
  • The conditions for entitlement (e.g. duty to provide support)
  • The various pension plans (BVG plan, plan for managers)
  • The various groups of insured persons (e.g. employees, managers)

 

Retirement assets

Retirement assets are the amount that accrues in your occupational benefits account under a Pillar 2 plan. The available assets consist of

  • individual retirement credits,
  • the vested benefits brought into the fund,
  • any amounts paid into the account by the employer and/or from a benefits purchase,
  • interest earned on these amounts,
  • surplus portions.

The amount of your mandatory retirement assets is determined solely by the retirement credits and amounts that are paid into the account pursuant to the minimum BVG provisions, plus interest. The minimum interest rate is set by the Federal Council.

 

Retirement credits

Retirement credits are used to build up retirement assets. They comprise the savings contributions the employee and the employer pay into the account. The level of retirement credits is specified in the regulations of every occupational benefits institution and is generally defined as a percentage of the pensionable salary. Pursuant to the BVG, the following percentage rates apply:

Man
(age) 
Woman
(age)
Amount of retirement credits
25 - 34 25 - 34 7%
35 - 44 35 - 44

10%

45 - 54 45 - 54 15 %
 55 - 65 55 - 64 18%

 

Retirement age

The current regular retirement age is 64 for women and 65 for men. You can draw an AHV pension up to two years in advance or defer it by up to five years. The 11th revision of the AHV, which is currently under discussion, is looking at raising the retirement age and making it more flexible.

 

Retirement pension

You can calculate your annual retirement pension by multiplying the retirement assets on the retirement date by the conversion rate valid at that time.

 

Vested benefits account

If you temporarily or permanently withdraw from an occupational benefits institution (e.g. if you quit your job, take leave, or go abroad) and are unable to transfer your vested benefits to a new institution, you are nevertheless obligated to maintain all of your accrued pension assets. This leaves you with two options:

  • You can deposit your vested benefits in an account with a benefits institution.
  • You can use the amount to purchase a vested benefits policy.

 

Vested benefits policy

If you temporarily or permanently withdraw from an occupational benefits institution (e.g. if you quit your job, take leave, or go abroad) and are unable to transfer your vested benefits to a new institution, you are nevertheless obligated to maintain all of your accrued pension assets. This leaves you with two options:

  • You can use the amount to purchase a vested benefits policy.
  • You can deposit your vested benefits in an account with a benefits institution.

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