Personal circumstances and objectives change during life. Various changes such as marriage, a sabbatical, children etc are part of the developments of each and every one. Are you ready for contingencies such as incapacity, unemployment and disability...?
- to provide security for your family ensuring an adequate income in case of death or of disability of one spouse.
- to take steps to keep the desired standard of living at retirement or even to take an early retirement.
GestCustom offers an active approach to prevention and counselling, aimed at controlling risk.
Understanding the principle of three pension pillars (article 111 de la Constitution Fédérale)
The diagram below shows briefly the functioning of the three pension pillars.
All persons domiciled in Switzerland must be insured for the state pension plan and invalidity insurance.
A principle of strong solidarity characterizes this system:
The first pillar creates solidarity between generations. Pension payments are financed by current pension contributions. It also ensures solidarity between rich and poor in that high-income earners pay more contributions and those who earn less receive benefits that their contributions alone could not fund.
Retirees who are in charge of children or parents benefit from a system of bonuses.
The first pillar also assures solidarity between spouses: their income is shared so that whoever earns the less benefits from the other spouses higher salary, i.e. higher pension contributions.
The second pillar consists of the LPP (Law on Occupational Retirement, Survivors and Disability, Section 113 of the Federal Constitution) and LAA (Law on Accident Insurance).
The LPP came into force in 1985. As of 2018 only employees with an income of more than CHF 21'150.- are required to be insured by occupational pensions. All employees are obliged to be insured by the LAA since 1984. People who are employed independently can be insured on a voluntary basis.
The case of joint employer and employee contribution:
Occupational pensions are funded jointly, that is to say by contributions from employers and employees, without any government funding. Its purpose is to insure that beneficiaries maintain an appropriate level of living at retirement.
The first two pillars allow employees to only partially achieve the objective of maintaining the constitutional right to maintain the standard of living at retirement. The State therefore supports individual pension planning through the third pillar. Therefore, these savings are partly tax-privileged.
Pillar 3A or retirement savings account:
All who are employed can contribute and enjoy the accompanying tax privileges. This is the usual form of retirement planning for those who are independently employed.
In 2018, payments to the pillar 3A are tax deductible as follows:
- for a person affiliated with an employer pension fund: CHF 6'768. –
- for a person with no pension fund: 20% of annual income but maximum CHF 33'840. -
Pillar 3B or flexible pension account:
The flexible pension plan includes all forms of wealth accumulation made for pension, other than those conducted under Pillar 1, 2 and 3a. Unlike tax linked pension plans (3A), it only enjoys certain tax benefits if it contains life insurances. The tax benefits is dependant on the canton of residence.
However, it can be arranged freely, without restriction. Other than life insurances, it includes the following financial vehicles: transitory employer retirement accounts, deposits with preferential interest rates and investment funds with a long-term investment horizon.