Occupational benefits (Pillar 2) My pension fund

If you work for several employers and don’t achieve the minimum annual salary pursuant to BVG (OPA) with any single employer, you can insure yourself voluntarily with the occupational benefits institution of one of your employers. If this is not possible, you can insure yourself with the BVG/OPA Substitute Occupational Benefit Institution.

This is a nationwide occupational benefit foundation. In accordance with the BVG (OPA), it is required to undertake the following tasks:

• Mandatory enrollment: Enrollment of employers who fail to comply with the requirement to enroll with an occupational benefits institution
• Company affiliation on request: Companies can join the Substitute Occupational Benefit Institution on request
• Voluntary insurance of individuals, e.g., self-employed persons and persons with several employers (whose total annual salary exceeds the BVG/OPA minimum salary)
• In the case of employers who are not enrolled with an occupational benefits institution: Provision of BVG (OPA) benefits for their employees
• If pension insurance is interrupted: Manage vested benefits accounts for individuals who do not join a new occupational benefits institution and do not inform their former occupational benefits institution within two years that they wish to maintain their pension provision
• Individuals receiving unemployment insurance: Manage the mandatory insurance for the risks of death and disability for individuals receiving daily benefits from unemployment insurance.

Pension funds collect contributions with which they finance their benefits. These are paid by employers and employees together. The contributions depend on various factors, such as:

• the age and gender of the insured person
• the type of pension plan
• the pensionable salary.

The division of contributions between the employer and employee is defined in the pension fund regulations. Employer contributions must equal at least the total contributions of all employees. The employer deducts employees’ contributions directly from their salary.

Exemption from contribution payments is an insurance benefit. An insured person who is incapacitated or disabled prior to reaching retirement age is exempt from having to pay contributions once the agreed waiting period ends. The occupational benefits institution will continue to fund the pension at its own expense.

Your BVG (OPA) age is calculated by subtracting your birth year from the calendar year. Your BVG (OPA) age can therefore be a year higher than your actual age.

The Federal Law on Occupational Old Age, Survivors' and Invalidity Pension Provision (BVG/OPA) defines the following occupational benefits:

Retirement benefits

• Retirement pension
• Retired person's child's pension

Disability benefits

• Disability pension
• Disabled person's child's pension

Survivors benefits

• Widow’s or widower’s pension (partner’s pension)
• Possibly: One-time lump-sum for eligible survivors
• Orphan’s pension 

A person is considered to be unfit for work if they can no longer carry out their job or another reasonable working activity or can only work to a limited extent:

• An illness that has been objectively diagnosed by a doctor
• Accident
• Infirmity 

This applies if you leave an occupational benefits institution before claiming benefits (retirement, disability, death), for example, if you change your employer.

Not everyone is subject to mandatory occupational benefits insurance. If you are self-employed or work for several employers, you can opt for voluntary insurance if your total annual salary exceeds the minimum BVG (OPA) salary.

Self-employed persons also have the option to enroll with the benefits institution of their professional association or of their employees. If this is not possible, they are entitled to take out insurance with the Substitute Occupational Benefit Institution.

If you withdraw early from an occupational benefits institution, you are entitled to the assets, referred to as vested benefits, that accrued during this time. The pension fund regulations define the vested benefits amount. The Vested Benefits Act guarantees a minimum in benefits.

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, they will nevertheless be paid out. However, they are not at your disposal. They can be paid out in two different ways:

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

Early retirement is possible once you reach age 58, provided that the regulations of your occupational benefits institution permit you to do so. Withdrawing from professional life at an even earlier date is possible only

• in connection with an organizational change,
• for jobs (e.g. pilots) where early retirement is mandatory for public safety reasons. 

Flexible retirement is possible between the ages of 58 and 70. Here you can reduce your annual salary either gradually or all at once, up to when you retire. The following conditions apply to flexible retirement:

• The regulations provide for flexible retirement.
• Medically, you are fully capable of working on the date of the first reduction.

A disability pension is payable if the insured person becomes disabled before reaching the reference age (formerly: normal retirement age) and the agreed waiting period has expired. The amount of the disability pension is defined in the pension fund regulations.

Persons who draw a disability pension are entitled to a disabled person's child's pension for each child eligible for support. Eligibility applies to children

• up to their 18th birthday
• up to their 25th birthday if they are in school or training,
• until gainfully employed, but at the most up to their 25th birthday, and if their disability level is 70% or more.

Minimum BVG (OPA) requirements state that a disabled person's child's pension is 20% of the statutory disability pension.

Permanent or long-term full or partial restriction of a person's ability to work or earn an income.

Restriction on a person's ability to work in percent. The IV invalidity insurance scheme determines the level of disability.

When you reach retirement age, you can withdraw 25% of your retirement assets from the mandatory portion of your occupational benefits plan as a lump sum.

If your occupational benefits institution's regulations permit, you can also withdraw all your retirement assets as a single lump sum. To do this, you will need to inform your pension fund before you retire. Your pension fund regulations may specify a notice period.

The following are entitled to receive a child's pension:

• biological and adopted children
• the insured person's foster children as defined by the AHV/IV (OASI/IV)
• stepchildren who receive full or primary financial support at the time of the insured person's death.

A life partner is a person who

• receives significant financial support from the insured
• shared the household with the insured person throughout the last five years up to their death
• is responsible for supporting one or more joint children.

Life partners may not be married or related to each other or live in a registered partnership.

Persons who draw a retirement pension are entitled to a retired person's child's pension for each eligible child. Eligibility applies to children

• up to their 18th birthday
• up to their 25th birthday if they are in school or training,
• up to their 25th birthday if they have a disability level of 70% or more.

Minimum BVG (OPA) requirements state that a retired person's child's pension equals 20% of the statutory disability pension.

Every year you receive a pension fund certificate. This personal certificate contains all the key information pertaining to your occupational benefits insurance:

• Annual salary
• Insured salary
• Retirement, disability, and death benefits
• Proportion of the retirement benefits you can draw as a lump sum
• Retirement assets
• Vested benefits
• Maximum advance withdrawal to fund home ownership
• Permitted amount for the purchase of additional benefits
• Total annual contribution
• Annual contribution by employee

The personal certificate (which is also known as a pension certificate or pension fund certificate) is provided for information purposes. It contains all the important information about your insured benefits under the occupational benefits program.

A pension refers to regular payments made to an insured person for a fixed period or for life.

Starting on January 1, 2024, the term 'reference age’ will replace the term ‘normal retirement age’ in Swiss law. The reference age is the age from which an insured person can start drawing their retirement pension without reducing their benefit payment.

Reference age

With the introduction of the OASI Reform 21, the reference age of 65 will now apply to both men and women. The retirement age for women is being gradually raised from 64 to 65. For women who were born after 1960, the retirement age will be increased by three months each year starting in 2025 until the new reference age is reached.

Risk insurance is a type of life insurance that offers financial protection against the risks of death and occupational disability.

Self-employed refers to anyone not working under an employment contract and who the AHV (OASI) has recognized as being self-employed. Self-employed persons are responsible for managing their own pensions.

A death benefit (lump sum) is a single payment made to the beneficiaries as defined in the regulations when the insured person dies.

The law prescribes which benefits must be insured and to what extent as a minimum. However, the employer has the option of providing better insurance for their employees. Benefits that exceed the statutory minimum are therefore extra-mandatory benefits.

The conversion rate is used for calculating the annual retirement pension. and comprises a factor for calculating the available retirement capital. The Federal Council sets the minimum conversion rate in accordance with the BVG (OPA).

Unpaid leave is treated differently from termination. The employment contract remains in force; only salary payments cease temporarily. During unpaid leave, persons previously insured under the BVG (OPA) generally have the option to continue their pension coverage without restrictions, or at minimum to remain insured against the risks of disability and death. The employer and employee agree individually on how to divide the contributions.

By law, occupational pension insurance does not cover your entire salary. A “coordination deduction” is applied to your AHV (OASI) salary and there is a cap on the insured salary. The coordination deduction applies to the part of the annual AHV (OASI) salary that is already insured under Pillar 1 (AHV/OASI). You can find the exact definition of salary in your pension plan.

A benefits case (i.e., a case where benefits are payable) occurs when a person reaches retirement age, becomes disabled, or dies.

Every occupational benefits institution issues its own regulations that define the scope of its occupational benefits insurance. The pension fund regulations must specify the following:

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

Orphan's pensions are paid when an insured person dies and leaves behind eligible children. Eligibility applies to children

• up to their 18th birthday
• up to their 25th birthday if they are in school or training,
• until gainfully employed, but at the most up to their 25th birthday, and if their disability level is 70% or more.

Minimum BVG (OPA) requirements state that an orphan's pension is 20% of the statutory disability pension.

The waiting period is the time between the date on which a person becomes unable to work and the date on which the disability pension or exemption from premium payments begins.

A widow's or widower's pension is the amount paid to the partner of a married insured person when that person dies.

You can make an advance withdrawal or pledge personal pension assets to finance the purchase of owner-occupied property.