Pension Fund Statement – Taking a Closer Look at the Future
It may seem like a book with seven seals too many, but the pension fund insurance certificate is easy to understand. It shows the financial flexibility for your retirement age and provides early warning of any gaps.
When a new year begins, a ton of paperwork lands on our desks: tax statements, bank statements, donation receipts, and more. Most employees also receive the pension fund insurance certificate, which frequently lands unopened in the filing cabinet or even the trash can. Bad idea! In addition to information about the insured benefits in the event of death or disability, this pension certificate includes important information about old-age income. That's why it's a good idea to take a few minutes to see whether your pension plans are on the right track.
The AHV annual salary is used to calculate the pensionable salary and thus the pension fund benefits. Check whether the AHV annual salary listed matches your actual annual salary. Unintentional discrepancies can reduce your benefits.
Comprises the contributions that you and your employer make, additional benefit purchases made, and interest. For pension funds with extra-mandatory benefits, you will see two numbers: your entire retirement assets and the BVG balance, i.e., the legally prescribed minimum. The pension fund has to guarantee an interest rate set by the Federal Council only for this BVG balance.
Lists the expected retirement capital and the related pension. Note: The amount calculated is only a simulation and not a guarantee. The pension funds use various (frequently very optimistic) interest assumptions in their calculations. Another key factor is the conversion rate used to determine the BVG pension from the capital.
The Pension Fund also provides benefits if you become disabled or die before retirement. In the event of disability, the Pension Fund pays a disability pension in accordance with the Regulations. In the event of death, in most cases a pension will be paid by the Pension Fund to the surviving spouse or children and, depending on the rules, under certain circumstances also to a partner.
Detailed information about how much you contribute as an employee and how much your employer contributes. Often you will also see the share attributable to insurance benefits such as death and invalidity risk, as well as administrative costs.
If you have met the legal requirements, you can make voluntary contributions to increase your retirement benefits. However, this is not advisable if a pension fund is significantly underfunded, i.e., is in financial difficulty, or if you plan to withdraw funds in the next three years.
Looking to purchase your own four walls? You can access pension fund capital if you contribute a minimum of ten percent in other equity. This shows the maximum amount you can withdraw to purchase a home.
|Staff pension fund of company XY|
|Pension certificate as at January 1, 2016|
|AHV annual salary reported||CHF||110,000|
|Pensionable annual salary||CHF||85,325|
|Development of retirement assets|
|Retirement assets as at January 1, 2016||CHF||336,874|
|➜ thereof BVG (= legal minimum)||CHF||178,184|
|Retirement benefit for normal retirement at age 65|
|Expected retirement capital with interest (projected interest 2.5%)||CHF||636,925|
|Expected annual retirement pension||CHF||40,411|
|Retirement benefit for early retirement (minimum age of 60)|
|Expected annual retirement pension at age 63||CHF||34,296|
|Risk benefits in the event of death or disability|
|Yearly disability pension||CHF||34,130|
|Yearly disabled person's child's pension||CHF||6,826|
|Yearly surviving partner's pension||CHF||25,598|
|Yearly orphan's pension||CHF||6,826|
|Annual contribution for retirement provision||CHF||16,336|
|Annual contribution for risk insurance and security fund||CHF||5,584|
|Total annual contribution||CHF||21,920|
|➜ thereof attributable to employee (50%)||CHF||10,960|
|Maximum possible purchase||CHF||64,185|
|Max. poss. advance withdrawal for promotion of home ownership||CHF||289,175|
The Wide World of Pension Funds
For many people, pension funds are the most important part of retirement provision. The contributions paid by employers and employees add up: After a few decades, a large portion, if not the largest portion, of personal assets are in the second pillar. Reason enough to take a close look.
Unlike the federal AHV/IV (Old Age and Survivors / Disability Insurance), the first pillar, the world of pension funds is very diverse. Today there are some 2,500 pension funds that vary greatly in terms of size, management and legal form, and benefits. The Federal Act on Occupational Retirement, Survivors', and Disability Pension Plans (BVG) stipulates the minimum requirements for mandatory occupational benefits insurance. However, most pension funds offer additional extra-mandatory benefits, i.e. they exceed the legally required minimums. Additionally, all pension funds have their own (often complex) regulations that explain all of the benefits, but can be very complicated for average people to understand.
Dreams vs. Reality
Given this diversity, it's no surprise that there is no standard pension certificate. Rather, there are dozens of types. Some contain just a few basic pieces of information, while others are very detailed. In any case, it's important to look at the information more closely, because the certificate is a key diagnostic tool that helps you see how your dreams measure up against reality at an early stage.
However, it does not provide the full picture of your pension status. For this, you need to look at all pillars of the pension system, i.e. the AHV/IV and private pension provisions such as the third pillar, as well as your other assets.