Pension assets are among the most privileged corporate holdings – in terms of both taxation and prior claims in the case of bankruptcy. The investment strategy chosen is now becoming increasingly important, and 1e pension solutions offer more possibilities and tactical advantages for entrepreneurs and middle management.
Companies that want to make use of the 1e plans must insure the corresponding salary components with a separate legal entity. As a result, a second foundation is being set up in addition to the first foundation for salaries in the mandatory and extra-mandatory insurance up to the 1e salary limit. This covers extra-mandatory pension provision for salaries above the limit.
If a company offers 1e pension plans, all employees who meet the criteria defined in accordance with pension regulations must insure these salary components as part of the 1e pension solution. The employer can also set the limit for the 1e solution higher than CHF 132,300. To implement 1e pension plans, it is advisable to either set up a dedicated new foundation or to join a collective foundation with 1e pension plans.
1e solutions offer attractive tax benefits to companies. For example, 1e plans serve as a tactical instrument in withdrawal strategy – this is of particular interest when considered against the backdrop of the increase in dividend taxation resulting from tax regulation 17.
From the insured's perspective, 1e pension plans are the answer to an increasing desire to individualize pension solutions. Insured participants in a 1e pension plan have more flexibility in their investments, allowing them to take advantage of higher potential returns. In addition, they don't need to accept any redistribution between employed persons and pensioners that is incompatible with the system on this part of their pension assets, because the balance of the 1e pension plan is no longer part of the collective balance in the mandatory and extra-mandatory insurance.
Whether or not a company should implement a 1e pension solution depends on the needs and expectations of its employees. In any case, the implementation and set-up of the solution needs to be discussed thoroughly. A 1e plan must work for both the company and its employees.
1e plans are primarily investment based, meaning that a longer investment time horizon is beneficial. As a result, 1e solutions tend to suit companies with an age structure that is relatively young. The income structure also plays a role: It needs to be considered whether the company has any employees with a total annual remuneration of more than CHF 132,300, because only the portion of the salary that exceeds this amount can be insured in a 1e plan.
If the basic framework conditions have been met, the company must analyze its current situation. The following questions should be addressed: What pension solution is already in place? Is there an all-encompassing solution alongside which a 1e plan is to be offered? Or is there already an additional executive solution that will be replaced by a 1e plan? The specific initial situation will determine how a 1e plan is introduced.
Depending on the company's 1e plan, insured persons may choose from up to ten investment strategies. One of these is low risk. Unlike other pension solutions, insured persons have an investment risk with the 1e plans. That's why it is very important that every insured person seeks advice when choosing an investment strategy and regularly reviews their portfolio. A personal Credit Suisse advisor can be assigned to you on request to provide you with individual advice. The insured must also be aware that they are taking on a certain level of investment risk. But this does also creates opportunities, with positive performance credited directly to the investors.
The insured will benefit from low institutional investment fees, which are usually only available to pension funds. Mixed assets can be actively managed for an annual fee of 0.45%. There are also no costs associated with changing the investment strategy for these products. Indexed mixed assets are even cheaper, with an annual fee of 0.20%. What's more, these passive products are subject to even lower issue and exit fees. This makes them particularly suitable for very long-term oriented investors who rarely want to change investment strategies.
The strategy should be reviewed on a regular basis. The choice of a conservative strategy or a strategy that is riskier, but may yield higher returns, needs to reflect the individual's overall situation. Shortly before retirement, for example, it may be wise to shift to less risky investments. It is important to note, however, that investment strategies can be regularly modified, for example in response to a change in a person's financial situation.