Swiss pension funds from more than one employer

I work for no less than 3 separate Swiss employers - all on a part-time basis. I haven't given much thought to my pension fund until recently because I didn't really understand how it worked in Switzerland. Now I am wondering which pension fund I am paying into, or whether I am paying into all of them. How do pension fund savings work when you have several jobs?

Greetings,

Which pension fund you subscribe to when you have multiple employers depends on a number of factors.

If your salaries fall below the threshhold for compulsory pension fund contributions (in 2017 only salaries of 21‘150 exceeding Swiss francs are subject to compulsory pension fund contributions), you are not required to join a pension fund.

If each of your individual salaries is lower than the compulsory pension fund threshold, but your combined salaries exceed the threshold, you can voluntarily join one of your employers' pension funds - if the pension fund's regulations allow this - or you can join a pension fund operated by the Substitute Occupational Benefit Institution.

If your salary at one employer exceeds the pension fund threshold but the others do not, you will be subscribed to the pension fund from the employer which pays the eligible salary. Your other salaries will not be subject to pension fund contributions. Some Swiss pension funds allow you to pay contributions based on all of your salaries rather than just the salary you receive from that one employer. Doing this whenever possible is recommended because your pension will be based on your full income rather than just that one salary.

If two or more of your salaries exceeds the threshold, your employers will typically subscribe you to their individual pension funds - meaning you will be a member of two or more funds. This is not a good setup because your pension is based on a "coordinated salary". This coordinated salary accounts for the part of your salary which falls between CHF 24,675 and CHF 84,600. The part of your salary below the CHF 24,675 threshold is known as the "coordination deduction".

Typically, when you are a member of more than one pension fund, each pension fund subtracts the coordination deduction and only insures the portion of your salary which falls above the CHF 24,675 threshold. So you end up receiving a much lower pension than you would if you paid your full contributions to a single pension fund (which would subtract a single coordination deduction).

Example: You work for three employers, each of which pays you a salary of CHF 25,000 per year. If you used separate pension funds for each salary, only 325 francs of each salary would be counted as your coordinated salary. So only CHF 975 of your CHF 75,000 in combined annual salaries would be insured.

Some Swiss pension funds allow you to make contributions based on your entire income - including salaries from other employers. If one of your employers uses a pension fund which provides this option, sticking with that one pension fund rather than using several is a better financial move. Your other employers and their pension fund agreements will also play a role in deciding whether you can get an exemption in favor of using a single pension fund.

Verdict:

Each Swiss pension fund has its own regulations, so while the advice above provides a basic guideline, the final decision rest in your pension fund's terms and conditions. Discuss the matter with your employers or prospective employers and ask them to explain the terms and conditions of their pension fund agreements.

If possible, try to stick with a single pension fund rather than mutliple funds and make contributions based on your full income rather than just one salary.

Best regards from Moneyguru

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