I think it would be interest to know the conversion rate of your pension fund. if the conversion rate is good 6% or more, Maybe a split 50% income and 50% capital could be less risky.
Thanks, to answer ur questions:
I would like 120k before tax (but earnings on the 3m, not withdrawal)
OASI - have 25yrs contribution (at the salary i have mentioned below). I didn’t factor this in, it wud help me get to the chf120k.
Pesnion - i think it pays about 5%, but i really want to avoid taking the the pension
The 3m pot is effectively 90% pilar 2.
Location - if it helped, i could move to graubunden for a year, as i have some connections there.
Thanks alot.
Would you mind to elaborate on your professional background?
Close to 3M in pillar 2 sounds like a successful, at least well-paying career, but there’s little financial knowledge or other savings?
Please don’t get this wrong, I’m not judging, just curious.
Sounds like a comfortable position and a good time to plan the next steps.
Are you still married? If yes, what about her pillar 2 and OASI? Are the 120k for both of you?
Hi
I work in insurance. But, I started working at 21, (not in CH) and saved fairly consistently from the beginning, and then used my savings to “buy in” to my pension, when i got to switzerland.
I am married, but wife didn’t work for about 20 years and for rest only worked 20% in a non profit, so no real savings/pension to speak of….
Cheers
Think that you reached the right conclusion - that you best have a look with a retirement advisor. I can fully echo what @Wolverine mentioned. If you don‘t get a good contact from @Your_Full_Name, could as well recommend Vermögenszentrum.
Notwithstanding what your advisor tells you - the required pension income and the lack of Investment experience in my view calls for taking an ordinary pension. There is one remark I need to make - think that it was very wise of yours to invest your bonuses into your pension fund - that probably gave you a fairly good return.
If your pension advisor recommends you to withdraw part of your pension put and to jnvest it - my recommendation would be to go to www.avadis.ch and take a 40-60% shares strategy. From this amount, give them a stabding order to withdraw about 3.5% of the initial invest. Meaning that if you put 1M there (post withdrawal tax) that they pay you monthly 3k aka 35k per annum.
Why Avadis? The investors biggest enemy is oneself and most investors in their first 10 years make massive behavorial errors. Generally no issue as they only accumulate material wealth over time but for you, a mistake will cost you much more as you already have a lot invested. Why Avadis? Its the cheapest set and forget solution for a payout plan where you simply don‘t need to do anything. Once set up - it will just work. No selling, no re-balancing, no risk of errors. Yes, Avadis is less efficient than self investing but at the same time - it can be sustained with zero interest, effort and even at 90 when you no longer want to care about online trading and the like. Plus, your kids will understand what you did and they can just replicate it for themselves. Its a safe place to start off and further optimize from IF you later on feel like.
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That’s true, on the short term (5-10 years), you could invest it yourself and reduct the cost, but at some point you will be too old to manage it. Some time people won’t admit they are too old and start to do mistake or be influenced.
It’s better to create a trust relation with an advisor early-on.
Are you British? What many Swiss advisors might miss is the substantial impact of UK Inheritance Tax. Assuming you have 3000k and lose 600k to ZH withdrawal taxes, you have 2400k left. If you pass this full amount on and assume ~40% is lost through IHT, then you lose another 900k to IHT and kids get 1500k of the original 3000k without additional IHT planning.
Thanks for the great advice.
To answer the last question, I am British but married to a swiss with 3 kids who are swiss citizens.
Thanks
So it is likely that your estate is subject to UK IHT and your kids’ estates also in the future.
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A few thoughts:
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You should research losing UK domicile to avoid UK IHT. Main steps I am taking include: getting swiss nationality & severing ties with UK (closing all UK bank accounts, memberships etc)
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If you are able to become UK resident for a while you could reduce the withdrawal tax on 2P to <4.8%. This is because the withdrawal is not taxable for UK residents (search UK-Switzerland double tax agreement article 18). However this needs to be planned carefully as it conflicts with 1 - definitely get advice on this one
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Advisor: I have been in touch with Forth Capital advisors in the past. They seem to target “normal” people below Swiss Private bank level and have experience with UK expats. I did not use them so cannot vouch for their service but they always seemed honest (advised me to leave my UK pension alone thereby avoiding any fee income). Per the link they seem to be transparent about their fees. If you talk to them you should also ask about product fees which will come on top.
Important: The advisor world consists mainly of commission chasing salespeople trying to make a living and often with considerably less knowledge than you get on this forum. You absolutely must make sure to talk to 2 or 3 of them before signing up. In UK and a handful of other countries it is ILLEGAL for financial advisors to get commissions or retrocessions from product providers. In Switzerland it is still allowed and people get ripped off - see the discussions on this forum. Always ask about these points and if the advisor is not upfront and transparent then walk away.
I have looked into all this stuff extensively , feel free to Private Message me
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This may still lead to a non-negligible income from OASI, as you get some kind of “bonus” for children as a woman. I woulf contact them and order a excerpt that shows how much each of you will get. I thibk there’s even a form online that you can fill out to order it. This might significantly reduce the income you need from your savings.
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It is notoriously difficult to lose UK IHT domicile - maybe you’ve already seen the various court cases regarding this.
I know. I will take more advice on it in the coming years but I think I will be ok. Discussion for another thread or forum.
[Edit : should be possible if OP has lived here a long time and is prepared to make sacrifices e.g. give up UK passport]
Not sure why this got onto my screen again, but while I’m here, I’ll mention that there are moves to change IHT from domicile system to residence system. If this goes ahead, it will take a lot of us out of the UK IHT net.
I currently have life insurance in place just to pay IHT on death.