I will be 65 shortly, was let go, am receiving unemployment and continue to be part of the ex-employer’s pension fund.
I requested a transfer of the pillar 2 funds on retirement to vested benefits foundation to stagger the withdrawal over 2 years {Staggered withdrawals from pillar 3a and the pension fund are worthwhile – finpension}.
But the pension fund is refusing to do that. I would expect the federal regulation to be applied by the pension fund. Appreciate your suggestions and ideas. Thank you in advance.
*Vested benefits can be withdrawn up to five years before or after the normal retirement age (women 64 / men 65) (Art. 16 para. 1 Freizügigkeitsverordnung).
Übergangsbestimmung zur Änderung vom 30. August 2023
Personen, die ihre Altersleistungen nach Artikel 16 Absatz 1 in den Jahren 2024–2029 beziehen müssten, weil sie das Referenzalter erreichen oder bereits überschritten haben, und die nicht mehr erwerbstätig sind, können die Auszahlung dieser Leistungen bis zum 31. Dezember 2029, höchstens aber fünf Jahre über das Erreichen des Referenzalters hinaus, aufschieben
Are you sure you didn’t decide to stay in the pension fund?
If you’re older than 58, you can decide to stay in the pension fund (by default you have to move to a vested benefit account), if you do that I don’t think you can reverse this.
(Since you say you’re unemployed but in your ex-employer pension fund, the only way this can happen is if you decided to stay)
Thank you @ nabalzbhf for your instant response. As I was let go, the pension fund offered the option for me to stay and I took it up (paying in employer & employee contributions & risk). But the law allows for the transfer to a vested benefit account to stagger the withdrawal to reduce taxes. I will be moving overseas and finpension (based in Schwyz) is the best option.
*Vested benefits can be withdrawn up to five years before or after the normal retirement age (women 64 / men 65) (Art. 16 para. 1 Freizügigkeitsverordnung).
Übergangsbestimmung zur Änderung vom 30. August 2023
Personen, die ihre Altersleistungen nach Artikel 16 Absatz 1 in den Jahren 2024–2029 beziehen müssten, weil sie das Referenzalter erreichen oder bereits überschritten haben, und die nicht mehr erwerbstätig sind, können die Auszahlung dieser Leistungen bis zum 31. Dezember 2029, höchstens aber fünf Jahre über das Erreichen des Referenzalters hinaus, aufschieben
I understand that your decision is valid until your legal retirement age. So your pension fund is declining to forward your money to a vested benefit account in canton Schwyz after legal retirement age.
Do they also refuse you to make 2 staggered withdrawals at a later time when you are abroad?
Could you become a tax resident abroad (country with a double tax treaty with Switzerland) and pay a very beneficial tax on the 1 or 2 lump-sum payments there? This would allow you to reclaim the tax at source from the canton where your pension fund is domiciled. there are some countries where you can get your lump-sum tax free. I believe Thailand and Singapore are such a countries.
Given what you describe, I believe your pension fund is correct. You choose to remain with them after you were let go. That is a one-time option that is final, so you have to stay with your pension fund until you reach the reference age of 65 for retirement (which I understand you are not quite yet). And once you have reached that reference age of 65, you also won’t have the option of a vested benefit account, because, well, then you are retired. You will only have the options your pension fund offers, likely full capital withdrawal (at once), partial capital withdrawal with partial annuity or full annuity. A staggered capital withdrawal will not be possible. The only way to circumvent this, would be to leave Switzerland before you hit 65, which is the only practical way left to trigger an allowed transfer to a vested benefit account (and you seem to plan to emigrate anyway). Make sure to check tax implications with an expert beforehand.
By the way: Your quoted Übergangsbestimmungen apply to AHV, and have no relation to BVG/your pension. And also your quoted vested benefit regulations don’t really matter too, as again, you are with a pension fund, not a vested benefit solution. This is the relevant law to your pension fund, along with its Verordnungen.
I would respond in the same order. Responses in italics after >> @dom.swiss
I understand that your decision is valid until your legal retirement age. So your pension fund is declining to forward your money to a vested benefit account in canton Schwyz after legal retirement age. >> yes
Do they also refuse you to make 2 staggered withdrawals at a later time when you are abroad? >> they want to remit the cash in one go in my bank account. No option to make staggered withdrawals. I will be out of the pension fund on 1 April.
@1742
For Pillar 2 please refer to (it’s at the end of the section and refers to BVG/LPP) , do ctrl f 2029 and it refers to BVG/LPP. Fedlex
I read French and this is a Disposition transitoire de la modification du 30 août 2023
One option is to find a job (even if only a few months), so that you can transfer your 2nd pillar and cash it out when you resign. >> No one would even touch a 64+ year old in CH with a barge pole. Any role - contract, project based, try & buy - no luck so far. I would rather work!!!
In any case, usually those cases are spelled out in the regulations of your pension fund, so do check that. >> I would think the federal regulations will be applicable to every pension fund. I am NOT asking to continue with the pension fund. I am requesting a transfer to a vested benefits foundation. THE SWISS PENSION SYSTEM IS A JUNGLE…AND DISAPPOINTING…
They do (tough there are many details that are left for each pension fund to decide on their own, this is not such a case). In your answer to me your still confusing which law applies to which pension solution. Again, you are with a pension fund, not with a vested benefit solution. I do agree that it is quite a jungle for anyone that isn’t specifically educated in these manners.
With your timeline of a payout upcoming April 2025, I don’t think there is anything possible anymore. You will have to pay the full taxes on the one-time capital withdrawal. On a positive note, you aren’t affected with the proposed upcoming substantial tax increases on such withdrawals that were specified today by the federal council.
That’s also how I understand it. The legal framework has a lot of flexibility around what the pension funds can do.
I checked two pension funds, for one you could leave whenever you wanted if you decided to stay in the fund after 58yo (incl. to a vested benefits account), the other one was forcing you to take a pension (not even choice of lump sum).
The choice to stay in the pension fund is fairly consequential, you definitely need to read and understand in detail when you make this decision.
I did discuss extensively the options with the advisor to the pension fund and have the email exchanges. There was no discussion nor information on the impossibility to transfer to a vested benefits foundation.
The refusal now came with the citation below. But this has NO relation/nor respond to the question of transfer to vested benefit foundation. My situation is a corner case - I believe that there is no precedent - a person retiring at 65 (my ex employer is a consultancy). I am NOT asking to continue with the pension fund. I am requesting a transfer to a vested benefits foundation.
Continued insurance will end - Upon occurrence of the risk of death or disability (in the case of partial disability, continued insurance will continue to run for the active part), - When the insured person reaches the reference age, - When the insured person is admitted to a new pension scheme, if more than two thirds of the termination benefit is transferred to the new pension scheme. If not all of the termina- tion benefit can be transferred to the new pension plan, the remainder will be used to take early retirement.
I suspect you need to read the pensumion find regilations. Chances are that cash withdrawals (upon retirement) need to be declared atvleast 6-12 months in advance and that youbalready were within that timeframe sonthatvtheybdecided to (from a pension funds point of view) retire you. Could as well be that your pension funds regulation just foresees that people after age X just get automatically retired.
Thanks. I discussed with the advisor to the pension fund. The notice period for withdrawal is 3 months - I signed the paper work on 2 Jan. 2025 (to get the funds on 1 Apr. 2025). The pension fund is quoting below and is refusing to transfer to vested benefits foundation. BTW there is NO MENTION of vested benefits foundation at the reference age in the regulations!! They will transfer ONLY to a new employer. These regulations have not integrated the possibility of transfer to vested benefits foundation. There was no option in the withdrawal form. Hope this clarifies.
Continued insurance will end - Upon occurrence of the risk of death or disability (in the case of partial disability, continued insurance will continue to run for the active part), - When the insured person reaches the reference age, - When the insured person is admitted to a new pension scheme, if more than two thirds of the termination benefit is transferred to the new pension scheme. If not all of the termina- tion benefit can be transferred to the new pension plan, the remainder will be used to take early retirement.
This probably applies from age 60 or 62 onwards? That means that if you get fired after age 60/62, you automatically get retired - unless you find a new job or unless you in time registered for a (partial) cash withdrawal - if this was permitted.
When cash withdrawal takes 3 months notice and you acted one day late (2nd of Jan) - then you are late.
Why do you want to withdraw to VB? Normally, the pension/annuity you get from the fund is favourable so most people would rather get the income if they can.
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