I recently changed jobs and because of this also had to move my second pillar. The new second pillar sent me a health questionnaire for the over-mandatory portion of my salary (everything over 88k I guess?). I filled it out truthfully (maybe this was a mistake?). Promptly they gave me health reservations for basically every item I listed, formulated much broader than what I declared and set them to the legally allowed maximum of five years. I find this whole situation questionable:
The law forces you to move the second pillar and thus also the insurance. I was fully insured with my previous second pillar. I never claimed anything from the previous insurance nor had any major sick leaves. Now I suddenly have gaps just because I changed jobs.
They are still deducting the full insurance premium from my salary, even though they are insuring less items.
What is the idea here… Are people (especially when they get older) just supposed to stay in their old jobs? I personally find it frustrating, as I feel like I am now paying insurance fees on my salary component above 88k both for the first pillar and for the second pillar, while both of them are not insuring this salary component (1st Pillar has a maximum limit, 2nd Pillar made the exclusions…).
Does anyone have any experience with this? I’m especially curious about:
Should I be contesting this in any way? I plan to at least write and contest the width of the exclusions, as I read that they must be more specific.
I guess the exclusion will now accompany me in case I ever change jobs for the next five years, as any new second pillar will ask if I had any exclusions with the old one and take them over. At least they are not allowed to restart the time limit I read. But what happens afterwards? My current second pillar will have to drop the health reservation after five years, but if I switch jobs after that, will the new one restart the whole exclusion again from scratch?
I don’t assume the insurance fee can or will be modified/reduced, but is it possible to opt out of this additional insurance by informing the second pillar? I would assume so, seeing as the law clearly does not see this salary as worth protecting and the foundation is also allowed to exclude items.
The law stipulates compulsory services which pension funds must provide as a minimum. These include:
Compulsory minimum contributions to benefits
A minimum interest rate for benefits
A minimum conversion rate for converting benefits into a pension
A minimum disability pension based on benefits
A minimum survivors’ pension based on benefits
Anything above those legal minimums are supplementary services which pension funds offer in order to be more attractive to employers, who in turn want to attract employees with better pension plans. Typical supplemental services include:
Supplementary contributions to your benefits above the required minimum (pillar 2b)
Interest rates for benefits which are higher than the required minimum rate
Conversion rates for pensions which are higher than the required minimum
Supplementary disability insurance (to bring your pension up to your current salary, for example)
Supplementary survivors’ insurance
The supplementary insurance offered by pension funds is generally provided by a private insurance company, and like all private insurance, they have the right to deny coverage in keeping with their terms and conditions. It is important not to unerestimate the insurance benefits when considering changing employers, especially if your health condition would make it difficult to get accepted for a new insurance.
If you are not accepted for the supplementary insurance, you do not have to pay for it. Make sure to check your salary statements, and inform your employer if the premiums are being deducted from your salary so they can correct this. This is possible due to bookkeeping errors.
Thanks Daniel. Seems like a bit of a weird system, probably it would be better if one signed up once and weren’t forced to switch it when changing employers, like with the regular additional health insurance.
I gather from your reply that an opt-out is actually possible, if one so wishes. I’m surprised this is not discussed more here (of course it has risks as well…), as it is a fair amount of your salary you pay for the insurance depending on the employer.
Here is my insurers approach FYI. Am not sure what is law, and what is simply my insurers policy.
The 5 years are reset in the mandatory part when changing employer, but not in the non-mandatory part, where the 5 years exclusions are transferred to the new insurer
There are different levels of coverage: Full coverage, coverage with qualifications and no coverage. Unless the insurer fully excludes you (unlikely), you will have to pay the full premium. No opt-out possible, but yes, qualifications (exclusions) must be specific.
I suggest to simply check your new insurers policy, as you won’t have a choice in this matter anyway. Regarding the exclusions they decided to apply based on the questionnaire, I’d recommend asking them to go to a doctor to verify exactly which relevant pre-existing conditions you have.
I think a sensible approach is to get just the basic, compulsory stuff from your employer occupational pension fund, and then get private (i.e. pillar 3a) insurances to close gaps in disability pensions or life insurance. Otherwise every time you change employers, you have to requalify for coverage.
Of course, as mentioned above, it’s your employer who decides. Also, you have to get private insurances if/while you are young and healthy enough to qualify.
But counting on occupational pension funds for these insurances is a little unreliable, because your PF is linked to your job. Private insurance, on the other hand, are only linked to you, and you can keep them regardless of your employment status and even if you move to another country, in many cases. You may pay somewhat higher premiums, but in the long-term it’s a better investment, in my opinion.
Getting a private insurance to close gaps can make sense. However, I don’t know whether those health checks would be easier to pass. At least you could check multiple insurance companies, which may increase your chances.
I’d advise against pillar 3a insurance, though. Mixed life/investment insurance should definitely be avoided. And if you have a relatively high marginal income and/or wealth tax rate, it’s likely better to invest the full 3a amount (benefit from the lack of dividend and wealth taxes in 3a) and pay the insurance premium with post-tax money. Depending on what you need, VIAC Life may be a sensible choice.
The checks for private insurance will be either the same or more strict than those of the insurances offered by pension funds. The premiums are also generally somewhat higher. What I meant here was that for a youngish/healthyish person who is eligible for disability insurance and (term) life insurance, private insurance linked to you is more flexible than insurances from your employer’s pension fund which you can’t take with you when you change jobs.
For someone who has conditions which make it difficult to get insurance, losing pension fund-based insurance is something to take into consideration before changing jobs.
As far as permanent life insurance (mixed life insurance/savings insurance/cash value life insurance) goes, I’m right with you there. My advice is to stay away from it altogether.
However, disability insurance and term life insurance (pure risk insurance) from Swiss insurance companies are also offered under either the pillar 3a (premiums are tax-deductible, but beneficiaries limited) or pillar 3b (premiums not tax-deductible but no restrictions on beneficiaries).
Thanks all for the ideas, I must confess I first needed to look up a few of the terms you used:)
So as I understand, the concept would be to get separate private insurance (term life insurance / pure risk insurance) for invalidity when you are young and healthy, similar to the additional health insurance (VVG). And then always tell the occupational pension funds you don’t want anything above the basic, compulsory minimum (Pillar 2a).
I’m just surprised because unlike the additional health insurance which is often talked about in media and even this forum, there doesn’t seem to be much discussion about getting young people to sign-up for this after e.g. finishing their studies? Also how does one know at that time which salary to even insure, as when starting out most people don’t yet earn Pillar 2b levels (88k+), but it’s not uncommon later? Naturally most people have the Pillar 3a, but that isn’t the same thing (monthly payout until pension age).
Firstly, it would be important to decide whether or not you need disability insurance or term life insurance. A lot would have to do with your lifestyle, and how you would want to live in the worst-case scenario of becoming disabled (or how you want your dependents to live if you die.
Understand that Switzerland has a solid welfare system, so even people who take no precautions do have their basic needs met, have the same mandatory health insurance, and equal opportunity to education, etc. If that is good enough insurance for a worst-case scenario, then there’s no point paying for extra insurance.
It is also important to understand which disability and life insurance you get from other mandatory insurance. The insurances which you get from your occupational pension fund primarily cover disability or death due to illness, because disability and death caused by accidents is covered by employer-based accident insurance. So extra pension fund insurance primarily insures against illness. Employer’s can take out supplmental accident insurance to extend the UVG, and that can be good if a lot of employees do extreme sports, etc., but that’s an exceptional scenario.
It’s also good to understand that the basic social disability insurance (DI) has the option of supplemental benefits. If your DI pension is not enough to support an agreeable life in Switzerland (it never is), and you don’t have a lot of other wealth, then you receive supplemental benefits to bring your DI pension up to the poverty line. So for a young person who’s just beginning to build wealth, for example, this is probably enough insurance.
Getting private disability and/or life insurance (pillar 3a/pillar 3b) only makes sense if you already a decent amount of wealth and a good income, and you want to protect that from potential hazards. The same more or less applies to supplemental insurance from your pension fund (pillar 2), but in practice you don’t usually have a say in the matter when it comes to your pension fund (even though you normally have to pay the premiums for supplemental insurances).
I just wanted to briefly update this thread with what happened, so anybody in a similar situation can profit from my learnings.
After talking to the insurance they explain the following to me:
The document which formulates the exclusion has one sentence (which I saw, but is in my opinion not very clear in the context) which states that if the second pillar money (vested benefit) was transferred fully and without interruption of the insurance, they grant the same level of insurance as the previous pension foundation.
What was unclear, but they confirmed, is the following: The new exclusion is only valid for amounts above what the previous pension foundation had already insured. Since my previous insurance already covered a minimally higher amount, the exclusion is basically not even activating as long as I do not get salary increases. And even if that happens, it’s only a minor part of the full salary so hopefully not really an issue.
This in my opinion makes the whole system quite a bit more acceptable, as it is set up primarily to block people who had very low insurance coverage and get sick to switch jobs to a second pillar with a high insurance coverage and state a claim. Regular career moves pretty much take over the previous insurance and don’t penalize you for changing jobs.
If you are worried about this issue, it is important to have knowledge of the two items above:
make sure your second pillar is transferred fully and on time to your new employer’s pension foundation
make sure you don’t take a longer break between jobs. As far as I understand the insurance of the previous pension foundation lasts for 30 days after the end of your job, so you would need to start your new job in this timeframe to be considered “without interruption”.
To also give an answer to some of the questions I stated in my first post which remained open:
After five years the exclusion is removed. After this point, this health issue can no longer used for further exclusions. This is valid even if you change jobs and hence move to a new pension foundation. It supposedly even is valid if you would take a break longer than 30 days. Depending on your individual situation, this can be almost a benefit, if it’s a health issue you will take with you your whole life anyway and they exclude it when you are able to cope with it.