What things to consider for the FI number?

if you were born in switzerland sure maybe (kid years apparently count)

if you’re a work immigrant you get FUCKED. pay same as everyone and get a lot less out of it

my biggest problem with them is that they STEAL half my hard earned money (money gets taken with no counter benefit whatsoever, that’s stealing), the rest gets risk pooled, sure, whatever, but only after the half of it is stolen

1 Like

Why should you get the same as someone who worked twice as long in Switzerland?

2 Likes

kids who grew up, studied in switz and worked the same as me get a lot more than me out of ahv, that’s unfair

but what really grinds my gears, as i mentioned, is that i get less than half of what i paid them when i cash out of the system (i have no intention of staying in swtizerland and getting rent at 65+). i cannot call this any other than stealing. government sanctioned STEALING.

You can affiliate voluntarily and make contributions:

That’s it. The Bundesrat has just voted 7-0 to exile you back to the gulag.

3 Likes

one has to pay ahv starting somewhen at age 20.

but anyway there a lot of other cases whrrr person A receives same ahv pension than person B while A paid more ahv then B.

also tax is unfair. I maybe pay more tax than you but potentially use less infrastructure which is financed by tax than you etc.

there are many places in the world where its different and it seems that still switzerland offers you something you cant get somewhere else. otherwise you probably wouldnt be here or would leave soon I guess?

life is unfair but we have choices to some degree

2 Likes

AHV contributions are mandatory for people over 20 years, even students.
Receiving a full pension requires 44 years of contributions.

For people with tertiary education from abroad, it is de facto all but impossible to accrue the needed years of contribution by the (normal) age of retirement, to be eligible for a full pension.

2 Likes

Benefits are counted as a factor of how much you have contributed over 44 years. If you have contributed less than 44 years, then you have not paid “the same as everyone” as longer residents with your level of income will have paid what you pay annualy on a longer period of time. Sure, it’s caped, so higher earners pay more than lower earners for the same benefits but that’s not a problem of being a work immigrant, that’s wealth redistribution at work.

Political stability, good quality of living, decent infrastructures… these things are a service and they have a cost. They are what you get for your “hard earned money”. If that is stealing, then that’s something you can factor in when you choose where to live as a factor of what you get in regards of what you pay for it. That optimization makes Switzerland a nice place to live in for some, but not for all, obviously (as we all value different things).

2 Likes

It’s not just one but (mainly) two factors:

  1. How much AND
  2. How long
    you‘ve contributed.

It‘s quite possible to contribute as much as someone else - yet receive considerably less, due to having contributed over fewer years.

Out differently, just as Cortana mentioned above, there is a disproportional benefit of making minimum contributions - that only the Swiss people/having done their tertiary education in Switzerland enjoy.

1 Like

I have a pretty good about idea about the system, don’t you worry

yes of course I counted that, and discounted the insurance parts (~20%). I’m cashing out only about 40% of my+employers contributions. the rest - STOLEN

that’s the thing. “how much” is capped at 84600 fr/y (or was it 86400? doesn’t matter much stupid number anyway). If you earn more, you’re expected to pay all the same flat rate but don’t get anything in return to show for it

yep, and swiss born kids “contributing” nada since they hit 20 get unfair advantage here, nada still counts

nah i still need another mil or two before going back to putler. one thing you got right, i’m not making them in switz

It sure is possible, that means you’ve earned more than everyone else during those years you’ve contributed, since AHV contributions are calculated as a part of your salary and are not capped, while your benefits are.

A person with your level of income who has been a resident for a longer time will have paid more AHV contributions than you have. A person who has less income than you do may get more benefits out of it, yes. AHV is a social insurance, unlike the 2nd pillar which is meant as personal savings (but doesn’t fully work that way in reality).

1 Like

As a rough estimate, I’d assume students will study for five years on average above the age of 20.

(A bachelor usually takes at least 6 semesters, plus 3 to 4 for a master. Few will do it in less, many take longer. Some bachelor graduates will not continue to pursue a Master, but 90% of university students do. Spending a semester abroad is often recommended. Average age of matura graduates is 18 or 19, but then, many are only taking up studies later. Average age of incoming students is above 20 years, same is, I believe, true for the median age. Bachelor degrees earned at an average age of approximately 25 years).

Minimum AHV contribution over five years is 496 CHF x 5 = 2480 CHF.

For this total contribution of only 2480 CHF, domestic students would receive 12.8% higher monthly pensions than their non-Swiss peers who were unable to contribute. See also, for an example calculation: „Bei einer Beitragslücke von fünf Jahren wird die Rente lebenslang um mehr als 11 Prozent gekürzt“.

The discrepancy and level of discrimination it be obvious.
On the other hand, it should be a reminder for the reader to consider making voluntary contributions (if allowed) even when not working in Switzerland.

1 Like

Your estimate doesn’t take into account that the student average salary in the formula will be lower, compared to somebody that arrived in Switzerland at 26 yo and who has the same salary for the rest of their life.

Valid point.

But not a big problem for many. Take Zurich, for instance: Median wage for graduates is more than 10k a month.

Only takes about 10 years, maybe 11 or 12 at median wage, to compensate for it, since you‘d by then have averaged the maximum AHV-relevant income.

It’s called Solidaritätsprinzip. Someone earning 200k will get the same AHV as someone earning 100k, despite paying double the amout. There are even more extreme cases, for example:

  • Person A earning 30k for 44 years will earn a total 1320k and pay 66k to the AHV. Once retired this person will get 1530.- per month.

  • Person B, coming to Switzerland at 40yo and earning 150k for 25 years will earn a total 3750k and pay 188k to the AHV. Once retired this person will get 1350.- per month.

It’s a social system and I wouldn’t change anything about it. Do you want pisspoor people in old age?

4 Likes

Can we go back to the numbers please?
So I feel regardless of keep paying the AHV during FIRE or not the returns of it seems neglectible? Should someone therefore account for the AHV income when hitting 65 or see it as pocket money from the state?

Also how does compounding look like if we assume the 20x3k go to the stock portfolio instead of the AHV?

Edit: my goal for this thread was mostly to end up with a list of items that might get forgotten when doing the FI number calculation for FIRE in Switzerland.

1 Like

I think taxes and AHV payments shouldn’t be ignored.

If you retire with 2 million in assets, you’ll receive 45k in dividends which you have to tax. Wealth tax will be 4k-16k depending where you live. AHV will probably be around 5k. All these things sum up quite substantially.

1 Like

That’s a very lively and exciting discussion, where people disagree with each other. That’s what I like :slight_smile:

So you’re talking about a Universal Basic Income for the retired. In a way, I think I agree with this solution. We should answer the question: what is the old age insurance for? Should it aim to guarantee the same living standard you had in your working years? I find that goal too ambitious and unnecessary, even 60% is misguided. In my opinion, old age insurance should only make sure you don’t starve to death when you’re old and can’t work. So yes, I think everyone should get the same money. If you live a rich life, it’s up to you to still have the money to keep it going once you’re retired.

My problem with AHV and income taxes is that it’s a tax on work and productivity, which is really not logical. We should promote work and entrepreneurship. The money for pensions should be taken from somewhere else. Taxing personal income is very complicated, requires millions of tax declarations and thousands of otherwise useless admin clerks. A rich person is indistinguishable from a poor person until he spends his money. So I believe we should focus on taxing consumption and the use of resources, especially tax exploiting the environment.

3 Likes

It’s compulsory if living in CH to pay AHV Beiträge, if not employed, then as a function of your wealth. (You might be able to sneak by undetected i.e. not paying, but do you want to risk that in your calculation?).
So calculate with this annual “expense” after FIRE in CH, until 65.
At 65 calculate with a monthly income from AHV, use today’s number to estimate & adjust for inflation.
That’s the way I do it.
I include a safety margin, yes in 40 years there may be “changes”, but my safety margin is in the total number. My opinion is putting safety margin in each individual position, while 100% safe would mean calculating with the worst-worst-worst-etc situation, which is unlikely. But my background in safety margins comes as an engineer, not an economist.

1 Like

I don‘t take issue with the solidarity principle.

You as an immigrant will (in many cases) not get the same benefits as someone who grew up in Switzerland. I take issue specifically with the discrimination based on residency during education, e.g.

a) Studying in Switzerland at age 20-25, then working in Switzerland til retirement:
contributing AHV, receiving considerably higher benefits
b) Studying in an EU/EFTA country 20-25, then working in Switzerland til retirement:
not being eligible to contribute AHV, not even retrocactively (such as Swiss)

It’s not about the years of work.
Neither have many Swiss students worked these years.
Yet the latter might still receive much higher pensions due to their contributions for non-work. Which are unavailable to others completing their education abroad. Even though they might have worked just the same amount of years.

By reading and partipating to this forum, you confirm you have read and agree with the disclaimer presented on http://www.mustachianpost.com/
En lisant et participant à ce forum, vous confirmez avoir lu et être d'accord avec l'avis de dégagement de responsabilité présenté sur http://www.mustachianpost.com/fr/