This is exactly what 1e is. Any contributions above 105K income goes into 1e. It’s not exactly equal to BVG min but close. So government has already made it possible. It’s employers who need to adopt.
But remember 1e might be preferred by folks on this forum because we are the overconfident people who think we can make more money than fund managers and we don’t need any state protection.
But there are lot of people who are afraid to invest and for them 1e is not very interesting. Because 1e doesn’t have capital protection. All losses are borne by investor. In addition , 1e also doesn’t have option of annuity, it only can be withdrawn like lumpsum similar to 3a.
Having seen the feedback on the proposed measures, I don’t see them going ahead - at least in the near term. Too many difficulties that need to be addressed.
Are you sure of this?
Or is it again case by case pension fund dependent?
I don’t see that I have 1e in my pension fund statement.
(Insured salary after coordination amount being deducted is above 105k)
Do you recall some calculations/estimations showing after which income level the 1e becomes meaningful? I mean, given that the eligible salary is above 129k at what salary level does it start making sense over and above just regular saving? What I mean is, if the 1e-eligible portion amounts to 1000-2000 saved/year is it worth the trouble?
Of course in the aim of optimizing and people considering sharing Spotify accounts any number is “worth the trouble”, but wondering for real-world use.
This gap allows for the existence of above mandatory contributions to pension funds and further supplementary pension schemes (copies of pension funds). Given little to no influence employees have on their pension foundations, and 1e not being mandatory for employers to offer, all this seems to be good cover up for socialisation (cross generation at least) of 2nd pillar rather than ‘good intentions’ of ‘over-protective’ government.
I have inquired about 1e at my work, and I was told the main reason they were reticent to have it is that it’s not possible to really pick and chose who has it or not.
According to them, it has to be broad categories like “anyone above 150k” or “anyone above level X”, but once you have defined such a category, it’s not possible for a matching employee to opt out.
Having part of your pension money grow at an ETF-rate vs 1% at a pension fund seems like a crazy impact. I’d guess that for someone doing this in their 30s/40s, this could mean a difference of serveral 100k by the time they decide to retire.
All pension funds don’t have 1e option. This depends on employer as they need to adopt the option. For example my employer didn’t have it earlier but we introduced it last year. In the end employer decides not the government.
But all pension funds with 1e option have following
base plan (where contributions for income up to X CHF goes)
1e plan (where pension contributions for income above X CHF goes)
Here X = (1.5 times BVG ceiling) minus (Coordination deduction)
If I remember correctly at this moment, X is about 105K ballpark.
That’s true because otherwise implementation will be complex. Above a certain income level, all employees need to accept or not
That’s why I said -: it’s easy for FIRE folks to assume that investing pension money in equities is great thing for everyone. But reality is very different for individuals
Yes you are right.
If pension contributions over the limit are not very big then the 1e fund will also not have big amount. So it depends on companies and what’s the median income level prevalent in that firm.
For example UBS can offer such a plan but their own base plan is so good that I doubt their employees really want 1e.
My personal view is following
CH is trying to find a balance between state regulated pension (base plan) and personally designed pension (1e plan) within 2nd pillar.
2nd pillar = base plan + 1e plan
The politicians know that people prefer to take matter in their own hands but also lack financial acumen to do so. So with base plan, the people are still protected even if they screw up with their 1e decisions.
As we know there is a bit of over confidence amongst investors these days that they know everything and obviously can manage their money than their funds, so 1e allows them to define their own destiny.
That is putting words in my mouth. And mis-characterisation of what I wrote above.
I want the employee to have options (including 1e) rather than companies deciding what is good for employees beyond the BVG regulations prescribed (not offered) by the state.
IF you have an employer that offers 1e and also has good returns on pension fund, then good for you! If just wish the 1e option for me too.
I hazard that many of the small GmbH who’ve set up shop in CH and use a broad payroll provider doing payroll for hundreds of companies in CH don’t even know about it. I’ve asked, was told they’re not interested to even hear about it.
I am not disagreeing with you. Offering 1e is a good thing. I am trying to say that if companies don’t adopt the 1e pension provisions then the problem is with the companies and not the government. Governments can only make policies but if people / companies do not adopt then it means they don’t want it.
Personally I don’t even understand why more companies don’t adopt 1e. In reality it’s better for them because they don’t need to worry about a part of pension fund- it’s management, paying annuities and employees are on their own. There is no need to fund capital short falls as well because all risk is for employees to take
Enforcing a requirement on companies to offer 1e would be a bit of a stretch. This would mean govt knows better and companies don’t. I would rather have a situation where companies decide for themselves and employees ask their companies to do the right thing.
I just don’t think it’s fair to say that Swiss government is trying to cover up their socialist agenda under disguise of 1e reforms. That’s all
I would rather leave the choice to employee rather than employer - to participate in 1e or any other competing option employer may propose if it so wishes to.
It is very fair to say that pension funds socialising and cross payments between generations is ENABLED by the government, by letting pension funds being the decision maker beyond the mandate of obligatory BVG.
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