Pension fund What you need to consider when changing jobs

If you switch jobs, you change pension funds too. Examine the new pension fund very carefully.

by UBS Insights 26 Feb 2018

Changing jobs is exciting: the professional challenge, new colleagues and a new environment. In all the excitement, don’t forget your pension fund (PF). Changing jobs obligates you to transfer your vested benefits from the old PF to the new one.

Consider the conversion rate and funding ratio

If the termination benefits from your former PF are less than is necessary for benefit coverage at the new fund, you can buy into the new PF. This could be the case in the event of income increases and time off work. However, consider the conversion rate of the non-compulsory pension. Every PF determines this itself. In addition to the conversion rate, you should check the funding ratio. The PF should be “healthy.” This is the case with a funding ratio of 100 percent or more. Figures of 115 percent indicate a solid pension fund.

Check the PF regulations

If you are over 50 when you change jobs, you should request the PF regulations and a provisional pension certificate before you sign your new employment contract. Look closely at the retirement benefits. Even if the salary may be higher, the PF benefits may be poor. You should also take a look at the disability and death benefits.

Furthermore: common-law partnerships and early retirement

People in common-law partnerships should check whether the new PF pays pensions to a partner in the event of death and what conditions apply to this. Find out about early retirement and absorb the shock of benefit reductions with PF buy-ins. Many institutions allow buy-ins until shortly before retirement. However, if you want a lump sum withdrawal from your pension fund, you must conclude the buy-in process at least three years before retirement.

Pension certificate

Everyone insured by a pension fund receives an annual pension certificate. It contains important information about your personal pension situation.

Reported AHV annual salary: This means your gross salary shown on your annual salary certificate from your employer.

Insured annual salary: The coordination amount is deducted from your AHV annual salary. This means the portion of your salary that is already insured in pillar 1 (AHV/IV) and should not be insured a second time. The coordination amount is 25,095 francs (as of 2021) according to the BVG. Individual pension funds can also stipulate lower coordination amounts.

Maximum possible buy-in: If you earned less in your early years, you can stock up your pension fund savings with a tax-exempt voluntary buy-in.