Occupational pensions Your pension fund (PF) statement explained in 10 steps

Do you know how to read your pension fund statement? Do you know how to draw the right conclusions from the figures?

by UBS Insights 14 Dec 2020

Employees who earn at least 21,510 Swiss francs per year (as of 2021) receive an annual pension fund statement. Usually just one page long, its appearance will vary depending on the pension fund but the 10 key components are always the same.

To better understand and improve your retirement situation, it's essential to know what the relevant figures represent. Our summary will help you better understand your pension fund statement.

1. Reported and insured salary

Your reported salary is your annual salary on which AHV contributions are payable; this appears on your salary statement for tax purposes as “gross income.”

The insured salary, also called the “coordinated salary,” is calculated by deducting what is known as a “coordination offset” of 25,095 Swiss francs (as of 2021) from your reported salary. The coordination offset is deducted because it is already safeguarded by pillar 1 (AHV).

Occupational pension contributions are mandatory on insured salaries of up to approximately 60,000 Swiss francs, though certain pension funds insure higher amounts.

2. Retirement assets

These are the total assets you currently have saved in your pension fund. They are composed of the total sum of your vested benefits, retirement credits from you and your employer, as well as voluntary contributions and any interest you have gained on these. The minimum interest amount is determined annually by the Federal Council.

3. Old-age benefits

This represents the retirement capital or pension payments you are predicted to receive at statutory retirement age. This projection assumes that your income, the conversion rate as well as the underlying interest remain unchanged. Of course, as this isn't always the case, the word “projected” appears on your pension fund statement next to these figures.

4. Benefits on taking early retirement

Taking early retirement will lower your projected annual pension/retirement capital, as you will have paid in for a shorter amount of time and received less interest on your retirement capital. Your pension payments will also be lower due to the longer payout period. Your pension usually decreases by 7 to 8% for each year you withdraw it early. Your pension fund statement indicates the assets you would have in retirement if you retired early, for example, at the age of 60.

Our tip: Check to see if your pension fund pays out a bridging pension if you decide to retire early. Some pension funds stipulate this in their regulations to compensate for the AHV pension you haven't taken out in early retirement.

Planning to take early retirement?

If you are considering retiring early and need help planning your retirement finances or drawing up a budget, UBS pension advisors are on hand to help.

5. Survivors’ benefits

Should you pass away, your spouse, registered partner or children will receive the amounts listed in your pension fund statement.

Our tip: Are you cohabiting? Ask your pension office whether your cohabiting partner is eligible to receive benefits in the event of your death and if you would need to designate them as a beneficiary for this to happen.

6. Invalidity benefits

These are the benefits you receive if you become fully disabled as a result of illness. Should you become disabled following an accident, your pension fund will only pay retirement benefits on top of accident insurance. Your pension fund benefits will most likely decrease as a result.

Everything you need to know about pension planning

Your pension fund is an important part of your retirement savings. To find out all you need to know about pension planning, our guides and publications provide useful tips.

7. Financing and benefit components

This shows how much both you and your employer have paid in to your retirement savings and risk insurance during the year, as well as administration costs.

8. Early withdrawal to finance your own home

This is the maximum amount you can currently withdraw from your retirement savings to finance a self-occupied property or pay off a mortgage.

You may use your total pillar 2 retirement savings to buy your own home before the age of 50. From 50 onwards you may use either your total savings set aside before you reached this age or half of your current savings, whichever amount is higher.

Our tip: After paying back your early withdrawal, you have three years to claim back the tax paid on the lump sum payment.

9. Pension fund buy-in

Many workers can voluntarily contribute more to their pension fund than the amounts their employer deducts from their salary each month. To do this, there needs to be a “contribution gap.” This figure determines whether you can make additional contributions to your pension fund and if so, how much.

Our tip: Voluntary buy-ins allow you to improve your retirement benefits, including in case of death or disability. Buy-ins are also a way of saving on taxes. Note that buy-ins are not possible until you have paid back any early withdrawals for financing your own home. Seek advice if this figure is not displayed on your pension fund statement. And if you have any questions, we'll be happy to provide advice.

10. Coverage ratio

The coverage ratio indicates the financial health of your pension fund; it tells you in percentage terms the extent to which the liabilities of your pension fund are covered by its assets. If this figure is above 100%, you can assume your pension fund is healthy. If it drops below 100%, coverage is insufficient.

So you see it’s not so tricky to read your pension fund statement after all! No matter your situation in life, it’s worth checking it regularly. It’s also worth seeking advice if you have questions about pension funds or pension planning in general.

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