Retiring abroad: impact on your pension and investments

The Swiss Compensation Office is responsible for paying pensions under the first pillar (Old Age and Survivors’ Insurance, known as OASI) to all Swiss citizens abroad. To be eligible for a pension, you must have paid OASI contributions for a minimum of one year before you reach the reference age.

The same applies to citizens of an EU member state who have lived or worked in Switzerland and have therefore built up an entitlement to an OASI pension. For these citizens, as well as those from an EFTA (European Free Trade Association) state, to which Switzerland, Iceland, Liechtenstein and Norway belong, the following applies: your OASI pension will be transferred abroad, as is the case for citizens of countries with which Switzerland has a social security agreement. If no agreement exists, when you leave Switzerland, you can apply for the contributions you and your employer have paid into OASI to be reimbursed interest-free.

It’s important to know that supplementary benefits or personal independence payments under the first pillar are paid only to people domiciled in Switzerland. Payments are regulated by the Central Compensation Office of Switzerland (CCO).
 

When you reach retirement age, you can choose to receive the benefits from your occupational pension plan as a monthly pension, a one-time lump-sum payment or a combination of the two. Contact your pension fund in good time to ensure that your occupational pension will also be available abroad. If you have part or all of the capital paid out, it will also be available to you abroad.

If you permanently leave Switzerland, you can withdraw your assets from a pillar 3a account, even if you have not yet reached retirement age. You can choose whether you have these assets transferred to an existing account in Switzerland or to one abroad. You can access and use any pillar 3b assets you have at any time – even before you retire.

The Swiss franc is one of the strongest and most stable currencies in the world. It has tended to rise in value over the past two decades against key currencies such as the euro, pound sterling and the US dollar. You are free to choose where you want your monthly pension payments from the first and second pillars to be transferred: to a Swiss account in Swiss francs or to a bank account in your new country of residence in the relevant local currency.

If you move to the US, for example, your financial plan will be based on the current exchange rate between the US dollar and the Swiss franc. If the US dollar appreciates unexpectedly, you would then have fewer Swiss francs than you originally had in your account. You may then need to adjust your retirement budget.  

When you choose your new place of residence, you should familiarize yourself with the country’s applicable tax laws. Tax issues are not only relevant to the payout of your retirement assets and for optimizing your investment strategy. The topic is both broad and complex.

Depending on a combination of factors such as income, type of assets, citizenship, place of residence and destination country, double taxation may come into play. Many countries have double taxation agreements to limit this risk, but it’s important to address the topic nevertheless. In addition, income tax rates vary from country to country and depending on the type of income (dividends, interest payments, social security benefits, etc.). Consult a local tax advisor to find out about your tax situation abroad.

Inheritance is a topic that’s often overlooked. Whether you want to pass on assets or are expecting an inheritance yourself – it’s worth taking a close look at the inheritance laws and potential inheritance taxes of both your home country and your future country of residence.