Withdrawal of capital and pension after termination of cross-border commuter activity in Switzerland

Foreigners who have worked in Switzerland for a certain period of time are entitled to a pension (AHV) and capital (pension fund) from Switzerland. We explain here exactly how this works.

Pillar 1 – the AHV pension

Former employees in Switzerland who have worked here for at least one year are entitled to an AHV pension. This is based on the amount of contributions paid and the number of years of contributions. The principle is simple: if you have worked in Switzerland for two years and in Austria for forty years, for example, you will receive a pension from the pension insurance schemes of both countries. This ensures that you do not “lose” any contribution years and that you receive roughly the same amount in total as if you had only ever worked in one country. In this example, you will receive a high pension from the Austrian pension insurance institution and a small AHV pension from Switzerland.

How do you have your Swiss AHV pension paid out? It is best to submit an application for an old-age pension a few months before reaching retirement age. In Switzerland, the statutory AHV retirement age is 65 for men and 64 for women. In return for a corresponding reduction, you can draw an AHV pension up to two years earlier or defer your pension for up to five years (in return for a corresponding increase). Citizens of an EU or EFTA member state must apply for an OASI pension from Switzerland at the competent social insurance office in their current place of residence. Further information on special cases can be found at the Central Compensation Office ZAS under the heading “Swiss Compensation Office SAK”.

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Pillar 2 – the pension fund

Anyone who stops working in Switzerland before retirement age is no longer affiliated to a pension fund. If the pension fund is not notified, it will transfer the entire retirement capital to a vested benefits account of the “Stiftung Auffangeinrichtung BVG” after 6 months at the earliest and after 2 years at the latest. Alternatively, you can open a vested benefits account yourself and inform your pension fund or the Substitute Occupational Benefit Institution of this. Because the interest rates of the Substitute Occupational Benefit Institution on vested benefits accounts are comparatively low, this step is usually worthwhile even years after emigration or a few years before withdrawal.

Pension assets deposited in a vested benefits account can only be withdrawn early in a few cases. If you emigrate to an EU country such as Austria, only the non-mandatory portion can be withdrawn at any time and without meeting certain requirements. Click “Here” for more information.

Money in vested benefits accounts can be withdrawn at the earliest five years before reaching retirement age (i.e. at the age of 59 for women and 60 for men). It is also possible to leave the money in the vested benefits account and withdraw it later (no later than five years after reaching ordinary retirement age).

Note: It is not possible to receive a pension from a vested benefits account. It is only possible to withdraw the capital.

Source: finanzmonitor.com