ER Account

Many people in Switzerland wish to retire early. However, early retirement is costly. If you retire before the age of 65, your retirement pension is reduced both on the basis of the lower conversion rate and the lower level of retirement capital. As the savings process ends prematurely, fewer savings contributions are made and the compound interest effect does not apply fully. You should therefore closely examine the financial consequences. With pre-financing in the savings account for the "Pre-financing of early retirement" (ER account), you can close this financial gap in full or in part. An insured can make voluntary buy-in payments to this account to effect an increase in the pension at retirement, in case of early retirement, and/or for the financing of a supplementary pension.

Prerequisite for contributions to the ER account

  • You have no buy-in potential in the pension plan, i.e. you have fully bought into the regulatory benefits in the pension plan.
  • You are fully able to work at the time of purchase
  • You have fully recovered all possible early withdrawals for the purchase of residential property (WEF) or from divorce transfers

Maximum amount of the ER account

a)      The costs of financing the difference between the insured retirement pension at age 65 (upper limit: retirement pension based on the maximum possible retirement savings capital according to the buy-in table in the Regulations) and the early retirement pension at the chosen age for early retirement.

b)      The costs of financing a supplementary pension of the desired amount (not to exceed the amount of a maximum single AHV pension) and for the chosen duration (until maximum age 65 for men and age 64 for women). The amount of the supplementary pension paid out remains unchanged throughout the duration of payment and is not adjusted in line with any AHV increases.

 

Insureds have an entirely free choice and decide freely on the modalities

- Age at the time of early retirement

- Complete or partial compensation for reduction in benefits (upper limit: retirement pension based on the maximum possible retirement savings capital according to the buy-in table in the Regulations)

- Pre-financing of a retirement pension and/or supplementary pension or lump-sum payment

- Amount of contributions and time of buy-ins

- Note: Tax law provisions must be complied with at all times (three-year blocking period, consolidated view).

At no time are insureds under any obligation other than that of complying consistently with tax law.

Time at which buy-ins are made

  • Buy-ins can be made in the desired amount until 3 months before the age of early retirement (note: tax treatment of lump-sum payments and consolidated view by the tax authorities – in case of uncertainty, please contact the relevant tax authorities).
  • Personal deposits can generally be deducted from direct taxes paid to the Confederation, cantons and municipalities.
  • The Pension Fund cannot guarantee the deductibility of deposits.
  • Benefits resulting from buy-ins cannot be drawn as lump sums within the next three years.
    + This applies to the retirement savings capital in the Pension Plan and the ER account
        as well as the savings capital in the Capital Plan (consolidated view).
    + An exception is made for repurchases of benefits following divorce.

Date of voluntary early retirement

  • Early retirement should be taken at the age planned for when voluntary buy-ins are made.
  • Continued insurance beyond the pre-financed retirement age results in negative consequences for the insured:
    1. Insured retirement benefits are reduced if they exceed 105% of the retirement pension at normal retirement age according to the buy-in table.
    2. Surplus savings capital in the ER account is applied as follows:
      • No interest on the retirement savings capital, no retirement credits or savings contributions
      • Any residual share reverts to the Pension Fund

Benefits from the ER account

  • Benefit on early retirement
    • Available savings capital used to increase the retirement pension and/or for a supplementary pension or lump sum
  • Benefit in the event of disability or death before retirement
    • Available savings capital paid out as a lump sum
  •  Leaving benefit
    • Available savings capital transferred to the new pension fund as vested benefit

Buy-ins by an insured member of the Pension Fund can only be credited to the ER Account if the retirement savings capital has reached the maximum amount defined for the Pension Plan.

The maximum possible amount of the ER Account corresponds to the sum of the following two amounts:

  • the costs of financing the difference between the prospective retirement pension at the normal retirement age (whereby any surplus in the Pension Plan is excluded) and the early retirement pension at the desired retirement age;
  • the costs of financing the maximum supplementary pension for the chosen duration.      

The maximum possible amount of the ER Account is reduced by any remaining surplus from the Pension Plan and from the Capital Plan.

If insurance continues (ie if you continue to work) beyond the pre-financed early retirement age, your retirement benefits will be reduced to a maximum of 105% of the retirement pension at normal retirement age. The excess savings capital in your ER Account will be treated as follows:

  • No interest, retirement credits, or savings contributions on the retirement savings capital in the ER Account
  • Any residual portion reverts to the Pension Fund      

Tax aspects

As a rule, Pension Fund buy-ins can be deducted from taxable income, but this ultimately depends on the decision of the tax authorities. Following a buy-in, no lump-sum withdrawals may be made during a period of three years. If you fail to respect this required period, the tax authorities may retroactively deny the tax deductibility of your buy-ins. The buy-in amount contributed in the last three years may not be paid out as a lump sum.

Important information

The following must also be taken into account for contributions:

  • Insureds who have made an early withdrawal from their pension fund assets to purchase property will no longer be able to make Pension Fund buy-ins until the withdrawal has been paid back in full.
  • Contributions are permissible only if you have no vested benefits held in vested benefits institutions.
  • With every contribution, the blocking period of three years for lump-sum payments begins anew.
  • If you have moved to Switzerland from abroad and were never previously insured by a Swiss pension fund, the maximum annual buy-in amount in the first five years after moving to Switzerland is 20% of your insured salary.
  • If you were previously self-employed and possess Pillar 3a funds, these will be taken into account when calculating your maximum possible buy-in potential.
  • In each calendar year, a maximum of three Pension Fund contributions may be made (Pension Plan, Capital Plan and ER account).
  • Insureds who have paid pension compensation following divorce may repurchase this amount in full or in part at any time.
     

All buy-ins have to be done over your personal bank account. Please ensure that following information is provided with the payment order:

  • First and last name        
  • Insurance number (you can find this number on your pension benefits statement under "personal details")

Bank details for buy-ins

Bank: UBS AG, 8098 Zurich
BC-Clearing: 230
PC-Konto: 80-2-2
S.W.I.F.T. -Address (BIC) UBSW CH ZH 80 A
IBAN CH08 0023 0230 3344 2305 Y

in favor of: Pensionskasse Schweizerische Rückversicherungs-Gesellschaft (Swiss Re), Zurich

Please ensure that following information is provided with the payment order:

  • First and last name        
  • Insurance number (you can find this number on your pension benefits statement under "personal details")

Please note:

Buy-ins are only possible after full use of maximum possible buy-in to the pension plan.

Example of a buy-in to early retirement at age 60

The insured, currently aged 45, wishes to buy into early retirement at age 60. To do that, he or she can buy in a maximum amount of 327% of the insured salary at age 45.