What your pension statement tells you about your financial future

hand on heart, When was the last time you took a closer look at your pension fund’s benefit statement? If it’s been a while or it hasn’t happened at all, then you’re far from alone. Finding and interpreting the pension statement is one of the most frequently asked questions in my financial seminars. So today Olga in explain mode, that is why it pays to look at your pension deed at least once a year and see what information you can get from it.

According to BFS pension fund statistics, there are 1,389 pension funds with investments in the Total value of 1159 billion Swiss francs and approximately 4.5 million actively insured. There are more assets in our pension funds than in the reserves of the Swiss National Bank: according to Statista, this amounted to CHF 853 billion in 2022.

While for many of us the money in the pension fund is one of the greatest assets we build up in life, it will be not as “wealth” watched. This is evident from the research of SOTOMO only a minority (44%) of the working population counts their own BVG savings as assets and at the same time underestimates the importance of the 2nd pillar for retirement income.

One of the reasons for this is that the deductions in the 2nd pillar take place automatically, almost automatically in the background. For some people it even goes that far that they forget their pension fund assets. Billions are therefore in the hands of the BVG, as the pension funds transfer the funds to the subsistence foundation if they do not receive transfer information when changing jobs or moving abroad. If you have or suspect that you have forgotten your pension fund assets, you can have this looked up by the 2nd pillar central office.

Your pension fund will send you an overview every year so that you have an overview of your premiums and the associated benefits.

What the extract looks like differs per pension fund. Some are more detailed than others and different terms are often used, which does not always make interpretation easy. However, what they all have in common is that they should contain the most important information.

You also have the right and right to full and regular information. If anything is unclear, feel free to ask your pension fund. There are no stupid questions, only questions you don’t ask. 😉

Here are the key specs to look at:

The reported AHV annual salary at the pension fund is your gross salary. You can also find it in your tax return. You will also find the coordination deduction listed. It is used to determine the salary insured by the pension fund. The deduction is currently CHF 25,095. Your insured annual salary consists of the stated annual salary minus the coordination withholding.

Tip: If you work part-time or if you have several employers, the coordination deduction will hit you hard. Ask your pension fund whether there is a part-time work-friendly scheme. Many health insurers are now adjusting the coordination deduction to the workload and there are also some where the coordination deduction has already been completely abolished. It’s worth asking!

The stated balance corresponds to the pension capital you have saved so far. This includes the savings you and your employer have made and the interest accrued to date. The acquired benefits contributed are also registered here.

This is often included expected pension capital meant in old age and is a prognosis. The pension fund uses your current salary for this and gives you an estimate of what your remuneration and pension assets will look like when you retire or retire earlier. However, it is important to note that this is only an extrapolation based on currently valid data and the younger you are, the more inaccurate the data is as the salary and conversion rate will change over the years.

Tip: To make the figures more tangible, it helps many people, eg B. to break down the expected retirement pension, which is often given per year, by month.

These figures show what the pension fund would pay each year to you in the event of disability or to your surviving dependents in the event of your death.

Tip: Find out how long the waiting time would be in case of disability. For many pension funds this is 720 days, so 2 years, until payment. Also check what happens to your pension fund money when you die and whether this can also be paid out to the next of kin. This is not possible at all cash registers.

This gives you insight into how much money the pension fund uses for what. This information may differ per pension fund. If your pension fund provides transparent information, you will see the administration costs, the premiums in the event of disability or death, the savings premiums for your pension savings and the breakdown of the premiums that you and your employer pay.

You have the option, increase your retirement pension if you make an extra deposit. This is possible, for example, if you used to earn less. Here the pension fund tells you how high the maximum possible purchase amount is. You can deduct this contribution, which you pay voluntarily, from your taxable income.

You can take advantage of this early payout if you becoming self-employed, emigrating or acquiring your own home want to buy.

The coverage ratio indicates how your pension fund is doing financially. Ideally, the funding ratio should be 100% or more. If the contribution margin falls below 90%, the pension fund is obliged to take measures. This can be a reduction in the benefit or a lower interest rate.

As you can see, knowing the information on the pension statement is part of personal financial hygiene, so that you have an overview of what happens to your pension fund assets and what benefits you can expect in case of an emergency.

In addition, always check the extract and report any discrepancies or questions directly to the pension fund.

How satisfied are you with your pension fund and what are your experiences? 💸