Relocating between the UK and Switzerland? What to do about your pension
Pensions in Switzerland
There are notable differences between the UK and Swiss pension systems. The Swiss pension system is based on the principle of compulsory insurance for all salaries between CHF 25,095 and CHF 86,040 (for 2021). This "coordinated salary” is a maximum of CHF 60,945. Above this amount, the insurance coverage depends on the pension plan offered by the employer, which generally offers much higher coverage.
In contrast to other pension systems, assets are managed jointly by a pension fund, usually a foundation managed by a board of trustees, on the basis of prudent and conservative management principles laid down by law and ordinances.
The compulsory pension scheme includes old-age, survivors' and disability benefits, which are generally paid out in the form of an annuity. On retirement, the insured may choose to withdraw the entire capital plus interest as a lump sum or as an annuity, based on the applicable conversion rate laid down in the pension plan.
For the portion of annual salaries exceeding CHF 126,900, there are possibilities for individualised plans where the employee can choose the type of asset management, provided that the employer has provided for such plans.
Many disputes arise as a result of either the employer or the employee ignoring the obligation to affiliate workers in Switzerland, even if the foreign employer has no branches or subsidiaries in Switzerland, except in cases of secondment. In principle, the period of secondment may not exceed 24 months, otherwise compulsory membership of the Swiss pension scheme is required.
Therefore, if you wish to take up employment in Switzerland you should find out before your arrival what pension plan your employer is offering you, in particular, whether you will continue to be affiliated in your country of origin in the event of secondment, or whether you will be affiliated to your (foreign or Swiss) employer's institution in Switzerland.
How we can help
We have experience advising individuals with UK pensions on options when considering re-locating overseas (whether to Switzerland or to other countries) and are well placed with offices in the UK, France and Switzerland to advise on all aspects of this process.
We also advise individuals with UK pensions (acquired whilst working in the UK) who are currently located overseas on their options in relation to their UK pensions when considering returning to the UK or to other possible jurisdictions on retirement, and in the context of UK and foreign pension assets splitting in divorce proceedings.
We regularly advise overseas companies with employees working in the UK on their UK pension obligations. Issues can arise where companies do not realise that they have pension obligations even though they may not have an “office” in the UK. The same is true for UK companies sending employees to work in other jurisdictions, either through secondment to partner companies or through mobile telecommuting.