Frequently asked questions
Frequently asked questions
Pension funds with defined contribution plans determine members’ benefits on the basis of the amount of contributions paid. This means that the amount of the benefits is calculated individually for each member on the basis of the total contributions (including interest) paid by the member and the employer during the contribution period. The contributions are specified in the regulations of the respective pension fund as a percentage of the salary.
Pension funds are required by law to form a value fluctuation reserve to absorb price fluctuations of their investments. This is to prevent underfunding due to temporary price movements on the financial markets.
The technical interest rate is used in financial mathematics and actuarial mathematics and serves as valuation and actuarial interest rate. In the case of employee benefits institutions, it indicates the discount rate at which the future (pension) obligations are discounted in order to calculate their present value, which is reserved for pension payments. As an actuarial interest rate, it represents the future expected return on assets considered for the determination of benefits or the amount of contributions. The technical interest rate is thus an important basis for the determination of the conversion rate.
The conversion rate is the percentage used to convert the accrued retirement assets into an annual pension on retirement (including spouse’s pension insurance in the event of death). Current pensions are not affected by changes in the conversion rate.
The coverage ratio expresses the relation between the accrued assets and the commitments vis-à-vis active members and pensioners.
The Board of Trustees determines the interest rate once a year, taking into account the pension fund’s financial situation and the BVG minimum interest rate which is set by the Federal Council once a year.
The generated return has to cover not only the interest on retirement assets but also other commitments: These include the financing of benefits in the event of disability and death, the creation of reserves resulting from excessive conversion rates or rising life expectancy, administrative and asset management expenses and allocations to the value fluctuation reserve.
New members are insured under the Standard plan unless they choose a different plan. Under the Comfort and Super plans, members voluntarily pay higher monthly contributions into the pension fund to increase their retirement assets. This also raises their retirement and risk benefits. The contributions paid by the employer are independent of the members’ choice of plan.
When members leave the company, their retirement assets are due in the form of a vested benefit. The pension fund will contact the member to obtain information regarding the transfer of the money. Where members join a new employer, the assets will be transferred to the new pension fund. Otherwise, it will be transferred to a vested benefit account or vested benefit policy. Cash payments will be made in certain cases only.
Characteristics pension: Retirement pensions will be disbursed on a monthly basis for the rest of the members’ life and are adjusted to inflation in accordance with the pension fund’s financial capabilities. The full retirement pension is subject to income tax. In the event of death, regular survivors’ benefits will be paid in accordance with the Pension Regulations.
Characteristics lump-sum retirement benefit: Lump-sum retirement benefits are non-recurrent and are subject to a reduced tax rate upon receipt. Once the lump-sum benefit has been paid, all claims against the pension fund are satisfied. Pensioners are then fully responsible for the management and apportionment of the lump sum. Apart from the lump-sum benefit, there is no further entitlement to benefits from the pension fund (in the case of continued insurance with the Pension Fund pursuant to Art. 47a BVG, special regulations pursuant to the Pension Regulations of the Pension Fund of SR Technics Switzerland apply).
Mixed forms: Combinations are also possible whereby members receive a portion of the retirement assets as a lump sum and the rest as a monthly pension.
Where members receive disability benefits, their retirement assets will be held by the pension fund. The projected retirement assets correspond to the retirement assets available upon recognition of disability, increased by the retirement credits determined on the basis of the last contributable salary, using an interest rate of 1.5% for the projection. The entitlement to disability benefits ends upon reaching the statutory retirement age and members will subsequently receive retirement benefits. The benefits are calculated on the basis of the accrued retirement assets.
In the case of partial disability, the retirement assets accrued at the onset of the disability will be divided in accordance with the pension scale under the Pension Regulations. The retirement assets relating to the active portion will continue to accrue as for full earners, the other portion will accrue as described above.
The current status of the insurance certificate can be retrieved and downloaded on the online portal at any time.
In their tax declaration for the respective year, members can deduct voluntary deposits from income up to the maximum buy-in limits under the Pension Regulations and under the law. In the case of lump-sum payments on retirement, a reduced tax rate applies.