Pensions when leaving Switzerland Considerations for individuals leaving Switzerland permanently

When someone leaves Switzerland, the question about the Swiss pension saving automatically comes up. This article covers the possibilities and rights as seen from a Swiss perspective. It is strongly recommended seeking individual tax advice from a Swiss perspective as well as from the perspective of the new country of residence in advance of the planned move, as the consequences may vary depending on the countries involved.

1st Pillar – OASI refund

Conditions to apply for a reimbursement of the Swiss 1st pillar contributions

A person may apply for reimbursement of the OASI (1st pillar) savings contributions when the person is leaving Switzerland definitively and is moving to a country with which Switzerland has not signed any social security agreement.

In order to be eligible for the reimbursement the following individual conditions need to be met:

  1. The person must have paid contributions for at least one year.
  2. The person and family (i.e. spouse/registered partner and children under 25) must have left Switzerland permanently or are intending to do so.
  3. In case the person has adult children under 25, who remain in Switzerland, they must have completed their education, i.e. be financially independent.

When can the application be filed and what is the process/consequences?

The application for reimbursement of the OASI contributions may be submitted before someone is leaving Switzerland, but only after receiving the certificate of departure from the community. The reimbursement will be made once the person has physically completed the move abroad and the application has been processed by the Swiss Compensation Office (SCO), based in Geneva. The latter is done by checking that the information, which the person has provided is correct and meets the requirements for the reimbursement. Once the authorities have calculated the amount to be reimbursed, the person will receive a letter stating the amount of reimbursement and when the amount will be transferred to the bank account indicated in the application. It should be noted that the insurance elements of the 1st pillar contributions are not reimbursed.

The application for the 1st pillar reimbursement must be submitted no later than five years after the departure from Switzerland. Otherwise the entitlement is lost. Once the 1st pillar contributions have been reimbursed, the person is no longer entitled to receive a Swiss state pension upon retirement.  

2nd pillar – Occupational pension schemes

Conditions for applying for a reimbursement of the Swiss 2nd pillar contributions

A person may apply for reimbursement of the 2nd pillar savings contributions when the person is leaving Switzerland definitively and is moving abroad regardless whether a bilateral social security agreement is in place or not.

For persons moving to another EU/EFTA country the mandatory portion of their 2nd pillar pension contributions must remain in Switzerland on a vested bank account until their retirement or they move to a non-EU/EFTA country. The non-mandatory portion of the 2nd pillar may be claimed for re-imbursement at the time of leaving Switzerland

When can the application be filed and what is the process/ what are the consequences?

The application for reimbursement of the 2nd pillar contributions may be submitted before someone is leaving Switzerland, but only after receiving the certificate of departure from the community.

The reimbursement of the eligible portion of the 2nd pillar pension contributions, less the beneficial Swiss withholding tax on lump-sum pension distributions, will typically happen within a couple of months after the application has been filed and once the person already may have become tax resident in the new country. In such case, the distribution may also become taxable in the new country of residence.

Hence, advice and tax planning should preferably happen before the move takes place.

 

Pillar 3a – Private pension schemes

Conditions to apply for a reimbursement of the pillar 3a pension savings

A person may apply for reimbursement of the pillar 3a savings, when he or she is leaving Switzerland definitively. This can happen freely irrespective of the new country of residence.

When can the application be filed and what is the process/ what are the consequences?

The application for reimbursement of the pillar 3a savings may be submitted to the relevant bank or insurance company before someone is leaving Switzerland, but only after receiving the certificate of departure from the community. The reimbursement of pillar 3a funds, less the beneficial Swiss with-holding tax on lump-sum pension distributions, will typically happen within a couple of months after the application has been filed and once the person already may have become tax resident in the new country. In such case, the distribution may also become taxable in the new country of residence.

Hence, it is recommended that proper advice and tax planning preferably happens before the move takes place and the person becomes tax resident in a new country.

Author: Per Melberg

Per Melberg is a Managing Partner at Exactio Ltd., a Swiss based advisory company that is specialized in providing professional tax and social security advisory services to individuals living and working in Switzerland. He has lived in Switzerland for more than 20 years working with international staff all over the world. He is dedicated to use all his experience supporting mobile individuals and their families moving to and from Switzerland.


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