What is the meaning of 1e?
For anyone familiar with the three-pillar system, one would assume that 1e is about first-pillar provision, just as 3a is about third-pillar provision.
However, this is not the case. In 1e, the “one” does not refer to the pillar in the three-pillar system. The designation 1e comes from an article in the Occupational Pensions Ordinance (BVV 2), Article 1e.
1e therefore refers to the second pillar (BVG). Salary components from 129,060 Swiss francs can be insured in 1e solutions (supplementary insurance).
What is special about a 1e pension?
The 1e pension differs from other pension fund solutions in one important respect. While the pension assets in a “normal” pension fund are invested in the general economy, the pension assets in a 1e solution are invested separately for each insured person.
In this way, the insured bear the investment risk themselves, but they are also credited with the full returns. With “normal” pension funds, the active insured do not receive the entire return generated. Part of the return is used to finance excessive pension promises (keyword: redistribution).
1e solutions are free of such redistributions from active insured to pensioners.
Who defines the investment solutions?
As already mentioned, with a 1e solution, pension fund members can decide for themselves how their pension assets are invested. You can choose from up to ten investment strategies.
The investment strategies are specified by the pension fund commission of the affiliated company. At least one of the strategies must be low-risk.
How long do 1e solutions exist?
1e plans have been around for a while. However, they only became really attractive after the amendment to the Vesting Law and BVV 2 came into force on 1 October 2017. The revision of the law eliminated the systemic error of allowing beneficiaries to benefit from profits while the pension fund had to bear any losses. Since then the 1e market has been growing strongly.