Insights into the design of 1e plans

It is well known that 1e pen­si­on plans have many advan­ta­ges. In the fol­lo­wing arti­cle, we would like to step for­ward and give an insight into the design of such 1e plans. This is done after a mile­stone has been rea­ched. Sin­ce Janu­a­ry 1, 2020, the your­pen­si­on collec­ti­ve foun­da­ti­on mana­ged by fin­pen­si­on has had over 100 affi­lia­ted com­pa­nies with around 1,000 insu­red per­sons. For the eva­lua­ti­on, 109 com­pa­nies with 133 pen­si­on plans were con­si­de­red. Bonus plans were not inclu­ded in the eva­lua­ti­on, as they are often sub­ject to dif­fe­rent laws.

Management Summary

  • Only 16 % of pen­si­on plans start at the age of 18, the majo­ri­ty at 25.
  • A lar­ge pro­por­ti­on of the plans exami­ned make full use of the sta­tu­to­ry savings poten­ti­al (25% savings con­tri­bu­ti­on of bet­ween CHF 127,980 and 853,200).
  • 70 % of the plans have a sin­gle savings con­tri­bu­ti­on rate for all age cate­go­ries.
  • The employ­ers pay a lar­ger share of the risk costs than of the savings con­tri­bu­ti­ons.
  • The insu­red risk wage is more likely to be cap­ped than the savings wage.
  • More than half of the plans have defi­ned a mini­mum insu­red sala­ry.

Start of the savings process and risk insurance

21 of the pen­si­on plans begin to take effect at the age of 18, 112 at the age of 25. Why this is the case, is easy to exp­lain: In its mini­mum requi­re­ments for the BVG obli­ga­ti­on, the legis­la­tor sti­pu­la­tes that the savings pro­cess does not begin until the age of 25. Many pen­si­on funds also ori­ent them­sel­ves to this. Only a few redu­ce the ent­ry age for savings con­tri­bu­ti­ons to 18 years. If a 1e plan is now set up for wages abo­ve 127,980 francs, the regu­la­ti­on is usual­ly taken over from the basic fund.

In con­trast to the basic plan, whe­re risk insuran­ce gene­ral­ly begins at the age of 18, the 1e plan does not gene­ral­ly dif­fe­ren­tia­te bet­ween the age at which savings and risk coverage begin. Both start at eit­her 18 or 25 years of age, excep­tio­nal­ly also in bet­ween (2 cases at 20 years).

Level of the savings contributions

In 94 out of 133 pen­si­on plans, the savings con­tri­bu­ti­ons are line­ar, which means that the con­tri­bu­ti­on rates are the same for all age cate­go­ries. More than half of the­se pen­si­on plans have a savings con­tri­bu­ti­on of 25 %(employ­er and employee tog­e­ther), which is the legal maxi­mum.

The remai­ning 39 plans do not have a com­mon savings con­tri­bu­ti­on rate. The ran­ge is from 7 % to 25 %, the average of 12 % in the 25–34 cate­go­ry to 20 % in the 55–65 cate­go­ry. With stag­ge­red savings con­tri­bu­ti­ons, rates of >25 % would also be per­mit­ted, sin­ce the sta­tu­to­ry maxi­mum of 25 % must gene­ral­ly only be obser­ved on average (sub­ject to tax law assess­ment).

25–3435–4445–5455–65
Lowest value7%9%11%12%
Mean value12%14%18%20%
Hig­hest value22%22%25%25%

Employee share of savings and risk contributions

The law requi­res the employ­er to pay at least 50 % of the savings and risk con­tri­bu­ti­ons. In the case of savings con­tri­bu­ti­ons, two-thirds of employ­ers go fur­ther and pay a lar­ger share of the savings con­tri­bu­ti­ons. The employee only needs to pay 40, 33, 25 or 20 %. In one-third of the plans exami­ned, con­tri­bu­ti­ons are finan­ced equal­ly; employ­er and employee both pay the same amount, 50 % each.

The employ­ers pay a litt­le more in risk con­tri­bu­ti­ons. Almost a third of employ­ers bear the enti­re risk costs. In an equal num­ber of plans, the split is 50 / 50, with the rest divi­ded bet­ween com­mon values.

The fact that employ­ers pay a hig­her share of the risk con­tri­bu­ti­ons can be exp­lai­ned by the fact that the risk con­tri­bu­ti­ons are much lower in rela­ti­on to the savings con­tri­bu­ti­ons.

Legal restrictions on election plans

If the employee can choo­se from dif­fe­rent plans, this is cal­led an elec­tion plan. In the­se elec­tion plans, the employee’s savings con­tri­bu­ti­on rates vary. Howe­ver, the employer’s savings con­tri­bu­ti­on must always be the same wit­hin a collec­ti­ve.

A collec­ti­ve must be defi­ned by objec­ti­ve cri­te­ria, for examp­le by the manage­ment level, the func­tion, the amount of the sala­ry or the age. The employ­er can offer a maxi­mum of three elec­tion plans per collec­ti­ve. The com­bi­ned savings con­tri­bu­ti­ons of the employ­er and employee in the “smal­lest” plan may not be less than two-thirds of the savings con­tri­bu­ti­ons in the “lar­gest” plan.

Plan minimum and maximum

It gets a litt­le tedious with the plan limits. A very lar­ge majo­ri­ty are gui­ded by the sta­tu­to­ry plan limits of at least 127,980 and a maxi­mum of 853,200 Swiss francs. 71 % of the plans app­ly to sala­ries bet­ween 127,980 and 853,200 francs. They thus make full use of the sta­tu­to­ry (tax) savings poten­ti­al.

Saving
Share of pen­si­on plans with plan mini­mum of CHF 127,98078 %
Share of pen­si­on plans with plan maxi­mum of CHF 853,20088 %
Share with plan mini­mum of CHF 127’980 and plan maxi­mum of CHF 853’20071 %

The situa­ti­on is slight­ly dif­fe­rent for risk, which is due to the fact that the risk sala­ry is limi­ted more often than for saving. This is rela­ted to the fact that the bene­fits of risk insuran­ce decre­a­se with incre­a­sing inco­me..

Risk
Share of pen­si­on plans with plan mini­mum of CHF 127,980078 %
Share of pen­si­on plans with plan maxi­mum of CHF 853,2074 %
Share with plan mini­mum of CHF 127’980 and plan maxi­mum of CHF 853’20061 %

Minimum insured wage

If the eli­gi­bi­li­ty cri­te­ria for the 1e plan are met, the que­sti­on ari­ses as to the mini­mum amount of sala­ry to be insu­red. Why this que­sti­on is important: As a rule, 1e foun­da­ti­ons have admi­ni­stra­ti­on fees per mem­ber per year. Without a mini­mum insu­red sala­ry, the­re may be an unfa­voura­ble ratio of costs to con­tri­bu­ti­ons. In extre­me cases, the con­tri­bu­ti­ons (savings and risk) may be lower than the annu­al lump sum. Examp­le: Wage 128’000 — coor­di­na­ti­on deduc­tion 127’980 = 20 Swiss francs insu­red sala­ry

  • Saving Con­tri­bu­ti­ons 20 % x 20 = 4 Swiss francs
  • Risk Con­tri­bu­ti­ons 1.5 % x 20 = 0.30 Swiss francs
  • Admi­ni­stra­ti­on flat rate = 100 Swiss francs
  • Total Cost = 104.30 Swiss francs

This can be coun­ter­ac­ted by a mini­mum insu­red wage. The mini­mum insu­red wage is app­lied when the ent­ry thres­hold is exce­e­ded. In 47 % of the plans exami­ned, a mini­mum insu­red wage is defi­ned at the level of the mini­mum AHV pen­si­on of CHF 14,220. A fur­ther 9 % have used the mini­mum insu­red sala­ry of CHF 3,555 for the BVG com­pul­so­ry pen­si­on plan. Over 40 % of the plans do not pro­vi­de for a mini­mum insu­red sala­ry.

The 1e-Sam­mel­stif­tung of your­pen­si­on char­ges an admi­ni­stra­ti­on fee of CHF 100 per insu­red per­son. Other collec­ti­ve foun­da­ti­ons char­ge con­si­der­ab­ly more, for examp­le 350 or 500 francs.

We will be hap­py to put tog­e­ther a ful­ly indi­vi­dua­li­zed pen­si­on plan tailo­red to your exi­sting pen­si­on plan and offer it to you tog­e­ther with a cost-effec­ti­ve and with­hol­ding tax-opti­mi­zed invest­ment solu­ti­on. After all, the invest­ment side should not be neglec­ted when asses­sing a 1e solu­ti­on.