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Date: Sun, 4 Jun 2000 07:08:27 -0700
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IHMO, and I am not a lawyer:
When you change a job, you typically move the money from one pension fund to another (e.g. the pension fund of your new employer
(buy in) or a protected bank account (Sperrkonto). This has no tax consequences (yet) as the money remains retirement money.
If you buy a house, or leave the country "for ever", you may take the money out of the pension system. Taking it out means you can
do with it whatever you want. In this case, you pay income tax on it. "For ever" I guess means you move your residency out of
Switzerland.
As for the amount you get: There are at least two major different "2nd pillar system" in CH. They calculate the amount you pay while
you work and then get after retirement differently. And each system or each fund defines how much you get if you take the money out
early. (This includes also changing of employer within Switzerland). So basically, the amount you get when you leave your CH job is
in the fine print of your employer's pension system (the "golden chains"). Typically, they try to rip you off if you leave the
company before retirement. This is the 40% cut mentioned.
The federal law mentioned in one e-mail defines a minimum amount you will get. If the fund rules give you less than what the law
says, the law applies. It is either all the money you put in (as opposed to what your employer put it) or something based on
percentages of your salary over the years. In my case, the legal minimum was even less than what the pension fund gave me, so the
law did not help me.
After that, you pay income tax on the money. Remember that so far you never paid anything on your 2nd pillar". So you have to pay. I
took my money out while I was still in Switzerland and I paid "Quellensteuer". The 7% mentioned seem about right. I don't know the
process when you are already in the US when doing this.
I took all 2nd pillar money out and put it into mutual funds (in Switzerland). I figured that the return of the stock market over
the next 30 years will compensate for these cuts. Pension fund returns are typically very low because they have to invest in
foolproof investments in Switzerland. My mutual funds are doing better. You have to declare these funds to the US Government (there
is a special form for this, 26.5 F or so that you have to send to the Treasury, I believe). I also declare these funds in my US tax
return and pay taxes on them.
BTW, similar rules apply to 3rd pillar in CH. I left all that money in the 3rd pillar, as I could invest that "aggressively". As
mentioned before, "aggressive" is pretty tame, but it was good enough for me, it is at least in the stock market.
Louis
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Received on Sun Jun 04 2000 - 07:08:05 PDT
