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RE: swiss-list: Voluntary AHV: timing question

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RE: swiss-list: Voluntary AHV: timing question

From: Christian S. Nobs <click for textversion of email address >
Date: Tue, 15 Oct 2002 22:59:24 -0700
X-Mailer: Microsoft Outlook IMO, Build 9.0.2416 (9.0.2910.0)

Leonore and CHer,

I recommend to read the "Voluntary AHV/AVS" brochure (1) thoroughly and
still get 3rd party advise if in your case it makes sense to pay into the CH
pension scheme while you also contribute to the US social security. The
brochure does not cover one common case: A CH working abroad (US) and
contributing to a foreign pension scheme (US SS) that has an agreement on SS
in place with the CH AHV/AVS scheme (2).

Assuming that you work in the US and your employer withholds deductions for
SS, one must be sure to make the right choice. In some cases it may not be
beneficial to now pay per year some 10 percent of your US income into a CH
AHV/AVS scheme, not get any US tax write off, still pay US SS, just to have
the word, that there is no contribution gap for the CH system once at the
retirement age. If I recall correctly, one year of contribution gap results
in a 2.5 percent reduction of the maximal AHV/AVS yearly payout. So if you
deserve 24,000 CHF per year, then you will only get 23,400 CHF per year
(until you decease). To compensate that shortfall, you will receive a
partial SS from the US (assuming you contributed a minimum duration).

There is no guarantee that you will see much money at your retirement age.
At the current aging rate, there is a pension funding crisis in the CH even
earlier than in the US. So paying today substantial amounts into a system
that is weak at best, may not be the wisest thing to do. One should not
depend on AHV/AVS or SS alone and better prepare through alternative means,
such as private savings and investments (think third pillar).

I paid into the "Voluntary AHV/AVS" and wish I had known better. Another
interesting fact is that once you are accepted in the Voluntary AHV/AVS, it
is difficult to get out. It is not "Voluntary" if you look closely.

(1) Document number 10.02 also available at www.ahv.ch)
(2) Agreement between the United States of America and The Swiss
Confederation on Social Security at
http://www.ssa.gov/international/Agreement_Pamphlets/switzrld.html
(executive summary) and
http://www.ssa.gov/international/Agreement_Texts/switzrld.html (details)

Just my five centimes...

Christian

-----Original Message-----
From: owner-swiss-list_at_swiss-list.com
[mailto:owner-swiss-list_at_swiss-list.com]On Behalf Of Leonore Wigger
Sent: Sunday, October 13, 2002 5:20 PM
To: swiss-list_at_swiss-list.com
Subject: swiss-list: Voluntary AHV: timing question

Hi all,

I am new to the Swiss list and have an urgent question regarding the voluntary
AHV contributions program.

As has been mentioned before on this list, if I want to make voluntary
contributions, I have to sign up within one year after leaving the Swiss
compulsory AHV program.

Does anyone know what will count as the date on which I left the compulsory AHV
in Switzerland?

My last working day in Switzerland? The end of my last working month in
Switzerland? The day I gave up my residency in Switzerland?

Can anyone help me?

My last working day in Switzerland was almost a year ago, on October 2001; I've
been living in the US since November 2001; however, I've only given up my Swiss
residency in September of this year. - Thanks in advance for any help with this
question,

Leonore
(San Francisco)

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Received on Wed Oct 16 2002 - 06:16:37 PDT

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