What are the retirement benefits

Retirement benefits: Calculation of BVG retirement benefits

Retirement benefits to be deducted from the ALE

  • Compulsory and advanced occupational pension benefits;
  • AHV bridging pensions / AHV replacement pensions provided for by the regulations
  • or bridging pensions;
  • Child pensions paid together with old-age pensions;
  • Retirement benefits from a foreign mandatory or voluntary old-age insurance scheme, regardless of whether it is a regular retirement benefit or an early retirement benefit.

The following are not considered retirement benefits:

  • Withdrawal / vested benefits according to Art. 2, 4 and 5 of the Freedom of Movement Act, as these benefits do not give rise to premature retirement;
  • voluntary benefits paid by the employer when the employment relationship is terminated within or outside of a social plan, such as hardship benefits, severance payments, loyalty bonuses, AHV transitional pensions or AHV bridging grants, which are not provided for in the regulations, as well as voluntary benefits to the occupational pension scheme.

Example: A person who involuntarily retires prematurely receives a monthly old-age pension of CHF 3,000 and a statutory AHV bridging pension of CHF 900. Both old-age benefits must be fully deducted from the ALE.

Combination of retirement benefits and voluntary benefits

If both retirement benefits as part of early retirement and voluntary benefits are paid out by the employer, both types of benefits must be considered separately:

  • The first step is to determine the period during which the loss of work cannot be taken into account
  • From the start of entitlement, the retirement benefits must be deducted from the ALE

Example: An insured person is dismissed for economic reasons. In recognition of his long-term employment relationship, he has been assured of early retirement without a reduction in his pension. For this purpose, the employer has paid a one-off, voluntary amount of CHF 320,000 into the pension fund, i. H. financed a so-called pension buyout. To calculate the ALE of the involuntarily early retired person, proceed as follows:

Calculation of the non-creditable loss of work:

CHF 320,000 ./. CHF 126,000 ./. CHF 83 520.- = CHF 110 480.-: CHF 9,000.- (monthly wage) = CHF 12.28.

Conversion to working days = 0.28 x 30: 1.4 = 6. The insured person does not have any creditable loss of work 12 months and 6 working days after termination of the employment relationship and therefore no entitlement to ALE.

After this period has expired, the insured person is entitled to ALE, provided the other requirements are met. The full pension must be deducted from the ALE.