Frequently asked questions

Pictet Individual Pension Foundation

Whom is a 3rd Pillar A account for?

• Anyone taxed in Switzerland whose income derives from gainful employment, whether a salaried employee or self-employed, and who has to pay OASI/DI social security
  insurance;
• Any person wishing to improve the financing of their retirement;
• Taxpayers who would like to take advantage of the tax relief offered by the Confederation
  and the cantons;
• Anyone who is already paying into a 3rd Pillar a account or policy and who has not yet
  reached the statutory limits;
• Pension fund members who already have a tied 3rd Pillar a pension account and who wish to transfer their assets to a different pension account.

What are the tax benefits of a 3rd pillar A account?

Payments into a tied pension account (3rd Pillar a) may be deducted from taxable income, in accordance with the provisions of Art. 7 OPP3/BVV3. The maximum contributions permitted by law are determined by the
Federal Council and rise regularly in line with inflation. All the income is exemptfrom income tax and is not subject to withholding tax by the SwissConfederation or by the cantons, until such time as the capital is withdrawn. Furthermore, no wealth tax is deducted from the capital until the latter is withdrawn. If assets are withdrawn, or in the event of death, the Confederation and the cantons will tax capital payments as income (usually separately from other income) at a special rate or at the pension rate. Beneficiaries of pension benefits are subject to withholding tax if the capital benefit is paid to them when they are not (or no longer) domiciled or living in Switzerland.

How much can be invested?

You are free to decide how much and how often you pay into your 3rd Pillar a pension account. If you opt to make regular, fixed payments, you can use the so called “average price” method: when the net asset value of ashare is down, you acquire more shares; when it is up, you receive fewer. Depending on how the markets are behaving, you can thus optimize the average cost of your investments. In any event, the total amount of your contributions in any one year may  not exceed the maximum amount allowed under Art. 7(1)OPP3/BVV3, except in the event of higher amounts transferred from other recognized forms of pension cover.

How are the assets invested?

In your capacity as a pension scheme member, you have an inalienable right to a portion of the assets in the Foundation, represented in the form of shares (having no par value) in the respective portfolios. When a member subscribes to shares in a portfolio, the shares are issued on the day following receipt of the payment. The subscription price is the net asset value of one share as calculated two business days following the value date of theamount credited to the account.

How to change (switch) your allocation ? 

You are free to switch the allocation of your capital between the different investment portfolios at any time as your goals, personal
circumstances or the financial markets dictate. Your instructions must be sent in writing to the Foundation, which will make the change on the day following receipt of these instructions.

When is the pension capital paid out?

Your pension capital will be distributed to you when you reach the normal AVS retirement age (Art. 3(1) LPP/BVG). Should you die before reaching this age,  the capital will be paid out to your designated beneficiary(ies) (Art. 2 OPP3/BVV3). If you can prove that you are still
gainfully employed, payment of the benefits may be deferred up to a maximum of five years from the ordinary AVS retirement age. You may, however, request that your retirement capital be paid out five years before reaching the retirement age (Art. 3(1) OPP3/BVV3).

Under what conditions can I withdraw my retirement capital?

• you become self-employed and are no longer subject to mandatory occupational pension coverage;
• you use your capital to purchase a home in
  accordance with the provisions of Swiss law regarding the encouragement of home
  ownership using retirement funds;
• you use the capital to repurchase benefits from a tax-exempt pension scheme, or for another recognized form of pension coverage;
• you leave Switzerland for good;
• you become entitled to the federal disability pension from the Federal Disability Insurance Fund.

How are assets divested from the Foundation?

If you fulfil the conditions of Articles 10 and 11 of the Foundation’s regulations, you may request in writing to have your shares redeemed. The redemption price is the net asset value of one share as calculated two business days following receipt of the redemption request.

What are the terms and conditions for acquiring residential property using retirement funds?

The Ordinance on the Fiscal Deduction of Contributions to Recognized Pension Plans (OPP3/BVV3) and the Ordinance on the Encouragement of the Use of Vested Pension Accruals for Home Ownership (OEPL/WEFV) offer you the possibility to use your blocked pension capital for purchasing residential
property at your place of domicile or habitual place of residence. You can also use the pension fund assets for repaying a mortgage loan or financing investments in your property, such as conversions or extensions.