Multiple jobs: What you need to know about your pension fund
These days, many employees work part time for several employers. This means that, despite regular income, they don't earn enough to fall directly under statutory BVG insurance. Nonetheless, they too should provide for their retirement. What solutions are available for this with employee benefits insurance?
With employee benefits insurance, the insurance obligation only begins at an annual salary of CHF 22,050. So people who work for several employers and do not earn more than CHF 22,050 per year in any one of those jobs do not fall under statutory BVG insurance. However, these part-time employees have two options to join a pension fund.
Case 1: Substitute Occupational Benefit Institution
The Auffangeinrichtung BVG (Substitute Occupational Benefit Institution) is a pension fund commissioned by the federal government that is the only pension fund in Switzerland to accept all employers and individuals willing to join, provided they meet the legal requirements. If your combined annual income is more than CHF 22,050 per year, you can join this foundation. It has regional branches, is part of the second pillar, and enables employees to insure the statutory BVG minimum benefits. The coordination deduction of the insured person (i.e. the portion that is already covered by the Old Age and Survivors' Insurance) is applied to the total annual income and every employer must make the relevant contributions.
Case 2: An employer's pension fund takes on the role of the Substitute Occupational Benefit Institution
If the relevant pension fund provides for this in its regulations and this is your chosen option, the other employer(s) must pay their contributions to this pension fund. This is potentially more advantageous for you, the employee, since many pension funds offer better benefits than the legal minimum in contrast to the aforementioned Substitute Occupational Benefit Institution.
If you work for two employers and earn over CHF 22,050 per year from each of them, you are obliged to be insured by both, because your annual salary is above the minimum income required for enrolment. However, the coordination deduction is then applied to both salaries, which puts you at a financial disadvantage. In this case, you should definitely ask both employers about the possibility of concentrating your pension provision into a single pension fund, as described in Case 2.
Sample calculation 1: Two low annual salaries - no BVG contributions
Anna is a student and works at the university as a tutor for a few hours a week. She earns CHF 18,000 per year with this. In addition, she works as a barista in a small cafe, which earns her CHF 20,500 per year.
Both annual salaries are below the BVG minimum income required for enrolment of CHF 22,050. Anna is therefore not covered by employee benefits insurance, although both salaries together would suffice for insurance.
Added together, Anna's annual salary is CHF 38,500. Minus the coordination deduction of CHF 25,725, she would still have an insured BVG salary of CHF 12,775.
What can Anna do now? She can either enroll with the Substitute Occupational Benefit Institution or ask both employers whether she can become insured with one of their pension funds.
Sample calculation 1: Two salaries, both below the BVG minimum income required for enrollment
Both salaries have to be insured with one of the employers or with the Auffangeinrichtung BVG.
Source: Credit Suisse
Sample calculation 2: Two moderate annual salaries – two coordination deductions
Thomas works 50% as a client advisor, for which he makes CHF 60,000 per year. In addition, he works 50% in a startup, which earns him CHF 30,000.
Thomas earns more than the BVG minimum income required for enrolment of CHF 22,050 with both employers. However, because the coordination deduction of CHF 25,095 is applied to both salaries , his BVG-insured salary as a client advisor is CHF 34,275 and at the startup it is CHF 4,275. In total, he has BVG insurance for CHF 38,550, which means that there could be pension gaps in his retirement provision.
What can Thomas do? If he enrolls in one of his employers' pension funds, one of the coordination deductions will no longer apply. Thomas's salary insured under the BVG would then be CHF 64,275.
Sample calculation 2: Two salaries, both above the BVG minimum income required for enrollment
Both salaries have to be insured with one of the employers.
Source: Credit Suisse
Who pays the voluntary pension fund contributions?
People with multiple jobs who want to take out BVG insurance voluntarily do not have to cover the pension fund contributions themselves. Employers have to pay for at least half – exactly the same as for the obligatory contributions that are due if the BVG minimum income level of CHF 22,050 is reached.
However, this requires the employee to inform their employer about their voluntary BVG enrolment.
BVG reform in the pipeline
A referendum on the BVG reform draft is expected in summer or fall 2024. The aim of the reform is to make the second pillar more resilient and improve pension coverage for part-time employees – and women in particular. It envisages the following measures:
- The minimum conversion rate will decrease from 6.8% to 6%.
- The transitional generation will receive financial compensation in the form of pension supplements.
- Retirement credits for older employees will be reduced.
- The minimum income required for enrollment in a pension fund will be lowered.
- The coordination deduction will be set as a percentage rather than a fixed amount.
You can find more information in this article.
