Short-time work and pension fund: Will my contributions fall?
In recent weeks, more than 1,800 insured persons have contacted the VZ VermögensZentrum with unanswered questions about their pension fund. Many fear that short-time work will tear large holes in their pension provision - or that the pension funds are no longer safe. Read which questions were asked particularly often.
Contributions to the pension fund do not generally decrease. The employer continues to pay the legally and contractually agreed social security contributions on the basis of the usual wage. In the case of short-time work, the employee usually receives 80 percent of his or her usual salary, depending on the obligation to continue to pay wages. Many insured persons ask how this affects the pension fund. Despite a lower salary, the so-called "insured salary" is not adjusted. Pension fund contributions continue to be based on this salary.
The employer is entitled to continue deducting the employee's portion from the employee's salary during short-time work. This has the effect that the same social security contributions are deducted on the lower salary.
An example: A man earns 10,000 francs per month before short-time work; 1300 francs are deducted from this for social insurance. He receives 8700 francs. During the short-time work he earns 8000 francs per month; but the deductions for social insurances are still the same at 1300 francs. He is left with 6700 francs.
However, it should not be forgotten that many pension funds are basically forced to continuously reduce their pension promises. The reasons for this are the persistently low interest rates and the ever-increasing life expectancy after retirement. This makes it all the more important for insured persons to take the reins themselves if they want to save their pensions.
Liquidity: How secure is my employer's PF?
Some employers have built up a reserve cushion in good years for the less good years - the so-called employer contribution reserves. On 25 March, the Federal Council decided that employers may exceptionally use these reserves to pay employees' contributions as well. This applies for a limited period of 6 months.
This measure helps some employers to better bridge liquidity bottlenecks. However, how good and how safe a pension fund is ultimately depends on a number of factors - such as the conversion rate, the funding ratio, the interest rate and the administrative costs.
Extra-mandatory: Can my employer suspend savings contributions?
Many employers have better benefits than those provided for by law. For example, in the form of savings contributions in the extra-mandatory part of the occupational benefit scheme. Many pension funds give employers, after consultation with the employees now have the option of temporarily suspending their extra-mandatory savings contributions.
As a result, an employee saves a little less money in his pension fund. However, here too it is good to know that these measures are intended to help companies reduce their costs in the short term, thereby preserving jobs.
Corona virus and stock market crash: less interest in the pension fund?
Many insured persons are worried that their retirement savings will no longer yield any returns. In fact, the share price losses are also affecting Swiss pension funds. In some cases, this is putting a massive strain on the coverage ratios.
At the present time, it is questionable whether it will be possible to pay interest on the retirement assets in 2020 at the same level as in 2019. This is because, according to BVV2 provisions, additional interest may only be paid if at least 75 percent of the target fluctuation reserves are reached.
What is important for employees is that pension funds have been among the successful investors in Switzerland for decades. They have experience with crises and will use the reserves they have built up in good equity years.
