Swiss Age pension

Why not apply and receive your Swiss Pension (AHV) 2 or 3 years earlier?

In Switzerland, women receive the AHV (OASI = Old Age and Survivor’s Insurance) pension from the age of 64 and men from the age of 65. This might change in the future.

With regards to the OASI, you may withdraw your pension 1 or 2 years ahead of time. This means that women can apply for the pension at the age of 62 and men at the age of 63.

Applying for the OASI earlier (maximum 2 years) will however reduce your pension throughout retirement (for the rest of your life). The reduction is 6.8% (one year earlier) or 13.6% (two years earlier). All the relevant information concerning your OASI pension can be obtained online.

We all know about the unfair deduction of Swiss pension from New Zealand Superannuation (NZS) when receiving NZS at the age of 65. According to the present policy and practice of the New Zealand authorities, our Swiss pension originating from compulsory contributions while working in Switzerland, is deducted from the NZS by the New Zealand authorities. On the other hand, voluntary contributions to the OASI pension scheme (Freiwillige AHV) are no longer deducted from NZS.

If one intends to apply (it is not compulsory) for NZS in New Zealand when reaching the age of 65, well aware of the fact that the Swiss pension, or part of it, will be deducted, one could consider the option of applying for the Swiss pension (OASI) one or two years in advance, for women at the present moment this would be up to 3 years before reaching the age of 65. Until this point of time the reduced OASI amount cannot be deducted and is regarded as normal income and taxable in NZ as such. This means that for maximum 2 years (men) or 3 years (woman) one would be receiving a slightly reduced Swiss pension without the New Zealand government getting their hands on it. Once receiving the NZS the “robbing” of your Swiss pension will commence unless policy in New Zealand changes.

 

For example:

A woman takes her Swiss pension at the age of 62 (2 years ahead and 3 years before reaching 65). Say she never paid any voluntary contribution and having been in New Zealand for a considerable period of time, her pension from Switzerland is, say NZ$ 700 a month.

Taking the pension 2 years ahead means a reduction of NZ$ 95.20 per month (13.6%). She will thus receive NZ$ 604.80 a month before New Zealand tax. Over a period of three years until eligible for NZS this amounts to a total of NZ$21’772.80.

Once reaching the age of 65 and applying for NZS, the New Zealand authorities will then reduce her NZS by NZ$ 604.80 per month. In other words, she will receive NZS but will lose her Swiss Pension as such. If she did not apply for an early Swiss pension, the full amount of NZ$700 would be deducted from NZS

 

Considering a solution such as just mentioned above would have the advantage that, before 65 years of age, the slightly reduced Swiss pension is yours (minus tax) and at 65 the New Zealand government will receive (pickpocket) 13.6% less then they would if you waited until the normal pension age.

You will however need to take into consideration the possibility that one day Section 70 might be abolished and thus hopefully people will be able to keep their overseas pension. I personally think it will be abolished sometime in the future, but not tomorrow. When this happens, you should be entitled to NZS or part of NZS, depending on the solution the New Zealand government comes up with. However, your Swiss pension will continue to be paid out on top at the reduced scale (%) mentioned above.

I would like to clearly emphasise that this article is my personal standpoint and that every person needs to look in detail at his or her personal situation, as no case is the same as the other. There are so many factors to be taken into consideration if one intends to take the OASI in advance such as: the eligible OASI amount due, voluntary contribution, family situation, financial situation in general, just to mention a few.

 

Peter Ehrler

Elected Member of the Swiss Abroad

Representing New Zealand