The best solution for employers and employees alike

By offering a progressive employee benefit scheme, a company can underscore its social commitment and thus enhance its attractiveness as an employer. Self-employed people can also voluntarily join the insurance scheme set up for their employees. The Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans (LOB) requires employers to set up retirement benefit schemes for their employees and to insure them against disability and death.

The first important decision involves the choice of employee benefit model

The SME can select either a solution offering guaranteed benefits and 100% security that covers all risks, but also costs somewhat more, or a semi-autonomous solution with potentially higher returns and certain investment risks. In the latter case, the risks of death and disability are generally covered by an insurance company.

The law prescribes minimum benefits (LOB)

• Savings to cover retirement (retirement pensions and pensioner’s children’s pensions)
• Disability pensions and disabled’s children’s pensions
• In the case of death, surviving spouse’s pensions and orphan’s pensions, or partner’s pensions for registered same-sex partnerships
• Vested benefits (accumulated retirement savings) upon leaving the company

Additional benefits and greater flexibility are possible, but not always included

The benefits are specified in the regulations of each employee benefit institution/collective foundation. But remember: there are differences between schemes. Helvetia’s group foundations automatically include the following forms of supplementary cover:

• In contrast to the LOB regulations, spouse’s pensions are paid regardless of the beneficiary’s age, the duration of the marriage and whether there are surviving children.
• Partner’s pension
• In the event of death, the accrued retirement assets are paid out as a lump-sum death benefit to the extent that no pensions have to be paid out to spouses, registered partners or life partners (this is known as “restitution of contributions”).

Flexibility for the insured persons is also part of the benefits offered:

• Employees have the option of early retirement or continued insurance beyond the reference age – also in several phases.
• Measures that enable insured persons to retire early without a pension reduction (contributions to finance early retirement).
• Voluntary purchases to make up for any shortfalls in contributions and to lower the employee’s tax burden.
• Options to remain in the occupational benefit scheme in cases of unpaid leave.

The insured salary is decisive – how OASI and LOB interact

In the compulsory pension segment of the LOB, the upper limit for the insurable salary is set at three times the amount of the maximum single OASI pension. Any portion of the salary above that limit is not insured. This leads to a loss of income in old age and in the event of disability.

The following graph clearly shows how the benefits from the first and second pillars (OASI and LOB) fall in relation to the overall salary and how the pension shortfall grows ever larger as income rises.