Management pension schemes

What is the advantage of a management pension scheme?

Higher-paid employees often want to pay as much as possible into their pensions. This is because they can then save on taxes and build up their retirement assets. It is often the case, however, that they do not fully utilise the opportunities permitted by law when structuring their retirement plans. That is why many companies offer their senior staff a management pension plan, which presents better options to save and a higher buy-in potential. With some solutions, members also have the option of selecting the investment strategy themselves.

An attractive management pension scheme is not only worthwhile for employees, but for employers as well. By offering an attractive plan, companies are able to retain highly qualified employees over the long term. 

It is also important to note that management pension schemes do not necessarily involve higher costs for employers.

What should you take into account with management pension schemes?

A management pension scheme can be an attractive addition to a pension fund. Whether a management scheme makes sense for your company, however, depends on the needs of your employees and you as a business owner. Before you set up an additional scheme, we recommend you do the following: 

• Draw up a simple list of criteria based on the needs of the various parties 
• Coordinate the basic and additional pension schemes by sensibly defining the criteria and threshold for joining the additional scheme.
• Determine the disability and death benefits as well as the contributions.

Once the insurance and contribution concepts have been drawn up, you need to check the investment options.

How flexible can a management pension scheme be?

A modern management pension scheme allows employees to choose how much they wish to pay in. Usually there are three levels of contributions to choose from. By law, employers must match employee contributions at all three levels. 

The law also dictates that the pension fund assets can be invested with a certain degree of flexibility. For contributions on salary components in excess of CHF 132,300 (2023 amount), management staff can select various investment strategies comprising up to 85% equities, depending on their personal risk profile and investment horizon.

Does a management pension scheme result in higher costs for companies?

Management pension schemes do not necessarily involve higher costs for employers. The risk premiums are on average 25% lower, as these schemes usually only cover sectors and people with a below-average risk of disability. Equally, there are no restructuring risks because shortfalls are not possible in management pension solutions.

What are "1e solutions"?

1e plans allow employs to determine how their retirement assets for insured salary components in excess of CHF 132,300 (2023 amount) are invested. They can adapt their investment strategy in line with their personal investment horizon and risk tolerance and thus optimise the returns generated on their retirement assets over the long term. The name "1e" comes from Article 1e of the Ordinance on Occupational Pensions (BVV 2). 

With a 1e plan, companies can lower their occupational pension costs and eliminate the risk of any shortfalls in coverage. Compared to traditional pension funds, 1e plans are not exposed to any restructuring risks.