How does management pension provision work?

1e plans allow employees to decide for themselves how their pension assets are invested for insured salary components above CHF 136,080. You can tailor your investment strategy to your personal investment horizon and risk capacity, thereby optimising the return on your pension assets in the long term. A 1e plan offers companies the advantage of reducing their occupational pension costs and eliminating the risk of underfunding. Compared with conventional pension funds, there are no restructuring risks with 1e plans.

The advantages for employees:

• All insured members choose the investment strategy in line with their own risk profile and investment horizon. Pension funds may offer a maximum of ten investment strategies per employer. At least one of these strategies must be low risk.
• With 1e pension plans, insured members benefit fully from capital gains. In return, they forego a guaranteed interest rate and bear the risk themselves.
• No capital gains are redistributed in favour of other insured members. No collective value fluctuation reserves are required.
• Contributions can be deducted from taxable income. Voluntary buy-ins are also possible.

The advantages for employers:

• Risk premiums are 25% lower on average as 1e plans generally only insure industries and individuals with a below-average disability risk.
• Since there's no possibility of underfunding with 1e pension solutions, there are no restructuring risks.
• Under IFRS and US GAAP rules, 1e plans are considered defined contribution pension solutions and therefore don't have to be recognised as pension obligations.
• 1e pension solutions help companies retain qualified managers in the long term. As a result, modern pension fund solutions offer senior executives considerable flexibility in planning their pension provision. This supplementary pension provision can also be introduced quickly and efficiently.