Interview with Albert Gallegos, Head of Wealth Solutions
Would you please introduce yourself?
I am Albert Gallegos, a corporate lawyer specialising in Swiss law with a Master’s degree in international law from the University of Lausanne. I also specialise in Peruvian law and hold an MBA from HEC-UNIL Lausanne. I have been gaining experience at BCGE for many years in the field of financial planning (including taxation, pension planning, investments, real estate, and matrimonial and inheritance law). I regularly publish articles in the press on financial issues and lead seminars and conferences. I have also co-written the books “Le guide de votre prévoyance” (The Guide to Planning for your Pension”) and “Guide de vos finances personnelles” (“The Guide to your Personal Finances”).
What are the main differences between pension planning for Swiss citizens and for expatriates?
For Swiss citizens living in Switzerland, the pension system is based on three pillars: the 1st pillar (OASI), the 2nd pillar (LOB) and the 3rd pillar (private savings).
- 1st pillar: State pension plan. This pillar is based on Old-Age and Survivors’ Insurance (OASI), with the aim of ensuring a minimum income for life after work. It is mandatory and financed by employee and employer contributions. The amount of benefits is capped. The objective: to cover vital needs and avoid poverty in retirement.
- 2nd pillar: Occupational pension plan. This pillar consists of the Law on Occupational Benefits (LOB), a mandatory savings plan for Swiss employees with an annual salary of at least 22,050 Swiss francs until the end of 2024 and 22,680 Swiss francs from 2025. This savings plan is also financed by employee and employer contributions. It complements the 1st pillar by providing a more substantial income for retirement. As a general rule, it aims to reach around 60% of the last salary to guarantee a decent standard of living. The objective: to maintain the usual standard of living for those who have had an average or above-average salary.
- 3rd pillar: Individual pension plan. This pillar is used to meet specific needs. This pillar, also called the private pension plan (or 3a and 3b), is optional and allows individuals to supplement their savings according to their means and life plans. This pillar can include retirement savings accounts or insurance (3a) or private life insurance contracts (3b). This 3rd pillar allows individuals who can and wish to put aside an additional amount of savings to do so with tax advantages. The objective: to supplement the other two pillars to finance personal goals and guarantee better financial security in the long term.
With these three pillars, the Swiss system aims to offer complete protection, allowing pensioners stability and comfort for the entire duration of their retirement. Adaptations are, however, necessary for expatriates, especially for the 2nd and 3rd pillars. For example, the 2nd pillar can be partially or completely withdrawn when permanently moving abroad, depending on the country of destination. It is often compared to a tripod – even if one pillar is less stable, the overall balance must be maintained, with each pillar playing a specific role.
What are the main pieces of advice you would give to expatriates who want to optimise their pension plan?
To optimise their pension plan, expatriates must first clarify their tax status and be aware of the bilateral agreements between Switzerland and their host country. It could be advantageous to keep voluntary contributions to the OASI to maintain their rights, or to supplement their 3rd pillar to fill any gaps. Like a good captain who knows his port, it is important to keep an eye on the long-term horizon and plan your choices according to your life plans.
What are the key points that every expatriate should know before leaving Switzerland to fully understand and use the pension system to their advantage?
Before leaving Switzerland, expatriates must check their eligibility to maintain their optional OASI affiliation, as this can play a key role in their future rights. Finding out about pension taxation in their host country is essential, as is analysing the possibility of withdrawing or leaving their 2nd pillar on deposit. Finally, updating contact details and informing Swiss institutions of their new place of residence to ensure proper monitoring of their contributions is recommended.
What steps must expatriates take to claim pension benefits abroad?
To claim pension benefits abroad, expatriates must inform the compensation office (for OASI) and their pension fund (for the 2nd pillar) of their address abroad. Each institution carries out periodic verification, often in the form of a life certificate, to guarantee the payment of benefits. A good way to ensure this continuity is to provide accurate information and respect the deadlines for the required documents, just like a farmer takes care of his field – by following seasonal cycles and ensuring constant vigilance. Determining your required income at retirement is also very important so that you can choose the right level of annuity or capital from your pension fund. Sufficiently communicating in advance your choice of all or part of your capital is also key; contact the institution that manages your pension fund to find out how.
Keeping this advice in mind will help expatriates to better plan for retirement while more calmly navigating their new life abroad.
