Tellco Logo
Time-out and your pension: advance planning pays off

Time-out and your pension: advance planning pays off

22.08.2018 |

Anyone who acts on their dream of taking a time-out needs to plan ahead for their insurance and pension. If you read these recommendations from Tellco Ltd you can make sure your sabbatical doesn’t turn round and bite you.

 
Taking a time-out – many people dream of doing just that. Whether it’s an extended maternity break, a round-the-world trip or some full-time training: sabbaticals are common these days. Some people can take unpaid leave but other people may have to resign to make their dream come true. In any case, start planning your pension arrangements ideally a year in advance to ensure your three pension pillars remain intact.

Are you taking unpaid leave?

 
There are many employers who will agree to a break if an employee wants one. This usually comes in the form of unpaid leave. The employment relationship continues but no salary is paid during the break. If the unpaid leave is less than 30 days the insurance cover and pension do not change. If, on the other hand, the sabbatical lasts for more than a month, arrangements have to be made for accident insurance, OASI and pension fund. Our recommendations:
Unpaid leave – issues to consider
OASI/IV/EO Once your salary payments have been suspended there will also be no further social insurance contributions paid. You should contact your OASI compensation office to make sure you pay enough OASI contributions (a minimum of 478 Swiss francs per year). If you have any gaps in your contributions you can pay in additional amounts for up to five years afterwards.
Pension fund Your insurance cover for disability and death as a result of sickness or accident comes to an end one month after the final salary payment. Depending on your pension fund, you can opt to continue either with just the insurance cover or with the saving portion as well – at your own expense. You will have to pay both your own and your employer’s contributions. You should take this up well in advance with your pension fund and your employer.
Illness and accident You have to make your own arrangements to cover sickness and accident risks. Your occupational accident insurance expires 30 days after your final salary is paid. However, if you take out an interim insurance policy you can extend this cover for up to six months – at your own expense. Daily sickness benefits insurance operates in a similar way

Are you resigning from your job?

 
If you are resigning from your current employment to take a time-out then all compulsory insurance cover ends at the latest 30 days after your employment ceases. From that point onwards you are responsible for your own insurance and pension. Our recommendations:
Resignig - issues to consider
OASI/IV/EO You should contact your OASI compensation office to make sure you pay enough OASI contributions during the sabbatical (a minimum of 478 Swiss francs per year). If you have any gaps in your contributions you can pay in additional amounts for up to five years afterwards.
Pension fund As you no longer have an employer, you should invest your pension fund assets in a vested benefits account at an insurance company or bank. You are not permitted to make any further contributions and lose your insurance cover. Once you are back at work you can make up this pension gap by paying into your second pillar. You should take out a private insurance policy to cover you against disability and death.
Illness and accident You have to make your own arrangements to cover sickness and accident risks. Your occupational accident insurance expires 30 days after your final salary is paid. However, if you take out an interim insurance policy you can extend this cover for up to six months – at your own expense. Daily sickness benefits insurance operates in a similar way
Are you planning to take some time out or do you have any questions? Our pension experts will be happy to advise you.


×
© Tellco Ltd
Tellco Ltd, Bahnhofstrasse 4
P.O. Box 713, CH-6431 Schwyz
t +41 58 442 12 91, info@tellco.ch
LinkedIn
Switch: Mobile / Desktop
© Tellco Ltd