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Moving to Greece/EU without damaging the Swiss wallet: a look at some of the important fine print

1. Coordination between Switzerland and the European Union

The legal framework governing relations between Switzerland and the EU is based on a bilateral agreement: the Agreement of June 21, 1999 between the Swiss Confederation, of the one part, and the European Community and its Member States, of the other, on the free movement of persons (hereinafter "ALCP").

Annex II of this agreement refers to European Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems, and to European Regulation (EC) No 987/2009 of the European Parliament and of the Council of 16 September 2009 laying down the procedure for implementing Regulation (EC) No 883/2004.

ALCP coordination rules must be applied as a matter of priority, even if they run against to European rules (Métral Jean/Moser-Szeless Margit, L'accord sur la libre circulation des personnes: coordination des systèmes de sécurité sociale et jurisprudence du Tribunal fédéral (II), REAS 2007, p. 169).

These regulations strengthen cooperation between the social security institutions of the EU Member States and Switzerland, particularly where old-age institutions are concerned.

In particular, if you contribute in more than one country, each pays a pension or lump-sum benefit corresponding to the assets accumulated for work carried out in its own country. It is not possible to transfer occupational assets between pension funds located in different countries. Therefore, if you have contributed in several countries, you will receive an annuity or lump-sum payment from each of them, depending on the applicable conditions.

2. AVS/AHV pension (1st pillar)

In Switzerland, access to ordinary first-pillar benefits is conditional on reaching the age of 65 (art. 21 al. 1 LAVS).

In addition to ordinary benefits, it is possible to opt for early retirement one or two years before ordinary retirement age, i.e. at 63 or 64. There are no specific grounds for early retirement (poor health, etc.), and only the age requirement (art. 40 al. 1 LAVS) and any purchase of regulatory benefits (art. 1b OPP 2) are relevant in determining this entitlement.

With regard to foreign workers, art. 18 para. 2 LAVS specifies that they and their survivors who are not Swiss nationals are only entitled to a pension as long as they have their domicile and habitual residence in Switzerland.  The notion of domicile refers to that of art. 23 to 26 of the Swiss Civil Code (art. 13 al. 1 LPGA), and that of habitual residence (art. 13 al. 2 LPGA) "corresponds to the place where the person concerned stays for a certain period of time, even if the duration of this stay is limited from the outset" (ATF 141 V 530, consid. 5.1. and references cited). Consequently, a person without Swiss nationality who permanently leaves Switzerland to settle abroad loses his or her entitlement to a Swiss AVS/AHV pension.

3. Professional pension provisions (2nd pillar)

In the case of professional pension provision (2nd pillar), entitlement to retirement benefits begins at the age of 65 (art. 13 para. 1 BVG).

The income capitalized over the years in the occupational pension account may be paid out in the form of an annuity (monthly payment) or a single lump-sum payment from the total occupational pension assets. It is important to note that an annuity can only be paid out once a certain amount of contributions has been made, otherwise only a single lump-sum payment can be made. To find out how much you can expect to receive, contact your pension fund.

Another important note: it is not possible to make a lump-sum withdrawal before retirement or early retirement age when leaving Switzerland permanently to settle in an EU/EFTA country (Vuilleumier Frédéric, Prévoyance professionnelle et aspects internationaux - partie II, in Droit fiscal et assurances sociales, en particulier la prévoyance professionnelle et les aspects transfrontaliers [de Vries Reilingh Daniel, ed. Zurich (Schulthess) 2016, p. 159 ff, p. 178; Office fédéral des assurances sociales OFAS, Prévoyance professionnelle (2e pilier), Prestation de libre passage : n'oubliez pas vos actifs et prévoyances).

4. What happens in the event of a spouse's death?

The surviving spouse is entitled to a widower's pension under the following cumulative conditions:

  • · If the surviving spouse has at least one dependent child or has reached the age of 45 (art. 19 al. 1 let. a LPP);
  • · If the surviving spouse has been married to the deceased for at least five years (art. 19 al. 1 let. b BVG/LPP);
  • · If the deceased had made sufficient contributions (to the first pillar);
  • · If the deceased's pension assets have not previously been withdrawn as a lump sum.

Survivor's pensions (in this case, the widower's pension) are paid in the EU under the same conditions as in Switzerland. However, they cannot be paid at the same time as an old-age pension in Switzerland. When two pensions (such as a widower's pension and an AHV/AVS pension) compete, the higher of the two is paid (art. 24b LAVS). If the surviving spouse has contributed more than the deceased spouse, he or she is likely to receive only his or her old-age pension, and vice versa.

Similarly, some countries reduce their benefits when foreign pensions are combined with national pensions (art. 10 of European Regulation (EC) no. 987/2009).

5. Choosing between an annuity and a lump-sum payment, and methods of payment abroad

Depending on your state of health, years of contributions, spouse's needs, life plans, etc., you will need to assess whether it is preferable to opt for an annuity paid over the long term (generally until the beneficiary's death) or a withdrawal of all contributions (i.e. a lump-sum payment).

A lump-sum payment in the event of early retirement will only be partial: a sum indicated on the insurance certificate must remain in the vested benefits account pending retirement age or death. This amount varies from one pension fund to the other.


6. Conclusion

Swiss social security is available throughout Europe to Swiss nationals, but to foreigners only in Switzerland. Note also that health is not a relevant factor when it comes to early retirement. In terms of crucial choices, a lump-sum payment is preferable when health is not at its best in order to facilitate access to pension assets for the surviving spouse, but an annuity is preferable when the comfort of a monthly payment is required.

Please note that above considerations apply in principle to all EU/EFTA countries.


Eurolegal Team : Auriane PHILIPPE, Thomas AGUIAR, Ilona CADOUX, Marie CARRILLO