Occupational pension plans (LPP) constitute the second pillar of the Swiss pension system and play a fundamental role in the social protection of employees, managers, and executives. In Geneva, the structure of LPP plans, whether mandatory or supplementary (including 1e), raises major legal, tax, and financial issues for both employers and insured persons.
PANCHAUD Tax & Legal SA, a law firm based in Geneva, assists companies, pension funds, executives, and managers with all issues related to occupational pensions, taking a cross-disciplinary approach that combines pension law, taxation, and governance.
Understanding the LPP and its challenges
Occupational pension plans (LPP) are designed to supplement first pillar benefits (AVS/AI) in order to guarantee an adequate standard of living in retirement, in the event of disability or death. They apply to employees whose income exceeds the legal threshold and are based on a capitalization system.
The LPP consists of:
Each level has specific rules regarding contributions, benefits, taxation, and governance.
Mandatory, supplementary, and 1E LPP plans
The mandatory LPP covers the insured portion of the salary within the legal limits. It guarantees minimum benefits set by law, particularly in terms of conversion rates and savings accumulation.
Supplementary pension plans provide income above the legal minimum and offer greater flexibility in terms of:
LPP 1e plans, a special type of supplementary pension plan, are aimed at employees with high annual incomes. They allow for individualized management of pension assets, offering insured persons individual management of their pension assets and a choice of investment strategy.
1e plans provide income beyond a threshold set by the legislator and offer increased flexibility in terms of:
PANCHAUD Tax & Legal SA assists employers in designing and structuring LPP plans tailored to their compensation policy and tax objectives.
Collective and individual asset management
Collective asset management is based on pooling risks and returns within the pension fund. Conversely, individual asset management, particularly in supplementary and 1e plans, allows for personalized allocation. With the right structure, companies and/or employees can take control of the management of all or part of their pension assets. Choosing a strategy with a higher equity ratio can increase returns.
PANCHAUD Tax & Legal SA assists its clients in choosing the most appropriate management model, taking into account:
Planning for LPP buybacks
Planning BVG buybacks is a major tax optimization lever for insured persons and executives. Buybacks make it possible to fill pension gaps while benefiting from significant tax deductions.
PANCHAUD Tax & Legal SA advises its clients on:
Inadequate planning can lead to unfavorable tax consequences, particularly in the event of early withdrawal.
Value fluctuation reserve and employer contribution reserves
Value fluctuation reserves are intended to absorb fluctuations in the financial markets and ensure the financial stability of the pension fund. Their management is a key issue in LOB governance.
Employer contribution reserves enable companies to anticipate their future expenses while optimizing their tax situation.
PANCHAUD Tax & Legal SA assists employers in:
Taxation of occupational pension plans
The taxation of occupational pension plans is a key factor in their attractiveness. Contributions are generally tax-deductible, while lump-sum benefits are taxed at preferential rates. In addition, pension assets are not subject to wealth tax.
PANCHAUD Tax & Legal SA provides services in the following areas:
Why choose PANCHAUD Tax & Legal SA in Geneva?
When you choose PANCHAUD Tax & Legal SA for your occupational pension plans, you benefit from:
Whether you are an employer, manager, or senior executive, PANCHAUD Tax & Legal SA can assist you in structuring, optimizing, and securing your occupational pension plan in Geneva.