The Essentials of Your LPP Certificate
- LPP Certificate: This is the official document sent every year that summarizes all of your occupational pension benefits.
- Insured salary : It represents the amount of salary on which you and your employer contribute each month.
- Retirement savings: It represents the total amount of capital you have accumulated to date.
- Retirement pension: It indicates the annual amount you will receive upon retirement.
- Risk coverage: They determine the benefits paid to you or your loved ones in the event ofdisability or death.
- Buy-in potential: This sets the maximum amount you can voluntarily pay in to fill gaps in your coverage and reduce your taxes.
- EPL capital: It specifies the maximum amount you can withdraw to purchase your primary residence.
What Is an LPP Certificate?
The LPP certificate, or occupational pension certificate, is a personal document sent to you every year by your pension fund. It summarizes all your rights and accumulated assets under the 2nd pillar — Switzerland's occupational pension system. This certificate plays a central role in giving you visibility into your retirement coverage, as well as your coverage in the event of disability or death.
It contains key data such as:
- Your insured salary (coordinated)
- The accumulated old-age assets
- Your annual dues
- Insured benefits (retirement, disability, and death benefits)
- The conversion rate applicable at retirement
Legal Basis for the LPP Certificate
The preparation and delivery of the LPP certificate are set out in the Federal Act on Occupational Retirement, Survivors', and Disability Pension Plans (LPP), as well as its implementing ordinance, OPP2.
Under Article 11 OPP2, every pension institution must maintain an individual retirement savings account and inform the insured person each year of the following:
- The amount of their retirement savings
- Coordinated salary
- Contribution Rate
- Benefit rights in the event of retirement, death, or disability
How Do You Read an LPP Certificate?
The LPP certificate contains essential information about your occupational pension coverage. Here’s how to understand the key details:
Personal information
Make sure to check the affiliation date: it must correspond to the date you started with your current employer or the date your pension fund changed.An error regarding these details may lead to complications in the event of a transfer, buyback, divorce, or benefit claim.
1. Salary Information
- OASI salary (CHF 102,000 but max: 90,720) – coordination deduction (CHF 26,460) = CHF 75,540
- But since the coordinated salary cap is CHF 64,260, that's the amount actually used.
2. Funding
Your LPP certificate details exactly how your pension coverage is funded. These contributions go toward building your retirement savings, but also toward insuring you in the event of disability or death.
The 3 components of contributions:
- Savings Bonus (Retirement Bonus): This is the portion set aside for your retirement.
- Risk premium: It provides coverage in the event of disability or death.
- Administrative fees: related to managing your account.
Contributions are split between you and your employer. The law sets two minimum requirements: the total savings contribution (retirement bonuses) depends on your age group (e.g., 10 % starting at age 35), and the employer must contribute at least as much as the employee.
3. Retirement Benefits
Retirement savings refer to the funds accumulated in your pension fund to finance your retirement. A distinction is made between current retirement savings and projected retirement savings (at the reference age). They consist primarily of:
- Some seniority bonuses paid annually (as a percentage of the insured wage),
- Some interest credited depending on the fund's performance,
- And, if applicable, any redemptions or transfers vested benefits.
The credit is generally divided into two parts:
- LPP Component (mandatory): in strict compliance with the law, with minimum contribution and interest rates.
- Extra-mandatory portion: related to the more generous terms set by certain pension funds or employers (higher contributions, coverage based on a higher salary, etc.).
4. Old-Age Benefits
The retirement benefits correspond to the pension you will receive upon retirement, calculated based on your retirement savings at the time of retirement. The certificate generally outlines several scenarios depending on the age at which you decide to retire. In most cases, it is possible to take a early retirement from 58 years old (in accordance with the fund's regulations).
The earlier you retire, the lower your pension and capital will be, since your retirement savings will be smaller (fewer years of contributions), the conversion rate applied will be lower, and the pension will need to be paid out for longer. The minimum conversion rate is 6.8% at the reference age of 65, for both men and women.
5. Disability Benefits
In the event of long-term disability, your pension fund pays you a disability pension in addition to your AI (disability insurance) pension. These benefits are designed to offset lost income if you become permanently unable to work due to illness (LAA, accident insurance, provides pensions for loss of earning capacity due to an insured accident).
What the LPP covers in the event of disability:
- Annual disability pension: It is paid to you after a 24-month waiting period during which you are unable to work. The amount depends on your retirement savings and the recognized degree of disability (at least 40 % under the LPP).
- Disabled parent's child's pension: If you have children, an additional benefit is paid for each child until they turn 18 (or 25 if they are still in school). It is generally equal to 20 % of the primary disability benefit.
- Exemption from premium payments: In the event of disability, your pension fund may cover your contributions (savings + risk). This allows you to continue building your retirement savings without interruption.
6. Death Benefits Before Retirement
If you die before retirement age, your pension fund provides benefits for protect your loved ones. These benefits vary depending on your family situation and the conditions defined in the fund's regulations.
- Spouse's or Partner's pension: An annual pension is paid to your spouse or registered partner if he or she meets the eligibility requirements (age, dependent children, length of cohabitation, etc.). The amount is equal to 60 % of your theoretical disability pension.
- Orphan's pension: Every child is entitled to an orphan’s pension, which is paid until the child turns 18 (or 25 if the child is still in school). This pension amounts to 20 % of the insured disability pension.
- Death benefit: If none of the eligibility requirements for a survivor’s pension are met, a death benefit is paid. This benefit is generally equal to three times the insured annual widow’s or widower’s pension.
The definition of "partner" varies by health insurance provider. It may refer to a registered partner or a cohabiting partner if proof of cohabitation is provided.
7. Homeownership (EPL)
The 2nd pillar can be used to finance the purchase of a primary residence. This mechanism is called Home Ownership Promotion (EPL). It allows you to either withdraw part of your retirement savings, or pledge them as collateral for a mortgage.
- Early Payment (EPL): The maximum amount you can withdraw is specified in your certificate. This withdrawal is subject to strict conditions and is intended solely for the purchase of a primary residence.
- Pledge: You can pledge your occupational pension assets or your future benefits (pension, lump sum). This allows you to strengthen your application to obtain a mortgage without immediately reducing your capital, which will continue to grow.
The certificate also lists any EPL withdrawals that have already been made, as well as any benefits that have been pledged, if applicable.
8. Buy-Ins and Repayments
A pension fund buy-in lets you fill gaps in your pension coverage and increase your retirement savings. It's a voluntary, tax-advantageous step, since it's fully deductible, and it can meaningfully improve your future pension.
- Maximum redemption amount: The certificate indicates the maximum amount you can buy back. This amount depends on your age, your insured earnings, and your employment history (periods without coverage, transitions to part-time work, etc.).
- Redemptions Already Made: The "Previous Contributions" section shows the amounts you have already voluntarily contributed to the 2nd pillar. These amounts earn interest and directly increase your retirement savings.
If you make a redemption, you will not be able to withdraw the funds without incurring a tax penalty. In addition, you must first repay the amount withdrawn before making a redemption.
Conclusion
Understanding your LPP certificate means regaining control over an essential part of your retirement planning. All too often treated as nothing more than a piece of paperwork, it actually holds the keys to your future: what you’ve already saved, what you’ll receive in the future, and what will happen to your loved ones if life takes an unexpected turn. It also reflects your employer’s commitments, the quality of your retirement plan, and the options available to you for improving your situation.
Every figure, every line matters. An unused buyback amount, an underestimated annuity, a conversion rate to watch: all of this can make the difference between a retirement endured and a retirement by choice.
Frequently Asked Questions
Where to find your pension fund certificate?
The LPP certificate is being sent to you each year by your pension fund, generally at the beginning of the year or after the closing of the financial year. It can be sent by mail or email.
Most pension funds now offer access to a client area in which your pension certificate can be found.
What is the LPP?
The LPP is the Federal Act on Occupational Retirement, Survivors' and Disability Pension Plans. It forms the legal basis of the 2nd pillar in Switzerland. Its objective is to ensure, in addition to the OASI (1st pillar), a decent standard of living after retirement or in the event of death or disability. Any employee in Switzerland with an income exceeding CHF 22,680 per year is affiliated with a pension fund.
What to do in case of an error on my occupational pension certificate?
If you notice an error (incorrect salary, inaccurate personal details, or missing contributions), contact your employer or pension fund immediately. It is important to correct these details promptly, as they directly affect your future benefits.