According to the BVG, the basis for calculating monthly contributions for occupational retirement provision is not the entire income. In this case, the proportion of the salary that is insured is that which is between 22,050 and 88,200 Swiss francs. The amounts up to 25,725 francs are covered by the 1st pillar (OASI). That is why this part of the salary is excluded from calculation of the BVG by means of the coordination deduction.
A sample calculation:
Annual income:
CHF 80,000
Coordination deduction:
- CHF 25,725
Insured salary:
CHF 54,905
The pension fund contributions are dependent on the the insured salary. The coordination deduction always corresponds to seven-eighths of the maximum annual OASI pension.
If income is higher than 88,200 Swiss francs, this can be voluntarily covered in the occupational retirement provision by means of non-compulsory contributions. In the case of part-time employees with a correspondingly lower income, the coordination deduction may result in them making significantly lower contributions in relation to their total income The result of this may be that correspondingly smaller benefits are paid out upon reaching retirement age. To partially counteract this, some progressive pension funds adapt the coordination deduction to the duration of employment. This leads to a higher insured salary, so that higher pension fund contributions ultimately lead to higher insured benefits from the 2nd pillar.