As in the case of the first pillar insurance scheme, the employer is responsible for registering the employee, for deducting the contributions from the salary and for forwarding these sums to the pension scheme. As a rule, employees and employers pay the contributions in equal parts, whereby deviations are possible, depending upon the particular regulations. It is obligatory for all employees to be insured if their salary, subject to OASI contributions, is over CHF 20,880.00. Contributions are payable from the age of 18 onwards. In addition, retirement saving begins from the age of 24.
Occupational pension provisioning is provided by pension schemes that are comprehensively subject to the Occupational Pensions Act (Gesetz über die betriebliches Personalvorsorge – “BPVG”, German only) and are supervised by the Liechtenstein Financial Market Authority (“FMA”). Occupational pension schemes are required to have the legal form of a foundation. In Liechtenstein, occupational pension provisioning is based on funded schemes. In these, the future benefits of the pension schemes are funded in advance.
In-house pension scheme or collective foundation
As a rule, major companies have in-house pension schemes that manage the occupational pensions of their employees, and may also do this for other companies. Smaller companies tend to join a collective foundation. In these, each member employer represents an independent pension scheme. Different pension plans tend to exist in a collective foundation.
Entitlement to benefits
Employees who reach retirement age are entitled to an occupational pension in retirement. The statutory retirement age for men and women is 64. As in the case of the first pillar, occupational pension benefits may be drawn before the ordinary retirement age is reached. From the age of 60 onwards, insured persons are entitled to early retirement. Pension schemes are, however, entitled to offer their insured persons a lower pension age, which is why some pension schemes permit retirement pensions to be drawn from the age of 58. In the event of a premature withdrawal, the retirement assets will not have been fully accrued. The capital will be converted to a retirement pension using a lower conversion rate. This means a premature withdrawal results in lower retirement benefits.
In the event of a degree of disability of at least 40 percent, and if a pension is drawn from the state disability insurance scheme, the insured person is entitled to draw an occupational pension. In the event of disability before retirement age is reached, an annual disability pension amounting to at least 30 percent of the attributable salary must be insured. This rate applies in the event of full disability. In the case of partial disability, the rates may be set correspondingly lower. Pension schemes are also free to make provision for higher disability pensions in their regulations.
In the event of disability before retirement age is reached, children’s pensions amounting to at least 6 percent of the attributable salary must be insured. These are designed to mitigate the provisioning shortfall caused by the disability.
In the event of the death of an insured person, the pension scheme pays benefits to the survivors of the deceased party. Such schemes make provision for benefits to be paid to the surviving spouse or registered partner and children. In their regulations, pension schemes may extend the circle of beneficiaries of survivor’s benefits stipulated by law.
In the event of death before retirement age is reached, lifelong widow’s or widower’s pensions amounting to 18 percent of the attributable salary per annum and orphan’s pensions amounting in each case to 6 percent of the attributable salary must be insured as minimum benefits. In the event of the death of an insured person who has drawn a retirement or disability pension, the widow’s or widower’s pension shall amount to 60 percent of the retirement or disability pension latterly drawn by the deceased party, while the orphan’s pension shall in each case amount to 20 percent of the retirement or disability pension latterly drawn by the deceased party.
The widow’s/widower’s pension essentially constitutes a lifelong survivor’s pension. Alternatively, the entitlement of the surviving spouse to a widow’s or widower’s pension may be based on the obligation to support at least one child, or may be based upon the survivor’s own age and the duration of the marriage. In the event of the second entitlement grounds, the spouse must be aged at least 45 and the marriage must have lasted at least five years. If the surviving spouse does not fulfil any of these preconditions, an entitlement shall exist to a one-off settlement amounting to three annual pensions. Following the death of the divorced spouse, the other divorced spouse shall not be entitled to a survivor’s pension. Upon remarriage or the death of the widow or widower, the entitlement to a widow’s or widower’s pension shall expire. Registered partners are treated the same as married couples.
Old Age and Survivor’s Insurance provisions are additionally and analogously applicable to the entitlement to orphan’s pensions. The entitlement to an orphan’s pension expires once the orphan reaches the age of 18 or dies. In the case of children who are still in education or training, the entitlement to a pension shall continue until they graduate, although at the most until they reach the age of 25.
The following collective foundations are members of the Liechtenstein Pension Fund Association (Pensionskassenverband – “LPKV”):
- AXA Stiftung Betriebliche Vorsorge, Principality of Liechtenstein
- LLB Vorsorgestiftung für Liechtenstein
- BEVO Vorsorgestiftung in Liechtenstein
- Malbun Collective Foundation of Zürich Lebensversicherungs-Gesellschaft AG
- Stiftung Sozialfonds
- Stiftung Personalvorsorge Liechtenstein
Statutory basis (German only)