FAQ

Information prepared by the CPIT Foundation Council in January 2012 and reviewed in September 2016.

A word of caution: This document is for information purposes only and has no value in law. Only the CPIT Regulations and Statutes are legally binding.

I. General questions
II. Tax issues
III. Contributions and purchase of insurance years
IV. Calculating benefits
V. Death and disability
VI. Retirement and leaving the Fund
VII. Personal certificate

I. GENERAL QUESTIONS

1. What is the legal status of the CPIT?

The CPIT is a foundation in Swiss law (see Articles 80 ff of the Swiss Civil Code). It is also, broadly speaking, part of the Swiss social security system, which has three "pillars": a federal retirement and survivors’ insurance scheme (Assurance vieillesse et survivants, or AVS), occupational pension plans (the second "pillar"), and private investment options. Most "second pillar" pension plans are governed by the Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans (Loi fédérale sur la prévoyance professionnelle vieillesse, survivants et invalidité, or LPP). Because CPIT members are not necessarily affiliated to the AVS, only some LPP provisions are applicable to it.

2. Who manages the CPIT?

The CPIT is run by the Foundation Council, which is made up of at least five active or retired interpreters and translators who volunteer their time. The Council delegates all administrative management, accounting and secretarial tasks to Swiss Life Pension Services S.A. (SLPS), an international firm specialized in the management of pension funds. The SLPS replies directly to all routine questions (requests for information) from members, with the Foundation Council stepping in, of course, when a substantive decision is required. The SLPS is also entrusted with the Fund’s operational management, whereas Pittet Associés are responsible for its actuarial management.

3. What do Banque Pictet & Cie do?

The CPIT has an account with Banque Pictet that it uses to receive contributions and payments and to pay pensions and bills. (In addition, Pictet Asset Management manage half of the Fund’s assets – the other half is managed by UBS Asset Management). You should address all questions relating to the Fund’s accounts, your payments, etc., exclusively to Swiss Life Pension Services S.A. Pictet & Cie cannot answer questions of that kind – they don't even keep a list of the Fund’s members. You should therefore never call them.

4. How do I make a payment to Pictet & Cie?

The CPIT’s complete bank details are as follows:

Caisse de pensions des interprètes et traducteurs de conférence (CPIT)
Account No. 587015.001
Banque PICTET & Cie.
Route des Acacias 60
CH-1211 Genève 73

Clearing No. : 8755
IBAN : CH0908755058701500100
Swift : (for payments made from outside Switzerland) : PICTCHGGXXX

To receive bulletins de versement (payment slips that can be used at all Swiss post offices), just contact Swiss Life Pension Services S.A. (do not ask Pictet & Cie).

5. Who do I contact about my situation at the CPIT?

For general questions about the Fund’s insurance scheme, the services it provides or relations with the international organizations, your first port of call is the members of the Foundation Council. They are your colleagues and are best placed to understand the situation of translators and interpreters. For specific questions about your personal situation that require individual calculations (for example, the amount of your future pension), contact Swiss Life Pension Services S.A., in writing, at the CPIT’s address, or by telephone ([+41] (0) 21 329 2269) or fax ([+41] (0) 21 319 2269), indicating that you're a CPIT member, or by e-mail at the following address: ClaudeYves.Adam@slps.ch. Don’t forget to first consult The CPIT in 5 easy steps.

6. My personal situation has changed. Does the Fund need to know?

Yes. You have to inform the Fund if you move or if your civil status changes (if you marry, form a civil union or divorce). If you marry, the Fund will send you a new personal certificate. If the divorce was decreed by a Swiss court, the judge may rule that your accrued benefits and retirement assets must be shared with your former spouse (see Art. 36 of the Regulations).

7. Who decides the Fund's investment policy? The Foundation Council? Is it knowledgeable enough?

The Foundation Council is legally responsible for the Fund’s investment policy. Its duty as such is to “choose, manage and carefully monitor investments” by the Fund, taking care “first and foremost to secure achievement of the purpose of the pension plan” (Art. 50, paras 1 and 2 of the Ordinance on Occupational Retirement, Survivors’ and Disability Pension Plans (Ordonnance sur la prévoyance professionnelle vieillesse, survivants et invalidité, or OPP 2)). The Foundation Council delegates day-to-day management of the portfolio to two specialized Swiss banks, Pictet and UBS. The investment policy itself is “framed” by the OPP2, which limits the percentage of their holdings that pension funds can invest in various types of assets (shares, bonds, etc.), and by the provisions of the Fund’s investment regulations. It is discussed by the Council – which is advised by external consultants – and the portfolio managers in the two banks, and set down, in writing, in legally binding agreements that stipulate strategic allocations by type of asset (percentage of Swiss and foreign shares, bonds, cash, etc.). These strategic allocations are periodically reviewed, and the two banks have some leeway to manage the tactical allocation of assets. The Foundation Council receives quarterly reports on the Fund's investments and meets with the portfolio managers at least twice a year. It works with specialists to assess the Fund’s financial situation; Pittet Associés periodically conduct a complete accounting and actuarial assessment, and the Council can also call on independent experts for advice or studies.

In addition, the Fund’s annual accounts are examined each year by an independent auditor, and the Fund itself is overseen by the Geneva cantonal regulatory authority, the Autorité de surveillance des fondations et des institutions de prévoyance.

As you can see, the Foundation Council does not have total leeway to do what it wants, and all its decisions are the outcome of consultations with specialists.

II. TAX ISSUES

N.B. On the subject of taxes, the CPIT can only provide detailed answers to questions about the situation in Switzerland. Fund members living in other countries are advised to obtain accurate information about the rules that apply in their country of residence.

8. Are my contributions to the CPIT subject to tax in Switzerland?

The CPIT is exempt from direct taxation by the Swiss Confederation, cantons and municipalities. This means that the funds paid into the CPIT and invested by it are not subject to any form of taxation in Switzerland for as long as they remain invested. In Switzerland, contributions paid into the CPIT are tax deductible, and the accrued capital and interest are totally exempt from taxes until such time as you start to receive benefits from the Fund. Purchases of insurance years are also deductible. (However, funds paid to purchase insurance years cannot be withdrawn in the form of capital for a period of three years. You are advised to think twice, therefore, before purchasing years of insurance shortly before you retire.) To benefit from this tax exemption, the CPIT has to meet a number of conditions (circle of beneficiaries entitled to lump-sum death benefits, maximum retirement age, etc.).

9. Are CPIT benefits subject to tax?

It depends on whether you live in Switzerland or abroad. If you're retired and live in Switzerland (i.e. you're domiciled or resident in Switzerland for Swiss tax purposes), the Fund makes no deductions from either pension or capital payments. (The Fund is obliged, however, to declare pension or capital payments to the Swiss Federal Tax Administration.) You declare the pension on your tax return, in addition to any other income you may have; the pension will therefore be taxed at a rate that will vary depending on your financial situation. If you choose to receive the capital, you declare that payment as such. Capital is taxed at a rate that is independent of your financial situation.

If you're retired and living abroad (i.e. not domiciled or resident in Switzerland for Swiss tax purposes), the tax situation differs depending on whether you receive a pension or the capital.

  • The pension is not taxed in Switzerland, on condition that you are living in a country that has concluded a double taxation agreement with Switzerland (as is the case of most countries, the main exceptions being Canada and the CIS countries). Taxation in your country of residence depends on the domestic legislation of that country.

  • Capital is taxed at source by the Geneva cantonal tax authorities (at a rate which varies between 0.00892% and 6.3941% depending on the amount of the capital) and by the federal authorities in an amount that also depends on the amount of the capital (CHF 1,225 for CHF 150,000, plus 2.6% on capital in excess of CHF 150,000).

You can recover the sums thus deducted under the double taxation agreements (in Great Britain/Northern Ireland, under the special agreement that entered into force on 22 December 2008). The CPIT will provide you with the documents you need for these formalities when it pays out the capital. Taxation of the capital in your country of residence depends on the domestic legislation of that country.

10. If I withdraw my retirement capital before retirement (“payment in cash” of the vested termination benefit, Art. 42 of the Regulations), is it immediately taxed in Switzerland?

Same answer as for question 9. If you're living in Switzerland, the capital is taxable income, but it is up to you to declare it; the CPIT makes no deductions and simply fulfils its obligation to inform the Swiss Federal Tax Administration. If the capital is paid out abroad, it is taxed “at source”, but you can recover the amount deducted under the applicable double taxation agreement, as for a lump-sum benefit at retirement age.

11. I am a member of the CPIT, I live in France, for example and I will shortly receive my retirement capital. Can I have that amount paid into a Swiss bank account?

It is up to you to tell the Fund’s secretariat in what bank account you want to receive the money, in the country and currency of your choice. A word of caution, however: tax status is determined by your place of residence, not the place of payment. In other words, even if your retirement capital is paid into an account in Switzerland, taxes will automatically be deducted at source when the payment is made if your legal domicile is in France. On the other hand, you will be able to recover the entire amount of those taxes under the double taxation agreement between Switzerland and your country (except Canada, the CIS countries and a few other countries). (N.B. Enquire in your country of residence about the tax treatment of retirement of the retirement capital paid by the CPIT before the payment is made: it may be exempt from taxation.)

III. CONTRIBUTIONS AND PURCHASE OF BENEFITS

12. I am not yet 30. Is it worth my while to start contributing to the Fund?

With any retirement plan, the sooner you start to contribute the better your pension is likely to be. In addition, since 1 January 2016, CPIT members under 30 are exempted from payment of the mandatory minimum contribution (CHF 600) for two calendar years. That exemption expires at the latest on 31 December of the year in which the member turns 30. In addition, since 1 January 2016, members can purchase benefits by making personal contributions as of the age of 20 (instead of 25, as previously stipulated).

13. Can I purchase benefits immediately after joining the CPIT?

No, first you have to contribute, because the amount you can purchase is calculated on the basis of the average annual contribution. If you purchase benefits having been a member for less than a year, your average annual contribution will be based on less than one year's worth of contributions. (You can use up your benefit purchase entitlement. If you continue to contribute, however, you'll be able to make fresh purchases, since your average annual contribution will have increased.)

14. I have accrued assets in another pension fund and would like to transfer them to the CPIT. Do I have to make the transfer immediately on joining the CPIT, or can I make it at any time?

You can make the transfer, known as libre passage in French, at any time. There’s one thing you have to bear in mind, however. If the transfer is from a Swiss pension fund governed by the LPP, the retirement capital you will have accrued will consist of two parts: a mandatory and an extra-mandatory portion. Because the CPIT is not, strictly speaking, a “second-pillar” pension fund (see Question 1), it can only accept the extra-mandatory portion of your retirement capital. The remaining, mandatory portion will have to be placed with a “second pillar” pension fund, i.e. one that is governed by the LPP.

The amount you do transfer to the CPIT will be handled, in actuarial terms, as a purchase of benefits, i.e. the entire amount will be credited to your savings account, without any deductions being made for expenses or disability insurance. There is no limit to the amount that can be transferred by libre passage, with the above proviso. Note that, should you want to purchase benefits, you will be asked to fill in a form in which you will have to declare any assets in a pension fund that you have not yet transferred to the CPIT. The CPIT will deduct those assets from the total amount you can purchase.

15. If I send money to Pictet & Cie without any explanation, will the amount be booked as a contribution or as a purchase of benefits?

Unless you specify otherwise, the Fund automatically considers any payment a contribution and will place 93% in your savings account (once you've paid the annual minimum contribution of CHF 600, see Question 24). If you want to make a purchase, you have to say so, not only on the payment slip or bank payment order, but also by informing the Fund in writing that you paid x amount on such and such a date with a view to making a purchase. Remember: the amount that can be used to purchase benefits is limited. That limit (calculated in accordance with Art. 11.4 of the Regulations) is indicated on the individual insurance certificate that every member receives from the Fund at the beginning of each year.

Since that limit changes over the course of the year, whether or not you make any contributions, we recommend that you write to Swiss Life Pension Services S.A. before purchasing benefits. They will tell you the maximum amount you can purchase. Contributions are limited to a maximum of CHF 30,000 per calendar year. If that amount is exceeded, the excess will be handled as a purchase of benefits.

16. If I purchase benefits, do I have to wait for my personal certificate to be sent to me for confirmation that the amount has been credited to my account?

No. The Fund’s secretariat automatically acknowledges receipt of any purchase, not matter what the amount (on condition that it is indeed a purchase of benefits, indicated as such on the payment order and in the letter to the Fund). Payments that are contributions, no matter what the amount, are not confirmed in this way, but itemized on the annual certificate.

17. I make contributions by sending banker’s cheques through the mail. How can I know, without having to wait until I receive the annual certificate, that a cheque I sent through the mail was received and the amount credited to my account?

You are strongly advised not to send cheques through the mail, because if they are lost you cannot recover the funds. If you really have no other choice, send the cheque by registered post with proof of receipt. You will therefore have confirmation that the money was received. In no case should you call Pictet & Cie, as they will not be able to inform you.

18. I'm a translator and, as working conditions change (growing recourse to outsourcing), I do more fee-based work from home and have fewer salary-based assignments in international organizations. Can I still contribute to the CPIT?

Yes, but you must be able to prove, at all times and at the request of the Fund, that your income is derived from your work as a translator. In such cases, of course, it is up to you – and not the employer – to pay your contributions into the account at Pictet & Cie. Even if you pay the entire contribution, however, two thirds will be deemed to have been paid by the employer.

19. Why is interest paid on contributions only on 1 January of each year? Why do contributions not start bearing interest as of the date of payment?

The Ordinance on Occupational Retirement, Survivors’ and Disability Pension Plans (Ordonnance sur la prévoyance professionnelle vieillesse, survivants et invalidité, or OPP 2) provides that interest shall paid on 1 January of the year following the year in which the contributions were made; the same rule applies to all pension funds in Switzerland. Purchases of benefits, on the other hand, start to bear interest as soon as they are received (see Art. 13.2 of the Regulations).

20. Since my payments earn the same interest whether I make them in January or December, why make contributions throughout the year? I might as well keep my money in an interest-bearing account and pay all my contributions at the end of the year!

Paying contributions only at the end of the year poses a financial problem (irregular arrival of contributions), raises an issue of fairness (it discriminates against members who pay their contributions regularly) and is problematic in terms of the CPIT Statutes. The CPIT is a pension fund, not an investment fund. According to the Regulations, members’ contributions are deemed to be paid “in the proportion of one third by members and two thirds by employers” (Art. 7) and are “deducted from their remuneration by the employer”, which is responsible for paying in the “whole contribution […] (including both members' shares and employers' shares)” (Art. 9). In any pension fund, contributions are made monthly (at the same time as salaries are paid); it was the specific status of conference translators and interpreters (and the irregular payments made by some of our employers, notably the United Nations) that led to the introduction of the relatively flexible conditions of payment that make our Fund somewhat “atypical”. The Foundation Council can establish or allow other (payment) conditions, and is thus able to "allow" members to pay their contributions themselves, at least in part. The Swiss oversight authorities tolerate this highly unusual degree of flexibility, but the principle of regular contributions nevertheless remains the rule, in particular vis-à-vis those authorities, which might frown on practices that are too far removed from the norm.

In other words, the particularly flexible and favourable conditions from which we benefit should not make us forget that the CPIT is a pension fund and that the related advantages (tax-exempt status, etc.) come at a cost: fairly strict rules. This is why we call on members who pay their contributions themselves to do so throughout the year.

21. According to Article 7 of the CPIT Regulations, "The total amount of contributions shall be paid in the proportion of one third by members and two thirds by employers." Does this mean that I pay one third of my contribution and the employer two thirds?

The organizations of the United Nations common system do not, strictly speaking, make a true employer’s contribution, because the basic pay of a free-lance translator or interpreter also includes the 9% social security component, by virtue of the agreements reached between the United Nations, on the one hand, and the AITC and AIIC, on the other. Article 7 serves to ensure compliance with Swiss law and to define the lump-sum benefit in the event of death.

22. Why is the amount deducted from pay by the organizations in the United Nations common system sometimes 12.39% and at other times 13.5%?

The United Nations organizations do not all construe the agreements the same way. The agreement between the AITC (translators) and the United Nations is clear, in that it stipulates (paragraph 66) that, "at the written request of a short-term translator, the employing organization shall deduct from his or her salary a sum equal to 12.39 per cent". However, not all United Nations organizations interpret the text the same way. Some consider that they have to deduct 9% + 4.5% = 13.5%. Others – quite rightly – consider that if pay includes a 9% social security component, the deduction has to be made from net pay, i.e. total pay minus the 9%. The result is that the employer’s share is 8.26% and the translator’s 4.12% = 12.39%. It hardly makes a difference, however, since the percentage in question is always deducted in its entirety from the pay of the translator or the interpreter (see answer to Question 21).

The agreement between AIIC (interpreters) and the United Nations, on the other hand, simply sets forth the principle of a contribution to a pension fund, without specifying the percentage. Article 28 stipulates: “At the written request of the short-term conference interpreter and subject to the Organization’s rules, a percentage of the short-term conference interpreter’s emoluments may be withheld by the employing Organization and paid in the name of the short-term conference interpreter into an applicable scheme such as the Caisse de Pensions des Interprètes et Traducteurs de Conférence or the Caisse de Prévoyance des Interprètes de Conférence.” That percentage is customarily around 13%; the exact amount depends on the same differences of interpretation as in the case of the AITC agreement.

23. Is each payment subject to a fee or administrative costs?

Under Article 14 of Addendum No. 1 to the 2012 Regulations: “Once the amount of the annual minimum contribution for the current year has been deducted, defined in Article 7, paragraph 2 as a contribution towards administrative costs, payments made during the same year are attributed in the amount of 93% to the accrued retirement capital and in the amount of 7% to coverage of risks and extraordinary general expenses. The date of the payment shall decide the attribution of a contribution to a calendar year.”

Thus, if you make a contribution of 100 francs, 93 francs are paid into your personal savings account, on condition that you have already paid the annual minimum contribution of 600 francs. On the other hand, if you purchase benefits, the entire sum is paid into your savings account.

24. Isn’t it excessive to deduct 7% from contributions in addition to the annual minimum contribution of 600 francs? I’d be better off joining another fund that charges less!

You may well be in for a nasty surprise if you do. Indeed, the CPIT has a policy of absolute transparency you will find in few other institutions. The 7% deduction on contributions is the only source of funding for the death and disability insurance, the risks all CPIT members are insured against, whereas the 600 francs cover the Fund’s operating costs (secretariat, bookkeeping, messages to members, replies to requests for information, calculation of benefits, payment of pensions, technical valuations, actuarial calculations, audits, statutory contributions to the Pension Fund Guarantee Fund (Fonds de garantie des institutions de prévoyance), fees owed to the oversight authorities, etc.). For an institution like ours, which has over 300 active members, pays a pension to over 100 retirees and manages nearly 55 million Swiss francs, that’s a modest sum. On the other hand, the CPIT’s accounts are perfectly transparent: each year you receive a detailed statement of the value of the portfolio, and you can check for yourself that all the benefits are redistributed among the members. Other institutions do not state so clearly what deductions they make to cover their costs, and often “dip into” the profits, without telling their members how much they really made. In addition, the CPIT is administered by the Foundation Council, which is made up of colleagues working on an entirely volunteer basis and ensuring that any expenses incurred are kept to a minimum. Lastly, the CPIT – unlike, for example, an insurance company – is not profit-driven; it has no shareholders to reward other than its members!

IV. CALCULATION OF BENEFITS

These definitions will help you understand the answers to the questions that follow.

Technical interest rate: used as an assumption for calculations. Actuarial interest is a discount factor used to calculate the current value of the benefits to which retirees are entitled. It depends on the changes anticipated in the Fund’s investments in the medium and long term. The yield obtained should exceed the actuarial interest by an adequate margin. Actuarial interest has nothing to do with remuneration of active members’ assets.

Conversion rate: This is the factor used to convert savings capital on the day of retirement into a life annuity. Its two main components are the actuarial tables (life expectancy) and actuarial interest (defined above). Hence the importance of adapting the conversion rate to changes in life expectancy: as people live longer, the same amount of capital has to provide a life annuity for more years.

Funded status: this is the ratio of available assets to commitments. A pension fund is underfunded when its assets are insufficient to meet all its commitments (i.e. retirement capital and technical provisions).

25. How can I calculate the capital amount and the retirement benefit I would get from a single contribution of 1,000 francs this year?

The individual certificate sent each year to active members indicates the additional annual retirement benefit at 65 obtained per 1,000 francs paid each year up to the age of 65. This calculation is of course approximate, because it is based on the estimated average return on investments. In addition, the rate at which capital is converted into a pension is bound to fall over time as life expectancy rises.

26. Isn’t the CPIT obliged to apply the LPP minimum interest rate set by parliament for Swiss pension funds?

In a word, “no”. The subject is a complex one, however. If you're interested, here's some additional information.

In Switzerland, the minimum rate of return on the minimum LPP pension capital is set by the government in an ordonnance (Switzerland is the only country in Europe in which that rate is established by law). The rate was 4% until 2002, then was lowered to 3.25% on 1 January 2003 and to 2.25% on 1 January 2004 before being raised to 2.5% between 2005 and 2007 and to 2.75% in 2008. It was lowered to 2% on 1 January 2009 and remained unchanged until 2011. It was lowered again, to 1.5%, in 2012. In 2014 and 2015, it was set at 1.75%; in 2016 it is 1.25%.

However, the LPP minimum interest rate applies only to Swiss pension funds subject to the LPP (and therefore not to the CPIT), and only, in the case of such institutions, to that part of the remuneration called the "coordinated salary". Put simply, for an annual salary of CHF 50,000, for example, the coordinated salary amounts to CHF 25,325 (CHF 24,675 being subtracted as the "coordination deduction"); it is only on contributions corresponding to this part of a person’s salary that the interest set by the Federal Council is due. The CPIT, on the other hand, applies the interest rate to the entire accrued retirement capital.

(The same holds true for the conversion rate. In many pension funds, the minimum conversion rate established by the Swiss Federal Council is applied only to the part of the retirement capital corresponding to the coordinated salary. Pension funds offer substantially inferior benefits in respect of the remaining part. A fund can, for example, decide on a conversion rate of 6.8% for the obligatory part and 5.7% for the remaining part; the effective rate for the entire retirement capital is therefore considerably lower than the “legal” rate. The CPIT, on the other hand, applies the conversion rate to the entire retirement capital.)

The CPIT, which is not subject to the LPP, initially remunerated the retirement capital of active members paid interest on active members accounts at 4%, similar to other Swiss pension funds, thanks to an economic environment that enabled it to do so without having overly risky investment policies. In fact, between 1970 and 2001, it always paid at least 4% interest (and often more). From 2002 to 2004, however, it was obliged, given the scope of the stock market crash, to stop paying any interest on individual accounts, so as not to worsen the technical deficit. From a long-term perspective, however, it must nevertheless be emphasized that the CPIT’s members benefited (in the form of distribution of profits) from interest of around 4.8% between 1990 and 2006, and 4.1% between 1995 and 2006, even in years in which no interest was actually paid. Payment of interest on active members' accounts resumed in 2005; the interest rate was initially set at 1%, then raised to 2.5% in July 2006 before dropping back to 0% in November 2008, in the wake of the financial crisis. It was raised to 1.5 % in 2013 and to 1.75% in 2014.

Any discussion of the interest paid on active members’ capital must take account of the returns to be expected from risk-free investments – a pension fund cannot have a risky investment policy. The reference for the CPIT is the rate on 10-year bonds issued by the Swiss Confederation, which in recent years has plummeted to its lowest level ever (hovering at around 0%). Another factor to be borne in mind is the inflation rate, which is much lower today than in the 1980s and 1990s. There is therefore nothing unusual about pension funds paying lower interest rates. Don’t forget that an interest rate of 2.5% at a time of 2% inflation earns more, in real terms, than a rate of 5% at a time of 5% inflation.

In addition, the retirement capital of retirees is calculated using actuarial interest, which dropped slightly from 3.5% to 3.0% (at 31 December 2015) as it became more difficult to obtain higher returns in the medium and long term.

27. What is the average yield I can expect to earn on my retirement capital at the CPIT?

At present, the rate used by the CPIT for long-term forecasts is 2.5%; should long-term interest rates remain very low for an extended period, the CPIT may well once again have to consider lowering the technical interest rate (see next question) and scale down those forecasts. It goes without saying that the anticipated yield depends on the financial markets and is contingent on inflation.

28. What is the “technical interest rate” referred to in the Annex to the Regulations?

“Actuarial interest” is the interest rate used to calculate the mathematical reserves of retirees. In other words, once your pension has been calculated (on the basis of your retirement capital and the conversion rate), the Fund has to determine the amount it has to set aside each year in the actuarial balance sheet in order to pay that pension until your death. To do this, the actuary takes account of data on life expectancy and of an interest rate enabling it to update the amounts that will have to be paid in the future. It is this interest rate that is called actuarial interest. It is akin to a long-term rate of return, in that it is not easily changed. The change in actuarial interest at 31 December 2015 in fact implied major changes in the mathematical reserves of retirees. That being said, the Foundation Council had taken steps to ensure that the Fund was in a position to finance the gradual decrease in actuarial interest.

In a savings plan like the CPIT, actuarial interest has no impact for active members, except the possibility of a lower conversion rate when the time comes.

29. Should I expect the conversion rate for retirement capital to fall (Art. 21 of the Regulations)?

The rate was adapted in 2012, falling from 7% at the start of 2012 to 6.35% in 2015 for a member retiring at the age of 65. Under the transitional provisions, the conversion rate declined by 0.025% every month for three years. The conversion rate is directly related to life expectancy: as life expectancy rises, the conversion rate falls. Under the first revision of the LPP, the minimum conversion rate gradually fell, between 2005 and 2015, from 7.2 to 6.8% at age 65. The lower conversion rate has no effect on those who have already retired, but it spells lower future benefits for active members. The future of “second-pillar” pension funds is a major issue for the authorities and is discussed in a report, Rapport du Conseil fédéral à l'attention de l'Assemblée fédérale sur l'avenir du 2ème pilier, drawn up following the massive rejection by Swiss voters, in a referendum held in March 2010, of the plan to adapt the minimum conversion rate.

30. The CPIT in 5 easy steps indicates the estimated amount of the annual pension for an average annual payment. Is that amount re-assessed to keep pace with purchasing power? Will that amount, which I deem sufficient today, still be enough in 30 years, taking account of inflation?

No one can tell you if the amount you think you need to live on today will still be sufficient in 30 years. No “expert” can predict the demographic, political, economic, social, fiscal and financial changes that will occur in the coming 20, 30 or 40 years.

That being said, the CPIT’s estimates are based on the assumption that its members' accounts will earn an average 2.5% interest over the long term, or more than the current inflation rate. This means that, if the Fund has the financial means to pay that average of 2.5%, your pension will have increased by more than the rate of inflation. Historically, the average interest rate paid by the CPIT to its active members since it was founded has been higher than the inflation rate in Switzerland.

In addition, the CPIT’s assets are held in Swiss francs, which is historically a stable and low-inflation currency. If you live in a country where the inflation rate is higher than in Switzerland, its currency will depreciate vis-à-vis the Swiss franc; the retirement capital you acquired at the CPIT will therefore benefit from an additional increase in terms of your national currency. Moreover, all the profits made by the Fund are redistributed to the members, since the CPIT is not a for-profit institution or a listed company (like insurance companies) that has to remunerate its shareholders.

As concerns yield on investments, pension and retirement funds basically increasingly operate in a fairly similar economic context and conditions – one outcome of globalization; there are few differences in performance. The CPIT’s portfolio is managed by specialists in institutional investment, from a long-term perspective and in the framework of Swiss legislation, which is very strict and provides a guarantee of security. Above all, however, the CPIT has the advantage of being managed by colleagues, in complete transparency, and of guaranteeing that any money made on investments is directly returned to its members.

31. Are the pensions paid by the CPIT indexed?

The CPIT is under no legal or regulatory obligation to index the pensions its pays. To date, however, retirees have also benefitted, alongside active members, from the distribution of the Fund's profits, resulting in regular increases – until 2001 – in the amount of their pensions. Thus, the CPIT paid 6% in extra interest on 1 January 1999 and 5% in extra interest on 1 January 1998. Our retirees therefore saw the value of their pensions rise by 11% (5 + 6) in two years. The inflation rate being low, this was a net increase in the amount they received. Of course, the economic context has changed radically since then; inflation and interest rates are currently at historical lows.

32. Why is there a gap, in some years, between the yield on the CPIT’s portfolio and the rate of interest paid to active members?

You have to bear in mind several points.

1) "Performance" represents the market value of the entire portfolio on 31 December compared to 31 December of the previous year. It’s a theoretical value, since the CPIT does not sell its entire portfolio at the end of each year; our investments are long term, even very long term. The yield therefore represents earnings that are in part not realized, since we keep most of our holdings.

2) The CPIT is not an investment fund; it has to be able to pay old-age pensions in the long term, and therefore has to constitute provisions and reserves to protect it from fluctuations in share prices, increases in life expectancy, etc. The bigger the portfolio, the larger the reserves required. Under Swiss law, pension funds must replenish all compulsory reserve funds before they can distribute profits to their members. Some investment funds may claim that they have higher yields than we do, but they do much worse in bad years and do not guarantee a minimum pension over the long term. When it comes to pensions, performance always has to be gauged over the long term.

3) The members of the CPIT are also insured against the risk of disability. To that end, the Fund maintains a provision of CHF 475,000 and pays an annual reinsurance premium of roughly CHF 28,000 (2015 figures). Furthermore, each disability event requires the establishment of a special reserve.

4) The Fund naturally also has running expenses (actuary, banks, auditors, etc.), but all profits are redistributed to the members (the members of the Foundation Council are not paid). Comparable investments made in Switzerland by the major banks and insurance companies (second or third pillar) have had lower returns than the CPIT in recent years.

V. DEATH AND DISABILITY

General comment: the provisions relating to the lump-sum death benefit (Arts 27 to 30 of the Regulations for the death of an active member, Arts 31 to 35 for the death of a retiree) are fairly complex. You are strongly encouraged to read them carefully, and above all to send the CPIT secretariat the form for designating beneficiaries, which clearly indicates who is entitled to benefit and to what extent. Remember to send a new form to the Fund if your situation changes or if you wish to change the distribution of your lump-sum death benefit.

33. Can I ask for the lump-sum death benefit to be paid to my nieces and nephews?

Yes (see Art. 29.1.h of the Regulations), but only if there are no other beneficiaries belonging to the categories that take precedence over nieces and nephews (spouse, partner, children, parents, siblings). Make sure you complete the declaration of beneficiaries, which is automatically sent to all members when they join, and which must be returned to the Fund secretariat. (On the other hand, if you were already receiving your pension, the lump-sum death benefit can only be paid if you were not married and only to your partner, children or persons to whom you were providing substantial support at the time of death).

34. Can I ask for the lump-sum death benefit to be paid to a cousin?

Only if, at the time of death, you were providing that cousin with “substantial support”.

35. What does “substantial support” mean?

A person is in receipt of substantial support if the amount of the economic support you provided while you were alive was such that your death, and hence the end of the support, causes great hardship to that person or results at least in a substantial drop in his/her standard of living. The support is deemed substantial from the strictly economic point of view, irrespective of the nature of your relationship, family or otherwise, with the person receiving the support. We recommend that you furnish evidence of the amount of support you provide, to avoid problems. It is up to the Foundation Council to check whether that support was still substantial at the time of death.

36. If I chose to receive a pension, will my heirs receive anything when I die?

Yes. If you’re married, your widow/widower will receive, after your death and lifelong, a pension equal to 60% of your pension (except if he/she remarries, in which case he/she receives a single payment equal to three annual pensions of the surviving spouse). If you're not married, your beneficiaries will receive a lump-sum benefit after your death. Your beneficiaries are, in order: your partner, your children under age 18, or under age 25 if they are still in education or at least 70% disabled, and any person(s) to whom you were providing substantial support at the time of death. The amount of the benefit in that case is equal to the amount of your contributions (within the meaning of Art. 7 of the Regulations) and transfers-in, plus interest, minus the amounts already received as pension benefits. You can designate your beneficiary/ies and the share each is to receive. If you have not designated anyone, the Regulations set out the order of beneficiaries.

37. The Regulations stipulate (Art. 27): "In the event of the death of a working or disabled member before the age of 65, the Fund shall pay a death benefit to the beneficiaries of the deceased." Does this mean that, if I ask, at the age of 65, to receive my retirement capital at the age of 68 and then die in the meantime, my beneficiaries will receive nothing? Does the lump-sum death benefit disappear after 65?

No, entitlement to the lump-sum death benefit continues to exist for as long as you receive no retirement benefits from the Fund (in other words, for as long as you are an active member), even if you are over the age of 65. The phrase "before the age of 65" refers here only to disabled members, who are not able to put off retirement and automatically receive a pension as of their 65th birthday.

38. Do I have to meet any special conditions to receive a disability pension?

The disability must be confirmed and attested to by medical certificate; the Foundation Council can require that you undergo a medical examination by a doctor of its choice (Art. 24 of the Regulations). Purchases of benefits do not enter into the calculation of the amount of the pension. Under Article 26 of the Regulations, the annual amount of a temporary disability pension is equal to 150% of the total contribution you paid during the calendar year before you became unable to work. If you have a lasting disability, you are also exempted from payment of your annual contribution, which is instead paid by the Fund: the Fund will pay into your account, for as long as you are deemed to be disabled and until the age of 65 at the latest, and after having deducted the contributions for administrative costs and risks, the amount of the total annual contribution you paid during the calendar year before you became incapacitated.

VI. RETIREMENT AND DEPARTURE FROM THE FUND

39. Until what age can I put off retirement and continue to pay in to the CPIT?

Until the age of 70; you must have retired and received either a pension or a lump-sum benefit (or a combination of the two) at the latest on the date of your 70th birthday. This age limit is not set by the Fund but imposed by the Swiss authorities, because the purpose of a pension fund is to provide old-age coverage and, after 70 years, the authorities consider that savings set aside for that purpose can no longer be tax exempt.

40. Can I draw on my retirement capital at the CPIT at any time (for example, if I go through a rough patch or want to buy a home)?

See Art. 42 of the Regulations on the payment in cash of the free-transfer benefit. In addition, under Swiss legislation you may withdraw the retirement capital before term to purchase or build a home (apartment or house) owned by you, acquire shares in the ownership of a home, or pay off a mortgage (LPP, Art. 30c). (N.B: this applies only to a primary home.) You have to withdraw at least CHF 20,000, and at least 5 years must elapse between two withdrawals. We nevertheless advise you to think carefully before deciding to do this. The procedure is relatively cumbersome and your pension benefits will of course be reduced as a result. Taxes are withheld on the capital paid, exactly as for a lump-sum payment on retirement (see “Tax issues” above).

In addition, the amounts thus withdrawn must be reimbursed to the Fund in their entirety before you can purchase any benefits, or should you sell the home thus acquired.

41. I've asked for my pension. How long do I have to wait before I receive the first payment?

In principle, unless any administrative complications arise, you should start receiving your pension at the end of the month following that in which the Fund’s secretariat received your request and all the necessary information (bank account number, etc.). If you inform the Fund on 10 January that you wish to start receiving your monthly pension, you will receive the first payment at the end of February. That being said, the Fund often continues to receive contributions, from the organizations, for members who have announced their retirement. This complicates matters, because it then has to recalculate the amount of the pension or reimburse the amount received. For everything to go smoothly, inform your regular employers that you plan to retire early enough to ensure that all contributions have been paid when you make your request.

42. I’m a freelance translator (interpreter) and member of the CPIT and have just been offered a contract allowing me to become a member of my new employer’s pension fund. What will happen if I stop contributing to the CPIT? Will I be excluded from the Fund? If so, what amount will I be reimbursed? Can I remain a member of the CPIT without making regular payments?

You have two options.

I. You can remain a member of the CPIT, either because you think you will sooner or later work as a freelance again, or because you want to diversify your pension provisions. In this case, you are obliged to pay the annual minimum contribution of CHF 600, all of which is used to cover administrative costs. Don’t forget, however, that the disability pension is directly proportional to the amount you contributed the previous year.

II. You can resign from the CPIT and ask to receive your retirement capital. Here again, you have two options: (a) if you are domiciled outside Switzerland, you can ask for the capital to be paid in cash under Art. 42 of the Regulations; (b) if your new employer is in Switzerland, you can ask to have the free-transfer amount transferred to your new employer’s pension fund under Art. 41. (N.B.: this does not apply to the United Nations Joint Staff Pension Fund, which does not allow transfers-in from previous retirement plans.) In both cases, you recover the retirement capital accrued at the date you leave the CPIT, i.e. all your payments, plus interest.

43. I’m a member of the CPIT, I live in France and I’m about to receive my retirement capital. Can I have it paid into a bank account in France, but in Swiss francs?

Only at your express request (the Fund usually makes payments in the currency of the country of domicile of the account, in this case, in euros), and on condition that you have first opened an account in Swiss francs. If your account is in euros, your bank will automatically convert the Swiss francs into euros when it credits the amount to your account. When Pictet & Cie pay a pension or a lump sum into an account abroad, they usually convert the amount (calculated in Swiss francs) into the currency of the destination country, at the exchange rate applicable on the date of payment (see Art. 17.3 of the Regulations).

44. My pension is paid into my account abroad. Do Pictet & Cie charge a commission?

Only if there is an exchange operation. In that case, Pictet & Cie charge a commission amounting to 1.3% of the exchange rate. Say, for example, that you are a CPIT pensioner living in England and receiving a pension of CHF 2,500 in a pound sterling account and that the exchange rate on the day is CHF 2.50 for £1. Pictet & Cie will make the exchange at 2.5325 instead of 2.50. In other words, you will receive £987.17 instead of £1,000. To avoid the commission, you can open an account in Swiss francs and ask for your pension to be paid in that currency: Pictet & Cie will charge no commission in that case (you will receive your entire pension in Swiss francs, without any deductions)... but, of course, you will have to change the money into pounds yourself, and that may cost just as much.

45. I’m a member of the CPIT, I live in France and I will shortly receive my retirement capital. Can I have it paid into a bank account in Switzerland?

Yes. The CPIT can pay the amount you are owed into a bank account in any country and in the currency of your choice. However, if you've chosen this option for tax reasons, think again: tax status is determined by your place of legal residence, not the place of payment (see “Tax issues” above).

46. Can I go to the Fund’s secretariat (or Pictet & Cie) and withdraw my retirement capital in cash?

No. It is absolutely impossible to obtain a cash payment. You have to indicate a bank account into which the Fund will make the payment.

47. I will shortly start receiving a pension from the CPIT. If I were to occasionally work a day or two, can I continue to contribute the employer’s share of the social security contribution to the Fund?

No. You can’t be active and retired at the same time. Once you start to receive retirement benefits, the Fund can no longer receive contributions in your name.

48. Will I incur any costs if I withdraw my retirement capital before retiring?

No. The CPIT pays the entire free-transfer benefit if the conditions set out in Art. 43 of the Regulations have been met, with no cost to the member.

VII. PERSONAL CERTIFICATE

49. Couldn’t the dates of my contracts be indicated on the annual statement sent to members, to make it easier to check payments?

It’s impossible to do this, because the organizations make global and grouped payments, without always indicating the dates of each separate contract. In most cases, the Fund’s secretariat does not have that information. We strongly recommend that you keep a record of all your contributions during the year and those that should have been made by your employers, to make it easier for you to check the list sent in March and September. You and only you have all the information needed to make that check.