Dear FI Friends,
I would like to describe our total saving scheme which include the government, company pension fund, tax advantage and personal savings.
In Switzerland, I must say that we are really lucky to have a good retirement saving scheme, which is composed of 3 pillars of out 2 are mandatory and 3rd one is private but as a tax advantage benefit.
1) Social Security fund, taken directly out of our salary and represent 4.2%. The company contribute to 4.2% as well which give us a total 8.4%.
2) Company pension fund, taken directly out of our salary, the percentage has a minimum defined by law by can vary above this percentage from company to company. For my company, the percentage is 7% (new as of 1st of Jan 2015).
The 2 above funding process should represent around 60% of the last salary.
3) The privately funded 3rd pillar has a maximum amount 6768 for an employee, this amount is increasing a little bit every year. This amount if fully deductible from your tax (income).
All of the above cannot be withdrawn before 65 years old except if you are leaving Switzerland or for the 2) and 3) if you want to buy a house.
Now, our individual saving that goes at 100% into our portfolio increase. After all above deductions, taxes, rent and all other spending we are still able to put 18% aside.
So let’s recap on the below table:
|Social security fund||4.20%|
|Company Pension fund||7.00%|
|Tax advantage fund||3.28%|
|Personal investing fund||18%|
In total, we achieve a minimum of 32% saving, but from time to time we are able to save a little bit more on the personal investing fund.
We are away from some of our FI friends around the world but still believe that living in Switzerland is great achievement.
Let me know where you stand on the savings.
You can choose to put your money under a simple account that will give you around 1%-2% per year or you can choose in invest in fund with different risk level (% of equities).