What impact does cross-border work have on my pension?
June 13, 2023 | 60,00 EUR | answered by Paula Bauer
Dear tax advisor,
My name is Günther Schlosser and I have been working as a cross-border commuter for several years. I regularly commute between my place of residence in Germany and my workplace in Switzerland. Lately, I have been thinking more about my retirement and wondering what impact my cross-border work could have on it.
Currently, I am covered by social security in Germany and also contribute to the pension insurance there. However, I mainly work in Switzerland and earn my salary there. I am wondering if my contributions in Germany will be enough to receive a sufficient pension later on, or if I should take additional measures to secure my retirement.
I am also unsure if I should consider building pension rights in Switzerland, since I work and pay taxes there. What are the advantages and disadvantages for me to claim my pension rights in Switzerland or in Germany? Can I combine my contributions from both countries to receive a higher pension?
I am worried that I may not be adequately secured in old age and wondering if I should optimize my retirement planning to be financially well-prepared. What options do I have as a cross-border commuter to maximize my pension rights and what steps should I already take to improve my retirement planning?
I would greatly appreciate your assessment of my situation and any possible solutions.
Sincerely,
Günther Schlosser
Dear Mr. Schlosser,
Thank you for your detailed inquiry regarding your pension entitlements as a cross-border worker between Germany and Switzerland. It is understandable that you are concerned about your financial security in old age, and I would like to help you clarify this.
First and foremost, it is important to know that as a cross-border worker, the regulations of the social security agreement between Germany and Switzerland generally apply. This means that while you work in Switzerland and pay taxes there, you are still insured in Germany and also contribute to the German pension system. The contributions you make in Germany will also be taken into account for your German pension.
It is possible that your contributions in Germany alone may not be sufficient to receive a sufficient pension, as your main income is earned in Switzerland. Therefore, it may be advisable to take additional measures to secure your retirement. One option would be to voluntarily contribute to the German pension system to increase your pension entitlements.
Regarding pension entitlements in Switzerland, as a cross-border worker, you generally have entitlement to a pension in Switzerland if you have worked there and contributed to the Swiss social security system. However, you cannot combine your pension entitlements from both countries to receive a higher pension. Each country will pay you a separate pension based on the contributions made there.
There are both advantages and disadvantages to claiming your pension entitlements in Switzerland or in Germany. In Switzerland, pensions are generally higher than in Germany, but the cost of living is also correspondingly higher. Therefore, it may be wise to review and compare pension entitlements in both countries to choose the best option for you.
To maximize your pension entitlements and improve your retirement provision, I recommend seeking advice on your individual situation at an early stage. A tax advisor with expertise in cross-border worker law can help you take the best measures to secure your financial future. It is important that you start thinking about your retirement provision now and take appropriate steps.
I hope that my explanations are helpful to you and I am available for further questions.
Yours sincerely,
Paula Bauer
