>
Date: Mon, 29 Sep 2003 12:19:00 -0500
X-Mailer: Eudora 5.2 for Mac OS X
Dan,
I guess this discussion is somewhat old now, but since Judit just
asked a similar question last week, it may still be pertinent.
Not being an expert in Swiss AHV/AVS nor a lawyer, my understanding
is the following. The Swiss AHV is constructed around the family as
a unit, going back to the olden days where one spouse is de facto
dependent on the other spouse's income--before and after that
spouse's death; hence the name AHV/AVS: old age and survivor
insurance. Since Swiss abroad can't be taxed on their income at the
source nor receive an employer contribution, the entire family income
is used to figure your family's contribution and, later on, the
benefits. (I am rather surprised by Anne Masser's earlier comment
that only 50% of the family income is used. I hope she has that in
writing from her AHV office.)
The SSA web site Dan references below clearly states that the
totalization agreement is designed so that an individual, and, by
corollary, a family, need not pay contributions in both the US and
Switzerland. This suggests that Dan and his wife, currently living
in the US and (presumably) working for a US firm, should be paying
contributions to the US-SS and not the CH-AHV.
Benefits from the Swiss AHV are calculated based on the retiree's
lifetime earnings on which s/he paid contributions as well as the
number of years during which s/he contributed at least the minimum
amount. The formula that figures the "average" income is, as far as
I know, heavily biased towards the later years in life, so that the
income in early years (and hence the contributions paid in those
years) are rather negligible except for the qualifying years they
add. Thus it worth having many contribution years and having a high
taxable earnings later in life. So, if Dan's wife is young now and
can get away with paying just the minimum contribution (e.g., if she
is a matriculated student), it's worth doing so; if her contribution
is assessed on a (high) combined income, then it is hardly worth
maintaining a contribution just for the sake of adding to the number
of contribution years.
It is a great myth in Switzerland -- one that every Swiss imbibes
with their mother's milk -- that missing contribution years to the
AHV disproportionately reduces AHV benefits. The fact is that
benefits are exactly proportional to the number of contribution years
(as long as the number of years is less than 42; any contributions
above 42 years are "a fonds perdu" anyway). So whenever your income
is anywhere close to the income determined to be your "average
income" according to the AHV formula, it's no longer worth adding
those years since the return to a dollar invested into the AHV for
residents outside of Switzerland is quite miserable. -- This is not
to say that contributing would be a great act of solidarity, which
constitutes another principle of the Swiss AHV.
Please correct me if I am wrong on any of the above.
Cheers,
-Sven
_______________________________________________
Swiss-list mailing list
Swiss-list_at_swiss-list.com
http://www.swiss-list.com/mailman/listinfo/swiss-list
Received on Mon Sep 29 2003 - 12:27:18 PDT
