The end of the pension relationship

If you are unable to work due to illness or an accident, your salary can quickly fall below the entry threshold for occupational benefits insurance. Does this automatically mean the end of insurance cover? The following article shows when the pension relationship ends in such situations and why this is crucial in practice.

Employees who earn an annual salary subject to AHV contributions from an employment relationship that exceeds the current entry threshold of CHF 22,680 (minimum salary) are subject to mandatory occupational benefits insurance. The pension relationship therefore requires an existing employment relationship in the context of which a minimum salary above the entry threshold is achieved. Insurance cover commences when the employment relationship begins and ceases in principle if the employment relationship ends or the salary falls below the minimum salary (Art. 10 para. 2 BVG).

These principles form the starting point. However, the situation becomes interesting when the salary temporarily decreases during an existing employment relationship as a result of illness or an accident and the salary falls below the minimum salary as a result. In practice, this regularly happens when daily allowances from daily sickness benefits or accident insurance are paid instead of wages. These daily allowances are not included in the relevant AHV salary and are therefore not part of the insured annual salary in the occupational pension scheme (Art. 6 para. 2 lit. b AHVV, Art. 7 para. 2 BVG). In these cases, there is therefore a temporary shortfall in the minimum salary, although the employment relationship continues to exist and daily allowance benefits are paid.

In such cases, the law stipulates that the previous coordinated salary is maintained for a certain period of time unless the insured person requests otherwise (Art. 8 para. 3 BVG). Art. 8 para. 3 BVG takes account of the fact that reductions in salary due to illness or accident are typically of a temporary nature and should not automatically lead to the loss of pension cover. The previous coordinated salary therefore remains valid for the duration of the employer's statutory obligation to continue to pay wages (Art. 324a CO), even if the employer fulfils its obligation through daily sickness benefits insurance and daily allowances take the place of the salary. The pension relationship continues to exist during this period. The pension relationship only ends at the end of this protection period (duration of the statutory obligation to continue salary payments within the meaning of Art. 324a CO) as a result of falling below the minimum salary. This applies regardless of whether daily allowance benefits continue to be paid at this time. The situation is different if the employment relationship ends; in this case, the pension relationship ceases with the legal termination of the employment contract, whereby the blocking periods under labour law must be observed in the event of termination by the employer.

The protective mechanism of Art. 8 para. 3 BVG is not limited to illness and accidents, but also applies to other temporary reductions in salary, for example in connection with parenthood, adoption or the fulfilment of legal obligations. In these cases, the previous coordinated salary remains applicable for at least the legally stipulated duration of the leave in question (e.g. maternity, adoption or carer's leave).

However, it should be noted that Art. 8 BVG only applies in the area of mandatory occupational benefits insurance. In the case of further pension provision, the regulations of the pension fund alone determine whether and how the previous insured salary is continued in the event of temporary salary reductions. They can also go beyond the cases covered by law, for example by providing for continued insurance of the previous salary in the event of temporary reductions in employment or salary for training purposes. In practice, regulations often provide for a waiver of contributions in the event of incapacity for work due to illness or accident, which usually begins after a waiting period of three months. If this is combined with the continuation of the previous insured salary, it is possible to avoid the pension cover being cancelled simply because the statutory obligation to continue salary payments has expired.

The protection period pursuant to Art. 8 para. 3 BVG attempts to prevent insurance cover from lapsing prematurely during transitional phases, which in practice has a considerable impact on contribution obligations and benefit entitlements. However, this does not succeed in the case of long-term incapacity for work if it lasts beyond the statutory obligation to continue salary payments. It is not enough to look at the law to make a conclusive judgement: the regulatory provisions of the pension fund, which determine the scope of insurance cover in the specific case, are always decisive. If the pension relationship ends, this is followed by the statutory supplementary cover pursuant to Art. 10 para. 3 BVG, which maintains insurance cover for the risks of death and disability for a further month after termination of the pension relationship.