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How does my pension fund calculate the contributions and benefits ?

An employee, when being engaged by a company, will in general by the same occasion adhere to the pension fund of this company. As the federal law concerning professional precaution and old age, survivors and disability (LPP) doesn’t impose but minima, every pension fund is free to prepare a more generous insurance’s cover and to choose the particular kind of precaution planning which is supposed to be appropriate to the employee.

Talking about this precaution planning, intentions aren’t rare to discuss also the primacy of contributions and the primacy of services.

What does exactly happen in this case ?

A case is in primacy of contributions in the first case, when contribution is fixed by payment expressed as a percentage of the insured wages. Starting from these contributions, the amount of the various services of precaution is established. It depends on the total of the wages the policy-holder perceived during all of his professional life and of the total sum of the payed contributions. Thus, the amount of the services cannot be known neither exactly nor approximately in advance. By consequence, the policy-holder cannot do his pensioner’s budget  planning with accuracy. Nevertheless, this system disposes of the advantage of permitting the employer and the polica-holder to calculate exactly the amount of the contributions poured by them.

On the other hand, concerning the way of planning employed in the other cases, which means by other words the primacy of services, it is the general services’ level which is fixed. The amount of the necessary contributions is calculated in a way guaranteeing the services. Generally, the contribution is expressed in an uniform manner concerning the unit of the policy-holders, as a percentage of fixed wages. The services are not calculated employing the sum of the wages perceived during the entire professional life, but expressed as a percentage of all insured wages. This system presents a major asset for the policy-holder, since it enables him to know with accuracy in advance the amount of his services.