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I came across the following quote:

last-minute attempts in Paris and Geneva in December 1969 and January 1970, led to the creation, outside of AIIC, of two different pension funds, one (CPIT) based on the principle of capital accumulation (pension fund) and the other (CPIC) on a defined benefit (welfare fund).

(Wadi Keiser)

Personal Experience

I remember getting some CPIC stuff in the context of an OECD job. Also, ESA asked me for my pension provider so it seems as though it's compulsory in the agreement sector. What about pension schemes for freelancers/are CPIC and CPIT also viable choices for freelancers' investment mix strategy? What are the pros and cons of these funds? I spoke to some colleagues who said that one of the downsides is that you never know what your eventual pension entitlement will be since the latter depends on the funds' performance.

Background/Things I read about pension schemes in general

I know, this is a complicated question but I feel it may be relevant for many of us - not only on the grounds of common sense but also in view of upcoming regulatory changes: In Germany, the competent Minister is thinking about a bill for compulsory pension schemes also for freelancers which will deliver a minimum pension of EUR750 (i.e. they want to ease the pressure on the social security networks which, in theory, is a commendable plan but how do you achieve this?

In a Finanztest article last year I read that, roughly, this would mean that every freelancer would have to have saved approximately EUR200,000 by the time they retire (if they want to live of the interest). For me, (at the age of 42) this would mean that I would have to set aside about EUR500 per month for pension purposes (of course, all these calculations are extremely complicated so I am just taking an extremely conservative figure based on a simplistic calculation which would allow me to meet the (potential) forthcoming future pension obligations in Germany).

However, in terms of investments, there is one common denominator across all legislations, i.e. diversification (again, common sense;). Hence my question:

Your experience/Peer advice?

I was wondering what CPIC and CPIT are all about. Of course I can write to them but since apparently there is an aiic agreement I was wondering whether

  • aiic also has supporting material (as opposed to the more technical stuff which, of course, will also be required) and,
  • more importantly, peer reviews. Are aiic members who have opted for one of these two pension schemes satisfied?

asked 29 Apr '12, 04:31

Tanja's gravatar image

Tanja
643151821

edited 04 May '12, 04:23

Vincent%20Buck's gravatar image

Vincent Buck
3.9k203350


Hi,

I joined CPIC when I got my accreditation as a freelance with the EU and use it for other International Organisations as well. Moreover, I use the CPIC "account" as a flexible "add-on" scheme, e.g. for additional retirement contributions that I want to make at the end of good years. CPICs main advantage is its flexibility - regarding the contributions and the way you can use the payments once you've reached retirement age. I understand your hesitations: Germans e.g. are used to fixed contracts that tell you at age 30 what monthly payments you will probably receive as off age 65. On one hand, this might be reassuring. On the other hand, you agree to a relatively rigid structure a very long time in advance (if you wanted to receive all the savings in one package, you would usually loose money for example - if this is possible at all). Other countries btw. do not have such a culture at all, i.e. contracts of the CPIC type are completely common in countries such as the UK.

I am pretty satisfied with CPIC's return and their investment policy and I'd go for this solution again if I was confronted with that same decision nowadays.

In addition to the retirement scheme, CPIT includes an invalidity insurance, i.e. the contribution payments are reduced by a percentage that goes into the IV insurance.

Kind regards

Angelika

P.S.: I am not sure whether you'd get vey far with 200,000. I'd recommend to consult retirement calculator. This one looks quite reasonable and can take into account what you already have (in German): http://www.assekuranz.de/rentenrechner/index.php4 There are plenty of calculators in different languages out there.

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answered 29 May '14, 08:33

Angelika's gravatar image

Angelika
4066

edited 29 May '14, 08:38

Here are both url's: http://www.cpic.ch/ & http://www.cpit.ch/ .

Your reasoning when it comes to your "savings effort" seems to focus on the interpreter to the exclusion of the employer: although this is indeed (and most regretfully!) so when working for the UN family, it is very much not so when working for the EU and coordonnées, where the deduction from your pay, under this heading and contrary to UN practice, does NOT cover the employer's part which is added to what's sent to the caisse on your behalf, ie as should always be the case, part of your retirement capital is contributed not by yourself but by your employers; both systems do allow for individual, voluntary contributions by colleagues wishing to increase their capital under management by either caisse.

Both caisses these days will either pay you a lump sum OR a regular income, when one retires... and both have negotiated insurance policies open to subscribers; I'm afraid I'm unable to draw up a comparison table between both... but the fact that I've never seen one must be meaningful.

Finally, I'm CPIC and have never had any reason to be other than satisfied :-); when you write freelancers, you do mean non-agreement market work, right? In this case (just like for UN freelance contracts, unfortunately) the whole savings effort is indeed ours...

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answered 29 Apr '12, 08:28

msr's gravatar image

msr
4.7k6923

edited 29 Apr '12, 08:39

Hello Manuel, thank you very much. I edited the question which now reads "PRIMS" as opposed to "agreement sector".

Whilst 99% of my work comes from the private market sector (where indeed we pay 100% of our pension contributions ourselves) I also understand that the two aforementioned (agreement sector) pension schemes allow voluntary contributions. Hence my question. Do these two pension schemes only make sense in cases where the employer (like ESA or OECD) matches your contribution or would be one (additional) alternative for private market sector freelancers?

(29 Apr '12, 09:13) Tanja
2

You're very welcome, Tanja :-). My take as to this angle is rather straighforward, albeit unsupported by any research: seeing how both caisses are run by the profession/s and are non-profit to boot, they should beat all for-profit undertakings, ie neither caisse remunerates shareholders because there are none, therefore the accrual in value resulting from successful investments exclusively benefits members - once expenses (no salaries are paid to directors!) are deducted.

(29 Apr '12, 09:31) msr

Thank you, Manuel. Whilst I guess "no news is good news" and of course it is always possible to study their glossy brochures I always prefer "real" user feedback:)

(29 Apr '12, 09:39) Tanja

I joined CPIC in 2007 when working as a freelance for the EU Commission for several months. I had no problems whatsoever with them and setting everything up was quite straight-forward.

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answered 01 May '12, 14:19

Alexander's gravatar image

Alexander
241127

Thanks, Alex! So I guess this is the second endorsement from the agreement sector where you go halves with the employer as far as CPIT/CPIC contributions are concerned :) I must admit, I envy you guys. Wish we had sth. Similar in the "free" market (PRIMS) Absolutely need to look into Ruerup again.

(02 May '12, 02:16) Tanja

I joined CPIC once I moved to Europe, and employers asked for my CPIC/CPIT account numbers. Now I give it to any institutional employer that can contribute, as I find it as easy way to save for retirement - get ot out of ky hands before I can even touch it!

When I was in the US, I invested in (and still have, though am no longer able to contribute to) high growth mutual funds. We had always been taught that the market would - over the longer run - give a better return than anything else, and I haven't been disappointed yet (even after the financial crisis). CPIC doesn't give me the same returns, but they do give me better than most conservative investments. I'm hoping that the combination of the bi-coastal private pensions and social security payments will serve me in good stead.

And I fully agree with Angelika, 200,00 will not be nearly enough!

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answered 23 Jun '14, 17:50

JuliaP's gravatar image

JuliaP
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question asked: 29 Apr '12, 04:31

question was seen: 11,729 times

last updated: 23 Jun '14, 17:50

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