Old Age and Survivors' Insurance Scheme
Alters- und Hinterlassenenversicherung
Coverage
Mandatory insurance
- Persons who live in Switzerland, regardless of employment.
- Persons who work in Switzerland, regardless of nationality.
- Swiss citizens who work abroad either for the Swiss government or for a number of specific organisations.
Opting in
- Persons with residence in Switzerland who are not insured due to an international agreement.
Exempted
- Persons who are members of an old age and survivors’ insurance scheme of another state if coverage under the Swiss insurance scheme would result in an unacceptable double burden.
- Persons who meet insurance coverage conditions only temporarily (based on residence or employment) in cases more closely defined by regulators.
- Foreign nationals who enjoy privileges and immunities under the rules of international law.
Voluntary insurance
- Persons who work abroad for, and are paid by, an employer based in Switzerland, may continue their insurance on a voluntary basis with the employer’s agreement. They must have been insured for at least five consecutive years just before joining.
- Non-employed students up to the age of 30 who give up residence in Switzerland in order to pursue an education abroad may continue their insurance. They must have been insured for at least five consecutive years just before joining.
- Swiss nationals and citizens of the Member States of the EU or the EFTA who do not live in a Member State of the EU or EFTA may join the insurance on a voluntary basis under the condition that they were compulsorily insured for at least five consecutive years just before joining.
Financing
General finances
- Mainly PAYG-financed from insurance contributions by the insured and their employers.
- Partly tax-financed out of the general federal budget (20.2%), especially earnings from alcohol and tobacco tax, value added tax and casino tax.
- Capital revenue generated by the equalising funds of the old age and survivors’ insurance scheme.
- Recourse claims.
Contribution rates
- Contributions shared in parity between employer and employee (4.35% of each relevant salary) without contribution ceiling.
- Self-employed persons pay 8.1% of their earned income. If it is between CHF 9,500 and CHF 56,900 annually, the rate of contributions is reduced according to a decreasing scale defined by the Federal Council, down to 4.35%. If it is below CHF 9,400 annually, the minimum contribution is CHF 409 annually.
- If the relevant salary does not exceed CHF 2,300 per employer in a calendar year, contributions are collected only at the insured person’s request.
- Insured persons are generally required to pay contributions for the entire duration of employment. Upon reaching the retirement age (64 for women, 65 for men), they are only required to pay contributions on the part of their salary as employees that exceeds CHF 1,400 per month, or CHF 16,800 per year for each employer.
- Non-employed persons pay a contribution according to their social circumstances, CHF 409 at a minimum, 50 times as much at most. The same applies to non-employed students until the age of 25, non-employed persons who receive a minimum wage or other benefits by social assistance, and non-employed persons who are financially supported by third parties.
Contribution rates to voluntary insurance
- Employed and self-employed persons pay a fixed contribution rate of 8.7% of their earned income, CHF 818 annually at least.
- Non-employed persons pay a contribution according to their social circumstances, CHF 818 annually at minimum, 25 times as much at most.
Taxation of contribution payments
- Insurance contributions by the employed are fully tax-deductible.
- Insurance contributions by employers for their employees are fully tax-deductible.
- Insurance contributions by the self-employed are fully tax-deductible.
Administration
- Employers register their employees with the compensation offices, report their annual relevant salary and are directly billed by the compensation offices for the contributions shared in parity.
- Cantonal compensation offices register the persons required to pay contributions, and, like all compensation offices, determine and collect contributions, and determine and provide benefits. They maintain an individual account of the earned income on which contributions are paid until the person becomes eligible for a pension.
- The Federal Government administers two additional compensation offices: the Swiss Compensation Fund is responsible for the staff of the Federal Administration, the Swiss courts and offices of the Federal Government; the Swiss Compensation Office runs the voluntary old age and survivors’ insurance.
- Trade association compensation offices are established by trade associations employers and the self-employed are organised in.
- The central compensation office is the central accounting and records office for the entire old age and survivors’ insurance scheme, and serves as the office for the scheme’s compensation funds. It ensures that the individual compensation offices transfer the balances from invoicing to the compensation fund of the old age and survivors’ insurance scheme and that reimbursements are made from this fund to the individual compensation offices.
- The compensation fund of the old age and survivors’ insurance scheme is responsible for managing the scheme’s assets.
- The Federal Social Insurance Office (BSV) is the supervising institution.
Qualifying Conditions
Qualifying conditions
- The statutory retirement age is 64 for women, 65 for men.
- Standard pension: persons are eligible if they can be credited with income, child-rearing credits or care credits for at least one full year. A full pension requires a complete contribution period. The contribution period is deemed complete if the insured person has as many contribution years as their age group. A partial pension is paid in case of an incomplete contribution period. A partial pension corresponds to an actuarially computed partial amount of the full pension.
- Extraordinary pension: does not depend on contributions. Swiss citizens who have their domicile and habitual residence in Switzerland are eligible for an extraordinary pension if, until the pension claim arises, they were insured for the same number of years as their age group but are not entitled to a regular pension because they were not required to pay contributions for the period of one whole year. This sort of pension is practically not relevant anymore.
- Foreign nationals only qualify for benefits as long as their domicile and habitual residence is in Switzerland.
- Foreign nationals with a residence abroad whose country Switzerland does not have a social insurance agreement with may have their contributions paid back if they leave Switzerland for good, as an old age pension is generally not paid abroad in such cases.
Early retirement
- Available one or two years before the regular retirement age, with permanent negative adjustments to pension benefits (6.8% actuarial reduction per premature retirement year).
- Contributions to the old age and survivors’ insurance scheme are mandatory until reaching the regular retirement age. In the case that a person is no longer employed, contributions are paid at the rate of a non-employed person. Payments between early retirement and reaching the regular retirement age are no longer considered for benefit calculation.
Deferred retirement
- Retirement can be deferred by persons with claims on a standard old age pension, at minimum by one year, at most by five years, with permanent adjustments to pension benefits (an actuarially calculated bonus between 5.2% of the deferred pension after one year and 31.5% after five years, rather than an increase of the pension claims themselves).
- After reaching the regular retirement age, employed persons pay contributions only on earned income that exceeds CHF 1,400 monthly, resp. CHF 16,800 annually per employer. Self-employed persons pay contributions on earned income that exceeds CHF 16,800 annually.
Combining employment & retirement
- Termination of employment is not a precondition for claiming pension benefits.
- After reaching statutory retirement age, employment is permitted without earnings limit.
Benefits
Pension benefits
- Standard pension: based on the contribution period and the average annual earned income on which contributions were paid. In the case of non-employed persons, it is based on the contribution period and the paid contributions.
- Contribution years are defined as periods in which the insured person paid contributions, as well as periods during which a working spouse of a non-employed or co-working (but unpaid) person paid at least twice the amount of the minimum contribution. Contribution years also include periods in which child-rearing or care credits can be awarded.
- The average annual earned income consists of income from employment as well as child-rearing credits and care credits. Their sum is split by the amount of contribution years. Income earned by spouses during years of marriage (including child-rearing credits and care credits) are split and attributed to each spouse in half.
- Minimum amount: up to an average annual income of CHF 14,220, which is revalued using the pension index, a minimum full pension of CHF 1,185 is paid per month.
- Maximum amount: for incomes starting at CHF 85,320, persons are eligible for a maximum full pension of CHF 2,370 per month. The maximum pension is equal to double the minimum pension. Benefit ceiling in the case of spouses: the sum of the two pensions is limited to 150% of the maximum pension if both spouses are eligible for an old age pension, or if one spouse is eligible for an old age pension and the other for a pension from the invalidity insurance.
- Extraordinary pension: the pension amount is generally equal to the minimum amount of the applicable regular full pension, i.e. CHF 1,185 per month or CHF 14,220 per year.
Benefit calculation
- The ratio of the insured person’s contribution years to those of their age group is used to determine the applicable pension scale. The relevant average annual income is used to determine the amount of the pension on the applicable scale.
- The monthly pension consists of a fraction of the minimum amount of the pension (fixed pension portion), and a fraction of the relevant average annual income (variable pension portion).
- Adjustments: to account for the development of salaries and prices, the Federal Council usually adjusts the standard pension every two years by setting a new pension scale for the old age and survivors’ insurance scheme.
Taxation and social security contributions
- Pension benefits are fully subject to income tax according to general tax rules.
- Pension payments are not subject to social security contributions.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Mandatory insurance
- Persons who live in Switzerland, regardless of employment.
- Persons who work in Switzerland, regardless of nationality.
- Swiss citizens who work abroad either for the Swiss government or for a number of specific organisations.
Opting in
- Persons with residence in Switzerland who are not insured due to an international agreement.
Exempted
- Persons who are members of an old age and survivors’ insurance scheme of another state if coverage under the Swiss insurance scheme would result in an unacceptable double burden.
- Persons who meet insurance coverage conditions only temporarily (based on residence or employment) in cases more closely defined by regulators.
- Foreign nationals who enjoy privileges and immunities under the rules of international law.
Voluntary insurance
- Persons who work abroad for, and are paid by, an employer based in Switzerland, may continue their insurance on a voluntary basis with the employer’s agreement. They must have been insured for at least five consecutive years just before joining.
- Non-employed students up to the age of 30 who give up residence in Switzerland in order to pursue an education abroad may continue their insurance. They must have been insured for at least five consecutive years just before joining.
- Swiss nationals and citizens of the Member States of the EU or the EFTA who do not live in a Member State of the EU or EFTA may join the insurance on a voluntary basis under the condition that they were compulsorily insured for at least five consecutive years just before joining.
General finances
- Mainly PAYG-financed from insurance contributions by the insured and their employers.
- Partly tax-financed out of the general federal budget (20.2%), especially earnings from alcohol and tobacco tax, value added tax and casino tax.
- Capital revenue generated by the equalising funds of the old age and survivors’ insurance scheme.
- Recourse claims.
Contribution rates
- Contributions shared in parity between employer and employee (4.35% of each relevant salary) without contribution ceiling.
- Self-employed persons pay 8.1% of their earned income. If it is between CHF 9,500 and CHF 56,900 annually, the rate of contributions is reduced according to a decreasing scale defined by the Federal Council, down to 4.35%. If it is below CHF 9,400 annually, the minimum contribution is CHF 409 annually.
- If the relevant salary does not exceed CHF 2,300 per employer in a calendar year, contributions are collected only at the insured person’s request.
- Insured persons are generally required to pay contributions for the entire duration of employment. Upon reaching the retirement age (64 for women, 65 for men), they are only required to pay contributions on the part of their salary as employees that exceeds CHF 1,400 per month, or CHF 16,800 per year for each employer.
- Non-employed persons pay a contribution according to their social circumstances, CHF 409 at a minimum, 50 times as much at most. The same applies to non-employed students until the age of 25, non-employed persons who receive a minimum wage or other benefits by social assistance, and non-employed persons who are financially supported by third parties.
Contribution rates to voluntary insurance
- Employed and self-employed persons pay a fixed contribution rate of 8.7% of their earned income, CHF 818 annually at least.
- Non-employed persons pay a contribution according to their social circumstances, CHF 818 annually at minimum, 25 times as much at most.
Taxation of contribution payments
- Insurance contributions by the employed are fully tax-deductible.
- Insurance contributions by employers for their employees are fully tax-deductible.
- Insurance contributions by the self-employed are fully tax-deductible.
- Employers register their employees with the compensation offices, report their annual relevant salary and are directly billed by the compensation offices for the contributions shared in parity.
- Cantonal compensation offices register the persons required to pay contributions, and, like all compensation offices, determine and collect contributions, and determine and provide benefits. They maintain an individual account of the earned income on which contributions are paid until the person becomes eligible for a pension.
- The Federal Government administers two additional compensation offices: the Swiss Compensation Fund is responsible for the staff of the Federal Administration, the Swiss courts and offices of the Federal Government; the Swiss Compensation Office runs the voluntary old age and survivors’ insurance.
- Trade association compensation offices are established by trade associations employers and the self-employed are organised in.
- The central compensation office is the central accounting and records office for the entire old age and survivors’ insurance scheme, and serves as the office for the scheme’s compensation funds. It ensures that the individual compensation offices transfer the balances from invoicing to the compensation fund of the old age and survivors’ insurance scheme and that reimbursements are made from this fund to the individual compensation offices.
- The compensation fund of the old age and survivors’ insurance scheme is responsible for managing the scheme’s assets.
- The Federal Social Insurance Office (BSV) is the supervising institution.
Qualifying conditions
- The statutory retirement age is 64 for women, 65 for men.
- Standard pension: persons are eligible if they can be credited with income, child-rearing credits or care credits for at least one full year. A full pension requires a complete contribution period. The contribution period is deemed complete if the insured person has as many contribution years as their age group. A partial pension is paid in case of an incomplete contribution period. A partial pension corresponds to an actuarially computed partial amount of the full pension.
- Extraordinary pension: does not depend on contributions. Swiss citizens who have their domicile and habitual residence in Switzerland are eligible for an extraordinary pension if, until the pension claim arises, they were insured for the same number of years as their age group but are not entitled to a regular pension because they were not required to pay contributions for the period of one whole year. This sort of pension is practically not relevant anymore.
- Foreign nationals only qualify for benefits as long as their domicile and habitual residence is in Switzerland.
- Foreign nationals with a residence abroad whose country Switzerland does not have a social insurance agreement with may have their contributions paid back if they leave Switzerland for good, as an old age pension is generally not paid abroad in such cases.
Early retirement
- Available one or two years before the regular retirement age, with permanent negative adjustments to pension benefits (6.8% actuarial reduction per premature retirement year).
- Contributions to the old age and survivors’ insurance scheme are mandatory until reaching the regular retirement age. In the case that a person is no longer employed, contributions are paid at the rate of a non-employed person. Payments between early retirement and reaching the regular retirement age are no longer considered for benefit calculation.
Deferred retirement
- Retirement can be deferred by persons with claims on a standard old age pension, at minimum by one year, at most by five years, with permanent adjustments to pension benefits (an actuarially calculated bonus between 5.2% of the deferred pension after one year and 31.5% after five years, rather than an increase of the pension claims themselves).
- After reaching the regular retirement age, employed persons pay contributions only on earned income that exceeds CHF 1,400 monthly, resp. CHF 16,800 annually per employer. Self-employed persons pay contributions on earned income that exceeds CHF 16,800 annually.
Combining employment & retirement
- Termination of employment is not a precondition for claiming pension benefits.
- After reaching statutory retirement age, employment is permitted without earnings limit.
Pension benefits
- Standard pension: based on the contribution period and the average annual earned income on which contributions were paid. In the case of non-employed persons, it is based on the contribution period and the paid contributions.
- Contribution years are defined as periods in which the insured person paid contributions, as well as periods during which a working spouse of a non-employed or co-working (but unpaid) person paid at least twice the amount of the minimum contribution. Contribution years also include periods in which child-rearing or care credits can be awarded.
- The average annual earned income consists of income from employment as well as child-rearing credits and care credits. Their sum is split by the amount of contribution years. Income earned by spouses during years of marriage (including child-rearing credits and care credits) are split and attributed to each spouse in half.
- Minimum amount: up to an average annual income of CHF 14,220, which is revalued using the pension index, a minimum full pension of CHF 1,185 is paid per month.
- Maximum amount: for incomes starting at CHF 85,320, persons are eligible for a maximum full pension of CHF 2,370 per month. The maximum pension is equal to double the minimum pension. Benefit ceiling in the case of spouses: the sum of the two pensions is limited to 150% of the maximum pension if both spouses are eligible for an old age pension, or if one spouse is eligible for an old age pension and the other for a pension from the invalidity insurance.
- Extraordinary pension: the pension amount is generally equal to the minimum amount of the applicable regular full pension, i.e. CHF 1,185 per month or CHF 14,220 per year.
Benefit calculation
- The ratio of the insured person’s contribution years to those of their age group is used to determine the applicable pension scale. The relevant average annual income is used to determine the amount of the pension on the applicable scale.
- The monthly pension consists of a fraction of the minimum amount of the pension (fixed pension portion), and a fraction of the relevant average annual income (variable pension portion).
- Adjustments: to account for the development of salaries and prices, the Federal Council usually adjusts the standard pension every two years by setting a new pension scale for the old age and survivors’ insurance scheme.
Taxation and social security contributions
- Pension benefits are fully subject to income tax according to general tax rules.
- Pension payments are not subject to social security contributions.
Legal Basis: Federal Constitution of the Swiss Confederation (Bundesverfassung der Schweizerischen Eidgenossenschaft [BV]); Federal Act on Old Age and Survivors’ Insurance (Bundesgesetz über die Alters- und Hinterlassenenversicherung [AHVG]); Ordinance on the Old Age and Survivors’ Insurance (Verordnung über die Alters- und Hinterlassenenversicherung [AHVV]).