We explain everything you need to know about the AHV pension system in Switzerland and how it works, so you know what to expect when you retire.
With its high quality of life and excellent healthcare system, retiring in Switzerland can be a very comfortable and positive experience for expats. However, if you are relocating to the country, it is crucial that you understand how the Swiss pension works in order to plan a successful retirement.
To help you out, this guide explains everything you need to know about the AHV pension system in Switzerland, including the following:
The AHV Switzerland pension system
Who is eligible for pensions in Switzerland?
Pensions in Switzerland for expats
Swiss pension rates and contributions
Supplementary pensions in Switzerland
Non-contributory pensions and other support for low earners in Switzerland
Other pensions in Switzerland
Applying for your Swiss pension
Pensions advice and support in Switzerland
Useful resources
The Swiss pension system
There are three main pillars to the pension system in Switzerland. The first is the basic state OASI (Old Age and Survivor’s Insurance)which is called the AHV (Alters-und Hinterlassenenversicherung) in German or the AVS (Assurance vieillesse et survivants) in French. Employers and employees both fund the compulsory Swiss social security contributions. The second pillar is based on company pension schemes (Berufliche Vorsorge/Prévoyance Professionelle), which are mandatory for employees who receive a specific salary threshold.
And finally, the third pillar is based on occupational pensions and private investment schemes, which are voluntary. While the first and second pillars are compulsory, many retirees in Switzerland also opt for the third pillar. This can help boost their funding for retirement.
Interestingly, research shows that Swiss pension funds have fared well to market shocks from last year, despite the COVID-19 pandemic. They lost about 8% to 15% of their asset values in 2020, however, these losses are broadly the same as the gains made in 2019, so there should be no “panic”.
You can find more information about choosing the appropriate compensation on thegovernmentandAHVwebsites.
Who is eligible for AHV pensions in Switzerland?
Pension age in Switzerland
If you are a womanretiring in Switzerland, then the statutory retirement age is 64. If you are a man, however, then the age is 65. That said, you may decide to work past the Swiss retirement age. If you choose to do so, though, you must still make compulsory contributions for earnings in excess of CHF 1,400 per month or CHF 16,800 per year.
The Federal Council recently announced four modifications, which will be effective from 2022. The first will be an increase in the retirement age for women, bringing it to 65 for both sexes in the first and second pillars. After this, the increase will be three months every year from 2023 onwards.
Some people may decide to retire earlier than expected. With reference to the first pillar, you can withdraw your AHV pension one or two years ahead of time. However, this will reduce your pension through retirement by 6.8% for one year, or 13.6% for two years.
Read our guide to retiring in Switzerland
With regard to the second pillar, you can only retire early if the regulations of your pension fund allow it. Currently, the minimum age for early retirement in Switzerland is 58 years old. However, to bridge the gap until you receive your AHV pension, you can check if your pension fund provides a supplementary pension. Sometimes, employers may already offer this, but if not, then the employee has to take it out on their own.
Who can claim an AHV state pension in Switzerland?
You are entitled to a full pension in Switzerland, as long as you make continuous payments from the age of 20 until retirement for at least 44 years, with an average annual income of CHF 84,600 or more. If not, then you can calculate payments based on the proportion of years that you have worked in the country. Furthermore, if you contribute to theAVSfor at leastone year, then you can access this pension.
The amount of AHV state pension that you will receive depends on the number of years that you contributed in Switzerland, as well as your average income during the insurance period. Notably, as long as expats continue to contribute to the AVS, they can still receive their pension from the first pillar, even if they no longer live in Switzerland.
What if you’re not eligible for a full pension?
Interestingly, most people who have AHV insurance and pay contributions in Switzerland don’t always reach the maximum AHV pension. To qualify, you must have no AHV contribution gaps and you must be making an annual income of CHF 84,600.
Read our guide to social security in Switzerland
If you are not eligible for a full state pension, then you can, under certain conditions, access supplementary benefits. However, if you are not a resident in Switzerland, then you will not receive these benefits. You can find out more about how to apply through the Swiss Confederation.
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Pensions in Switzerland for expats
When planning your retirement in Switzerland, it’s important to think ahead and understand how it works. For instance, many expats don’t realize that they can sometimes receive a refund for their contributions if they aren’t planning to say in Switzerland long-term.
In Switzerland, company pensions are usually paid out as annuity once the person has reached the required retirement age. However, it is a good idea to contact your pension scheme provider before you retire to confirm this.
Unlike company pensions, private Swiss pension funds usually allow you to withdraw the entire amount at once. You can do this as early as five years before, or as late as five years after, you reach the required retirement age. Evidently, planning ahead is an effective way of ensuring that you can simply relax and enjoy your retirement in Switzerland.
Transferring your pension to Switzerland
If you want to transfer your pension to Switzerland, then there are several options to choose from. Essentially, anyone from a country with a bilateral pension agreement with Switzerland can access a Swiss pension, even if they no longer live there. These countries include EU and EFTA member states, Australia, Bosnia and Herzegovina, Canada, Chile, Israel, Japan, Montenegro, North Macedonia, the Philippines, San Marino, Serbia, Türkiye, the United States, and Uruguay. Although it is possible to claim an AHV pension from outside of Switzerland, different conditions apply according to each country.
Read about portable retirement planning for expats
Notably, with a bilateral agreement in place, you can’t refund or transfer a Swiss pension to another pension scheme. You can only receive it once you reach the full Swiss retirement age. However, if you leave Switzerland, then you can’t make any additional contributions to the AHV pension system. If you also made contributions to a state pension scheme in another country that has a social security agreement with Switzerland, then you may also be able to receive these pension allowances alongside your Swiss pension.
If you’re leaving Switzerland, then you must notify the Swiss pension fund office before you leave. They will then send your application to receive your Swiss pension abroad to theSwiss Compensation Fund for processing. This compensation will be paid out in the currency where you live.
You can apply for your reimbursem*nt from abroad using an online form found in theFormulare/Allgemeine Verwaltungs formularesection of theAHV Switzerland website. Along with your application, you will also need to supply the following:
your AHV insurance card
confirmation of leaving Switzerland
proof of nationality
proof of current address
The process can take up to several months and payments will be made into your personal bank account thereafter.
Expats moving abroad from the UK may be able to transfer their pensions into a Qualified Recognized Overseas Pension Scheme (QROPS). This allows expats to consolidate their pensions into one plan, helping them to manage their retirement funds more easily and avoid currency fluctuations.
Although there are many advantages to QROPS, they aren’t suitable or available to all UK pensioners, therefore, it is a good idea to seek advice from an expert financial adviser such as AES.
Swiss pension rates and contributions
If you want to find out what your average pension is in Switzerland, then you can use the government’s Swiss pension calculator or fill out theironline surveyto calculate the amount. The first pillar, OASI, depends on the number of years that you have contributed, the level of your income, and any contribution credits that you have received for bringing up children or caring for other persons. In this case, both employees and employers must pay contributions, with employee contributions being deducted directly from the salary.
The occupational pension scheme is mandatory for all employees in Switzerland and starts at the age of 17 when you get your first job. That said, you must earn at least CHF 21,330 per year in order to qualify for it. Again, both employees and employers pay contributions. You can calculate this pension using a conversion rate, while the minimum rate is laid out by law; at the moment, this rate is 6.8%.
Finally, the third pillar is the private pension, which comprises savings for retirement. Although this is subject to certain limits, the funds are tax-exempt. There is no obligation to make payments to a third pillar scheme, but some may prefer this method.
Find accountants and tax advisors in our directory
It is also compulsory for self-employed individuals over the age of 20 to make contributions to the AHV or OASI. If you are a self-employed worker, then the rate is usually calculated on annual income, which is generally around 7.8%. However, if you earn an annual income of less than CHF 56,400, then this can reduce to 4.2%.
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Supplementary pensions in Switzerland
In order to receive supplementary benefits, you must be living in Switzerland. If you’re a foreigner in the country, then you must have lived there without interruption for 10 years. However, this reduces to five years if you’re a refugee or stateless person.
If the first pillar old-age pension and other income aren’t enough to cover your basic needs, then supplementary benefits are available from the Swiss cantons. Applications for supplementary benefits must be submitted in writing to your canton of residence, usually the cantonal compensation fund office. The benefit amount depends on your individual situation and is calculated on the basis of your recognized expenses and income.
For the second pillar, you accumulate retirement assets with a pension institution, with contributions made by you and your employer. After you retire, this capital converts into an old-age pension using a conversion rate of 6.8%. Pensioners can also receive pensions for children at 20% of the old-age pension. There is also the possibility for early or deferred retirement if the regulations of the pension institution allow it.
Typically, private pension schemes can be accessed earlier than the Swiss retirement age. It is possible to take early withdrawal for matters such as buying a property, whereas many of the unrestricted pension schemes can be accessed at any time.
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Non-contributory pensions in Switzerland
Fortunately, benefits from the first pillar scheme apply to the elderly as well as survivors and disabled persons in Switzerland. Therefore, they will receive a pension through the AVS or AI, or have access to certain other invalidity benefits. For unemployed individuals, the contributions are set by calculating assets and income received through social benefits. Therefore, those who meet the minimum contribution period of one year of full payments are then able to draw a Swiss state pension when they reach retirement age.
Other pensions in Switzerland
Survivor’s pension
In the case of death, a surviving spouse, same-sex registered partner, or child may be eligible to access a survivor’s or orphan’s pension in Switzerland. However, this is provided that the deceased paid AHV contributions for at least one year among other conditions.
Read about planning your will and estate in Switzerland
Fortunately, a partner can receive from CHF 940 to CHF 1,880 per month, while children are entitled to CHF 470 to CHF 940. You can learn more about the requirements for claiming adependant’s pension on this website. You can also find more information in our guide to estate andinheritance tax in Switzerland.
Invalidity pension
If you havework incapacityof at least 40% for at least one year, then you are entitled to an ordinaryinvalidity pension. However, this is provided that you demonstrate at least three years of contributions. You can apply for thispensionfrom the age of 18 up toretirementage.
Applying for your AHV pension in Switzerland
In order to claim the AHV Swiss state pension, you will need to submit a written request for your pension withdrawal from where you made your last contribution payment. You can find out more about the appropriate compensation office from the governmentandAHVwebsites. However, don’t forget to send your request at least three months before you reach the retirement age in Switzerland. You can find out more about how to apply through the Central Compensation Office.
Pension advice in Switzerland
Of course, it is wise to seek professional financial advice before making any decisions regarding your pension in Switzerland. If you have worked orretired in Switzerland, then you may wonder how much of a pension you can expect to receive as a woman. This is because many women in the country choose to work either part-time or not at all, which can result in a smaller pension. Consequently, there is an ongoing gender gap, which is partly due to how theSwiss pension systemworks.
Unfortunately, this mainly comes from the unforgiving second pillar which directly reflects the amount someone has worked and how much was paid in during their working life. With this in mind, every year in which little to no contributions have been made will affect the final pension amount. And sadly, boosting your work percentage at a later stage can’t fill the existing gap, either.
Fortunately, the AHV payment, which everyone can access whether they are employed or not, is less affected. That said, because it is no longer possible to live on AHV payments alone, the second pillar pension amount is key. With this in mind, it is important to seek proper financial advice when planning for the future.
Useful resources
The Swiss Authorities Online – provides further information on the three pillars in the Swiss old-age pension system
The AHV pension amount is based not only on contribution years but also on income, with the maximum pension permitted by law being no more than twice the minimum pension amount. People whose average annual income across all contribution years was at least CHF 88,200 are entitled to the maximum AHV full pension.
The maximum AHV pension for individuals in 2021 is CHF 2,390 per month and CHF 28,680 per year. You can only claim this maximum AHV pension if you have paid into the scheme for 44 contribution years and have an average AHV income of CHF 86,040.
The amount of your pension depends on several factors, in particular: The number of years you have paid OASI contributions: if you have paid OASI contributions throughout your working life, you are entitled to a full pension. If you have missed contributions, you will receive a reduced pension.
You are entitled to a complete pension if you have a complete contributions record, i.e. if you have the same number of years of contributions as the people from your age class. For men this is 44 years and for women 43 years. If your contributions record is incomplete, you are only entitled to a partial pension.
Are Swiss OASI old-age pensions paid out even if the person lives in an EU or EFTA member state? Yes. Old-age pensions provided by the OASI scheme are also paid out to pensioners living in an EU or EFTA member state.
The median monthly new occupational pension was CHF 1701 in 2021. For men, the monthly median pensions were highest among those who received their first pension before the legal retirement age of 65 (CHF 2595), followed by new recipients over the age of 65 (CHF 1948).
You can have your 2nd pillar pension capital paid out early if you leave Switzerland for good. However, this is not possible if you are going to settle in an EU or EFTA country. If you make your new home in one of these states, you will be insured by law there for pension, disability and survivors' benefits.
In Switzerland, pension contributions into the pension systems are tax deductible in the year of the payment. In contrast, pension benefits are subject to taxation in the year of payout.
FAQs. Q1. How much money do you need to live comfortably in Switzerland? Answer- In most Swiss cities, a single person would need a net salary of 3,500 CHF per month to live comfortably, while a family of four would need a net salary of at least 9,000 CHF per month.
Anyone who has made continuous payments from age 20 until retirement for at least 44 years, and who has earned an average annual income of CHF 84,600 or more is entitled to a full pension. If the length-of-payment criterion is not met, payments are calculated in proportion to the years worked in Switzerland.
The term “401(k)” denotes a category of U.S. retirement savings which shares some features with the Swiss pillar 2a occupational retirement savings and pillar 3a private retirement savings categories.
If you are over the age of 55 and not working, you can apply for a residency permit. You must show proof that you are financially self-sufficient and have accident and health insurance. You must also have a tie to Switzerland, be that through family, property, business, or financial investment.
However, Swiss banks are some of the most secure and reliable banks in the world, and many people might consider keeping their accounts open even after they move to another country. Not only are they reliable, but Swiss accounts can often be used to hold a range of world currencies.
As long as you've paid enough National Insurance, you can claim your State Pension while living abroad. The main difference is that if the State Pension increases, you may not benefit from the extra amount if you're living in certain countries.
The Swiss Compensation Office provides the ESCAL website for all insured people resident in Switzerland or abroad. It can be used to calculate an online estimate of your old-age pension. This pension estimate is generated using a simplified calculation method and is based on the information given by the insured person.
With high public expenditure on pensions, and a strong percentage of the population paying into a pension, Finnish nationals can really make the most of their retirement.
The retirement age in Switzerland is 65 years for men and 64 years for women, although the retirement age for women will be gradually increased to 65 in 2025.
Swiss salaries are amongst the highest in the world which reflects the high cost of living and an attractive tax-rate. Switzerland has one of the most advantageous taxation systems in the world and although tax in Switzerland is not a one-size fits all situation.
Yes. As long as the property in question will be or is being used as your primary residence, you can withdraw Swiss pension fund benefits to finance a home purchase, mortgage payments, and renovations or alterations.
If you are planning to retire or live abroad, you may be concerned about whether you'll still be able to collect your Social Security retirement, disability, or survivor benefits. In most cases, the answer is yes.
In Switzerland, pension contributions reduce your taxable income, and therefore your overall Swiss tax liability. However, your pension distributions are taxed as income in retirement. Thus, when you retire and receive distributions, they will be fully taxed at your ordinary income tax rate.
If Switzerland has a social security agreement with the country where you live, your Swiss OASI pension will also be paid out abroad. If there is no such agreement, you will lose your entitlement to the Swiss OASI pension if you settle abroad permanently.
How retiring abroad affects your 401(k) or IRA taxes. Distributions from your 401(k) and pensions are still taxed as income, albeit they're treated as unearned income—meaning you won't be able to claim them under the Foreign Earned Income Exclusion.
If your pension is from a government job or a job worked in a foreign country, and you have not paid Social Security taxes for at least 30 years of Substantial Earnings, your benefit may be reduced. We refer to this reduction as the Windfall Elimination Provision, or WEP.
Pension payments, annuities, and the interest or dividends from your savings and investments are not earnings for Social Security purposes. You may need to pay income tax, but you do not pay Social Security taxes.
Price or value indications in foreign currencies are converted into Swiss francs. You can find the exchange rates here. If the total value exceeds CHF 300, you must pay VAT on the total value of the imported goods. Individual items worth more than CHF 300 are always subject to VAT.
You will owe federal income tax at your regular rate as you receive the money from pension annuities and periodic pension payments. But if you take a direct lump-sum payout from your pension instead, you must pay the total tax due when you file your return for the year you receive the money.
In Switzerland, annual salaries run from CHF 31,300 to CHF 553,000. Translated into euro, the average salary in Switzerland is between €32,000 and €564,000. In US dollars, that's a range from $35,250 to $622,900.
With a cost of living index of 139 all goods are on average about 39% more expensive than in the USA. But the average income in Switzerland of 7,550 USD is also 28% higher, which means that citizens can also afford more goods. Now you calculate the 39% higher costs against the 28% higher income.
Social insurance (base pension): 4.2% of gross earnings (old age and survivors) and 0.7% of gross earnings (disability). There are no maximum earnings used to calculate contributions.
Swiss citizenship offers numerous benefits, including access to a strong economy, political stability, the right to vote, visa-free travel to many countries, high-quality healthcare and education, a generous social welfare system, and a high degree of public safety.
Switzerland has a close-knit network of social insurance provisions, which covers the following five categories: pensions: old-age, survivors, and invalidity insurance (three-pillar system)healthcare benefits. maternity, paternity, and parental benefits.
Yes, US citizens can retire in Switzerland once they meet the requirements and criteria for obtaining a Switzerland Retirement Visa. As a US citizen, you must receive a visa from the Swiss consulate, and apply for a residence permit without gainful employment within two weeks of entering the country.
You may apply for a residence permit if you are above the age of 55 and not working. You must provide evidence of financial independence and accident and health insurance. You must also connect to Switzerland through family, property, company, or financial investment.
With 133,831 insured persons, BVK is the biggest pension fund in Switzerland. It is a foundation established under private law. Some 60% of its customers work for affiliated employers in the healthcare, education and administration sectors. The remaining 40% are employees of the Canton of Zurich.
If you have social security credits in both the United States and Switzerland, you may be eligible for benefits from one or both countries. If you meet all the basic requirements under one country's system, you will get a regular benefit from that country.
You will need to apply for a residence permit with the cantonal you plan to move to. Once you've entered the country, you go to the cantonal immigration and labor market authorities to register and receive your Swiss residence permit.
If you wish to settle in Switzerland without taking up gainful employment, you must apply for a residence permit from the cantonal immigration and employment market authorities. Depending on your nationality, you must also obtain a visa from the Swiss representation abroad.
Residents of almost any country worldwide can open Swiss bank accounts and Switzerland is indeed one of the most renowned countries when it comes to opening accounts for foreign nationals. A Swiss bank account still offers security and privacy.
That's because banks here tend to charge much higher fees than elsewhere. The fees that you might encounter in Switzerland include fees for opening accounts, initial due diligence, account maintenance, sending and receiving transactions, and foreign exchange.
The main benefits of Swiss bank accounts include low levels of financial risk and high levels of privacy. Swiss law prevents the bank from disclosing any information regarding an account (even its existence) without the depositor's permission, except in cases where severe criminal activity is suspected.
Unlike 401(k)s, pensions aren't portable. You can't move a traditional pension account to your new employer or into an IRA rollover when you leave a job. (A cash-balance plan, by contrast, allows you to take your money with you when you leave a job.)
Countries which grant tax exemption for the UN pensions whether it is paid as a lump sum or as a monthly income are: Argentina, Austria, Bahrain, Chile, India, Kuwait, Malaysia, Malta, Singapore, Saudi Arabia, UAE, Uruguay and Thailand. However, a different rule may apply to lump sum pension.
You can continue to get Universal Credit for up to 6 months if: you go abroad for medical treatment. you go abroad for a period of recovery that's been approved by a medical professional (also known as 'approved convalescence')
The maximum AHV pension for individuals in 2021 is CHF 2,390 per month and CHF 28,680 per year. You can only claim this maximum AHV pension if you have paid into the scheme for 44 contribution years and have an average AHV income of CHF 86,040.
The median monthly new occupational pension was CHF 1701 in 2021. For men, the monthly median pensions were highest among those who received their first pension before the legal retirement age of 65 (CHF 2595), followed by new recipients over the age of 65 (CHF 1948).
With 133,831 insured persons, BVK is the biggest pension fund in Switzerland. It is a foundation established under private law. Some 60% of its customers work for affiliated employers in the healthcare, education and administration sectors. The remaining 40% are employees of the Canton of Zurich.
In general, the annual benefit for a participant under a defined benefit plan cannot exceed the lesser of: 100% of the participant's average compensation for his or her highest 3 consecutive calendar years, or. $265,000 for 2023 ($245,000 for 2022; $230,000 for 2021 and 2020; $225,000 for 2019)
The maximum Social Security benefit in 2023 is $3,627 at full retirement age. It's $4,555 per month if retiring at age 70 and $2,572 if retiring at age 62. A person's benefit amount depends on earnings, full retirement age and when they take benefits.
Following Finland, the best countries for pensions are Poland and Sweden. Both boast an average retirement age of 65, below the average of 66, and Sweden has an impressive 100% rate of participation in funded pensions.
There are limitations to many parts of retirement plans. Under a defined benefit plan, there are limits to how much can be taken out as well as contributed. Certain 401 or 404 plans have annual compensation limits, and many plans are variable if an employer is involved with these contributions.
The annual limits are: salary deferrals - $22,500 in 2023 ($20,500 in 2022; $19,500 in 2020 and 2021 and $19,000 in 2019), plus $7,500 in 2023; $6,500 in 2020, 2021 and 2022 ($6,000 in 2015 - 2019) if the employee is age 50 or older (IRC Sections 402(g) and 414(v))
A pension plan is funded and controlled by the employer, while a 401(k) is primarily funded by the employee, who may choose how the money is invested. Some employers will match a portion of your 401(k) contributions.
You can take your whole pension pot as cash straight away if you want to, no matter what size it is. You can also take smaller sums as cash whenever you need to. 25% of your total pension pot will be tax-free. You'll pay tax on the rest as if it were income.
You can take money from your pension pot as and when you need it until it runs out. It's up to you how much you take and when you take it. Each time you take a lump sum of money, 25% is tax-free. The rest is added to your other income and is taxable.
You will owe federal income tax at your regular rate as you receive the money from pension annuities and periodic pension payments. But if you take a direct lump-sum payout from your pension instead, you must pay the total tax due when you file your return for the year you receive the money.
To acquire the full amount, you need to maximize your working life and begin collecting your check until age 70. Another way to maximize your check is by asking for a raise every two or three years. Moving companies throughout your career is another way to prove your worth, and generate more money.
Yes, retiring at 55 with $500,000 is feasible. An annuity can offer a lifetime guaranteed income of $24,688 per year or an initial $21,000 that increases over time to offset inflation. At 62, Social Security Benefits augment this income. Both options continue payouts even if the annuity depletes.
If you earned around $50,000 per year before retirement, the odds are good that a $300,000 retirement account and Social Security benefits will allow you to continue enjoying your same lifestyle. By age 55 the median American household has about $120,000 saved for retirement, and about $212,500 in net worth.
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