Pension system in Switzerland
The Swiss pension system rests on three pillars: the Federal Old-age, Survivors' and Invalidity Insurance (1st pillar), the occupational pension scheme (2nd pillar) and private pension schemes (3rd pillar). The first pillar is a PAYGO system, the second and the third are funded pension plans.
The basic pension insurance is known as Alters-, Hinterlassenen- und Invalidenversicherung (AHV) in German, Assurance vieillesse et survivants (AVS) in French and Assicurazione vecchiaia, superstiti e invalidità (AVS) in Italian.
According to article 112 of the Swiss federal Constitution, the first pillar should cover basic living expenses adequately. It is a PAYGO system, financed by contributions from employees and employers (4.2% of the employee’s income each), from the self-employed (7.8% of their income) and from the people not engaged in paid employment (between 392 and 19600 CHF a year in 2013). The authorities also contribute via direct funding, VAT and the revenues of the tax on gambling clubs. People’s contributions are collected and benefits are distributed by different bodies, some managed by the cantonal or federal authorities, some managed by union of employers, like the Fédération des Entreprises Romandes Genève.
The first pillar provides old age pensions as well as benefits for widowers and orphans.
The ordinary age of retirement is 65 years for men, 64 for women. It can be anticipated or postponed, with financial consequences.
The occupational pension scheme is known as Berufliche Vorsorge in German, Prévoyance professionnelle in French and Previdenza professionale in Italian. In daily life, it is more oftened referred to as “the second pillar” (German: die Zweite Säule, French: le deuxième pilier, Italian: il secondo pilastro).
According to article 113 of the Swiss federal Constitution, “the occupational pension scheme, together with the Old-age, Survivors' and Invalidity Insurance, enables the insured person to maintain his or her previous lifestyle in an appropriate manner”.
It is a funded pension plan. It is compulsory for employees and is financed by both employees and employers. The sum of the contributions of the employer should be at least equal to the sum of the contributions of his employees.
It is also opened to the self-employed on a voluntary basis. The contributions differ according to the regulations of the institutions providing it. Pension funds are organised as foundations. They can be created by authorities or private corporations for their own personnel, by private companies, like insurance companies, and be opened to any company, or by professional associations or union of employers, like the Fédération des Entreprises Romandes Genève, for their members.
The second pillar offers old age pensions. Some of the pension funds also provide benefits in case of invalidity and benefits to survivors in case of premature death. Under certain conditions, the second pillar can be used before retirement to buy a principal home or to start an independent activity.
The third pillar consists of private pension schemes provided by the private sector. It is optional and financed entirely by the person.
- "Federal Constitution of the Swiss Confederation". Swiss Confederation. Retrieved 2013-09-28.
- "Overview of Swiss Social Security". Swiss Confederation, Federal Social Insurance Office. Retrieved 2013-09-28.
- "Caisses de compensations / Offices AI – vos contacts". Retrieved 2013-09-28.
- title=Age flexible de la retraite | publisher=Centre d'information AVS-AI and Office fédéral des assurances sociales
- Occupational pension in Switzerland
- Overview of the Swiss social security system
- Website of the Swiss Confederation about the first pillar