Old-age insurance in Switzerland is based on a system of three pillars.
Credit Suisse offers a pension calculator to help estimate benefits.
The basic state old-age and survivors' insurance scheme is called AHV/Alters- und Hinterlassenenversicherung. It is intended to secure a basic livelihood. Like so many countries, Switzerland faces a rising gap between total contributions and payouts.
Contribution is obligatory for all employees, self-employed and unemployed over 20 years old. The payments are split equally between employer and employees and are directly deducted from the salary. Contributions to the basic schemes are about 10 percent of gross salary for employees.
The program is open to Swiss citizens and residents and you must have lived in Switzerland for at least 180 days a year. Men must be 65 and older; women must be 64 and older. They must have contributed towards the scheme for at least one full year.
Ten years of coverage is required if neither a citizen nor a resident of Switzerland.
The pension is calculated on the basis of the relative average income and the number of years the person has contributed. Income is made up of total earned income plus bonuses for child-rearing and care-taking. The income which spouses have earned during their married life is split and 50 percent is credited to each spouse. The contribution made by spouses not employed outside the home is converted into income.
If you have not paid into the scheme for the full period, a proportion of the full pension may be drawn. Early retirement allows a pension to be drawn at an amount reduced between 3.4 and 6.8 percent for each year of early withdrawal. If you prefer to draw retirement later, a pension can be drawn within any period up to five years after the retirement age with the amount increasing by over 5.2 percent or more per year.
Switzerland has bilateral pension agreements with more than 20 countries, including all Western European countries. For those who are moving to Switzerland temporarily, you may be exempted from contributing to the basic scheme. Enquire at your company. Information regarding foreign nationals of states outside the EU / EFTA can be found at the Federal Social Insurance Office(FSIO) and the Federal Office for Migration (FOM).
Foreign nationals living in Switzerland have the same rights and responsibilities in terms of social security as Swiss nationals. If they are subject to the bilateral social security agreement, they may also receive their Swiss old age insurance pension payments in their country of origin once they return home. In this case, your pension entitlements cannot be transferred to another pension system after leaving Switzerland and aren't refundable.
Foreign nationals from countries with which Switzerland has not concluded a social security agreement, may request a refund of their contributions when they permanently leave Switzerland.
Standard old age and invalidity pensions can be transferred to any country of residence unless this is contrary to the regulations of the country of residence. Payment is made by the Swiss Compensation Fund, and in some cases also by the Swiss embassy or consulate. Supplementary payments not subject to contributions (supplementary benefits / benefits for those in need of constant care) cannot be transferred abroad.
Company pension funds are the base of the occupational benefit plan (Berufliche Vorsorge/BV(G) or Prevoyance Professionelle/PP). This is the second pillar of the pension system and is required for employed persons only.
All employees with an annual income over CHF 19,350 are obliged to pay contributions to the scheme. Contribution is optional for self-employed and those who do not qualify in terms of earnings. The insurance scheme can be run by a company pension, state or private fund. Total contributions increase with age and amount to 7-18 percent of gross salary.
The system stipulates a minimum level of benefits to be provided by all employers. However, many large employers offer benefits that go beyond the prescribed minimum as a benefit.
Both employee and regular employer contributions are tax deductible. Special employer contributions above the normal annual contribution are also tax deductible. The extent to which such additional contributions are possible depends on the actual circumstances, with five times the regular contribution as a reference figure.
Men can withdraw a PP pension at the age of 65, women at the age of 63. Pensions are calculated as a percentage of your accumulated credit, which is made up of contributions and interest. You are entitled to a full pension if regularly payments into the fund have been made from the age of 25 until retirement. It is possible to draw a pension before reaching retirement age if the regulations of the pension fund allow this.
The second pillar includes the basic pension scheme and together, the two pillars cover 60 percent of a person's final salary.
Benefits are normally paid in the form of an annuity. Death and disability benefits are also provided.
A lump-payment of contributions and interest can be paid in some cases.
The individual occupational pension scheme is the 3rd pillar. It is a privately-financed personal provision and is voluntary. It offers tax advantages and can be used as a means of closing pension gaps. This type of insurance subsidy is intended for gainfully employed persons who are domiciled and taxed in Switzerland.
Contributions are deducted from taxable income and only taxed at the time of payment. Interest on contributions is not taxed. If you belong to a pension fund, you can deduct up to CHF 6,566 per year from your taxable income. If you do not belong to a pension fund, you can pay an amount of up to CHF 32,832 per year into a third pillar pension fund.
The amount of pension paid depends on the chosen type of policy. There is a maximum amount of contributions that are deductible from income. This depends on salary and contributions to other insurance schemes.
Benefits can be claimed at 61 years of age for a man and at 60 for a woman. At the latest, benefits can be claimed by the age of 66 for a man, and by 65 for a woman. If you can prove that you are still gainfully employed, you can postpone the payout up to a maximum of five years after reaching the official old age pension retirement age. An early payout is also possible if you become self-employed, buy residential property or if you leave Switzerland.
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