Listening: Social security and Swiss pension system
Swiss social security is split into three ‘pillars’, each with its own characteristics and goals that help retired people continue to finance their way of life after retirement.
Employers participate in the funding of most insurances with the exception of health insurance, which, unlike in the United States’ employer-based system, is financed by each insured person who pays premiums based on their age and where they live.
The Swiss pension system, structured around three pillars, includes Old Age and Survivors/Disability Insurance (OASI/DI), an occupational pension plan, and private investment options.
First pillar of the Swiss pension system
The first is a state pension plan that consists of various insurance schemes such as the Old Age and Survivors InsuranceExternal link (OASI), Disability Insurance, and Unemployment Insurance. OASI and disability insurance are mandatory for all Swiss residents.
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Are Switzerland’s pensions too high?
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The Swiss are nation of happy pensioners, but the country’s social security system is in danger of collapse.
Men and women in Switzerland are entitled to an old-age pension at the age of 65. This follows a national vote in 2022, in which Swiss citizens decided to standardize the retirement age for both genders. Previously, women were eligible for a pension at 64. In a historic vote in 2024External link, Swiss voters approved a popular initiative introducing a 13th monthly pension payment under the state pension scheme.
The Swiss pension system is based on a pay-as-you-go model: the working population finances the pensions of the retired. Pension payments can begin one or two years earlier, though this results in a reduction. Alternatively, payments can be deferred by up to five years, which increases the monthly amount depending on the number of months postponed.
In some cases, beneficiaries of old-age pensions may also receive a pension for a child and/or for their spouse.
For basic facts on disability insurance please go hereExternal link.
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Swiss pension reform: the latest changes
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The pension reform promises more flexibility. A look at the latest changes.
The second pillar is based on occupational pension plans and accident insurance. Employees who earn more than CHF21,150 a year are automatically insured by a second pillar pension fund. Pension plans and accident insurance have been mandatory for all employees for more than 25 years. The self-employed can join on a voluntary basis. When combined with the first pillar benefits, a person could expect to earn about 60% of their final salary after retirement to help maintain their standard of living.
Self-employed persons, wage-earners with an employment contract whose duration does not exceed three months, family members on a farm, or persons who, according to the disability insurance scheme, have a disability of at least 70% may optionally contribute to second-pillar schemes but are not required to do so.
The third pillar of the Swiss pension system is a private, individual option that workers can use to help make up the remainder of their income not covered by the first two pillars. Such schemes are also protected by law and often offer tax advantages. These typically take the form of a retirement savings account (with tax breaks) or a flexible savings account (few if any tax breaks).
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Many women in Switzerland work part time or not at all, often resulting in a small pension that is not enough to live on.
All workers in Switzerland who have not yet reached retirement age are insured against unemployment. Contributions are split between the employer and the employee. To receive payments, the following conditions must be met:
Have been employed for at least 12 months within the two years prior to requesting benefits.
Have Swiss residency and a work permit.
Be registered with the regional unemployment office.
Be actively looking for a job.
Unemployment benefits typically amount to about 70% of your average wage over the last six months to a year. Average wages are capped at CHF12,350 a month. You must have made at least CHF500 a month to qualify. Insured persons with children may receive 80% of their average salary.
Unemployment insurance is one of several key components of Switzerland’s broader social protection system, which also includes the Swiss pension system.
Purchasing basic health insurance is compulsory for everyone residing in Switzerland. Since basic health insurance premiums are not tied to income, Swiss authorities subsidise those who have trouble making the payments. For more information, please see section on Daily Life, Insurance, Health.
Bilateral agreements
Switzerland has concluded bilateral and multilateral social security agreements with EU and EFTA states, as well as 15 other countries. These social security agreements determine the rights and obligations of citizens in relation to the social security system of another signatory state. The aim is to ensure the equal treatment of citizens from both Switzerland and the other state. For more information on agreements with specific countries, see this official publicationExternal link.
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at [email protected].
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‘Antisocial’ tax policies blamed for growing wage gap
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In its latest report on wealth distributionExternal link, published on Wednesday, the federation highlighted a growing income gap. “The hope that, following the financial crisis, the wage excesses of top earners would be corrected has been shattered,” said the federation’s economist Daniel Lampart. “Although low and medium wages have increased, higher taxes have almost completely…
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This is below the European Union average for social spending of 28% of GDP. The main share of the spending, CHF46.7 billion, went towards healthcare. A further CHF14.6 billion was spent on disability benefits, according to provisional results from 2014 published on Friday by the Swiss Federal Statistical Office. Compared with the previous year, inflation-adjusted…
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Concerns about the country's old age pension scheme and health insurance coverage were high on the agenda of the most recent assembly of the Swiss Abroad Council. The delegates, meeting on the shores of Lake Lucerne, raised a series of practical problems.
“Social security issues have been a recurring topic for the Organisation of the Swiss Abroad (OSA), just like e-voting or problems for many expats to open a bank account in Switzerland,” said OSA co-director Ariane Rustichelli during Saturday’s meeting in Brunnen.
Since a reform of the old age pension system is underway in the Swiss parliament, the expat assembly focused on a voluntary scheme for Swiss citizens living outside the European Union or the countries of the European Free Trade Association (EFTA).
Currently, 14,000 people from outside the EU/EFTA – or 5% of the total number – benefit from the voluntary old age pension scheme, according to the Federal Social Security Office.
In giving a short history of the voluntary state pension scheme, Roberto Engeler, a leading member of the OSA, conceded flaws in the system since its beginning in the late 1940s.
“Reforms of the scheme were introduced at the expense of the weakest members of society or those who temporarily live outside Switzerland and miss out on regular contributions,” he added.
“The problems are increasing,” he warned and called on the government to consider possibilities for a voluntary old age pension scheme regardless of the country of residence of the Swiss expats.
Reforms
Jürg Brechbühl, director of the Social Security Office, said a revision of the voluntary scheme could be tackled once the mandatory state old age pension scheme was successfully reformed.
Parliament agreed to overhaul the voluntary system in 2001 because of Switzerland's bilateral treaties with the EU, notably limiting the circle of beneficiaries and increasing the rate of contributions.
However, Brechbühl acknowledged that efforts were necessary to improve cooperation with other countries and between the different pension systems, especially when it comes to simplifying the control mechanism.
“It won’t be easy and it will take time,” he cautioned.
The voluntary pension scheme ran up a deficit of CHF37 million ($38.2 million) last year, mainly because the financial payments made exceed the amount of contributions, as Brechbühl explained.
Health insurance
Delegates taking part in workshops at the Swiss Abroad Council also identified a series of problems with health insurance coverage.
Some participants wondered why health insurance premiums for expats are so much higher than in Switzerland. Others pointed out practical problems for Swiss citizens returning to Switzerland at retirement age.
There were also questions about apparent difficulties with having additional health insurance coverage or with finding specific information about insurance schemes in other countries.
In response to the questions, Olivier Peters of the Federal Health Office said Switzerland’s mandatory health insurance coverage was very good compared with other countries. He assured the delegates the government had to plans to change the existing system for the Swiss living abroad.
Anniversary marked
On Saturday, the Swiss Abroad community also celebrated the 25th anniversary of the Swiss expat square in Brunnen on Lake Lucerne.
Set up in 1991, the 5,400 square metre open park site opposite the Rütli meadow is meant to show the affiliation of the Swiss Abroad to their home country.
Swiss President Johann Schneider-Ammann opened a special exhibition of posters telling the lives of Swiss emigrants.
The board of the foundation in charge of the site also awarded Swiss-Australian illustrator and author Lucienne Fontannaz-Howard a one-month grant as artist in residence.
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The previous year, 2014, also saw greater costs than revenues, but the better investment performance meant a total loss was avoided. Compenswiss, the Swiss Federal Social Security Funds, blamed unfavourable market conditions. The scrapping of a franc-euro exchange rate ceiling by the Swiss National Bank (SNB) on January 15, 2015, had a negative effect, it…
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