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Occupational Retirement Pension

An occupational pension is intended to complement the state old-age pension (AHV) and invalidity insurance (IV) which only provide a basic living allowance. The majority of the funds goes towards paying for retirement pensions.  Employees and employers make equal contributions.

Who is eligible?

Occupational insurance is compulsory for people in paid employment who receive an annual salary of 19,890 CHF or above (1,658 CHF per month). Employees earning less are not covered by their employer. 

 

Any person over 17 years of age and earning the above amount or more must be insured. For the first years, the contributions only cover death and invalidity; over the age of 25, the worker also contributes to a retirement pension.  

 

Please note
Certain groups of people are not covered :
-- employees on short term contracts (les than 3 months)
-- freelance and independent business people
-- family members working in a family business
-- people receiving Invalidity Insurance with an incapacity deemed 70% or more

 Contributions?

Age
% of the salary
25 to 34
7 %
35 to 44
10%
45 to 54
15%
55 to retirement
18%

 

Only part of the salary must be insured: below 19'891 CHF and above 79'560CHF there is no obligatory cover.   Some insurance company regulations allow voluntary contributions for the remaining parts of your salary. 

 

An additional 3,315CHF per year is excluded from payments (to allow good coordination of AVS and pension payments), so the insured earnings are those above 23,205CHF.

 

An example
If you earn 60,000 CHF per year, your insured salary is 36,795CHF. This is the amount used to calculate your contributions. 
 
People who earn between 19,890 and 23,205 are insured on the basis of an annual revenue of 3,315CHF.

Premiums

Occupational pension funds are subsidised collectively. Employers pay at least half of the contributions.   The other half is automatically deducted from employees’ salaries and both parts are placed in the employer’s pension fund.

Retirement age

The legal retirement age in Switzerland is fixed at 65 for men and 64 for women. In terms of occupational pensions, early retirement is possible only if the insurance fund allows it. The minimum retirement age is fixed at 58 years old.  

 

Please note
In case of early retirement, payments rates are reduced because, in theory, the pension fund is not complete. Find out the consequences of an early retirement before making a decision!

Payments?

The pension received from an occupational plan depends on the individual savings accumulated. The more you save, the more you will receive on retirement. The accumulated capital provides an annual pension payment. Today, men receive 7.05% of their accumulated capital and women receive 7.1%. This rate is under review and is being progressively reduced to 6.8% for men and women.

 

An example
If, during your working life, you have saved 100,000CHF, you will receive an annual pension of 7,000CHF per year, or a monthly payment of 580CHF. 

Capital payment

Under certain conditions, you can request for a lump-sum payment of a quarter of your accumulated capital.   You can also request a full payment in place of an annual pension if the total of your capital is less than 10% of the state retirement pension.  

 

Please note
You must respect the notice period fixed by your pension fund when you ask for a capital payment.

 

Recommendation
Get specialist independant advice before deciding to take lump-sum payment from your occupational pension.

In this section: Occupational retirement pension, Retirement provisions, Old-Age and Survivor's insurance