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Investment in Switzerland
11 Social security system
Social security in Switzerland Social security in Switzerland is governed partly by federal and/or cantonal law and partly by collective employment agreements. Participation in the federal social security program is compulsory for all persons, whether employed or selfemployed. With regards to retirement benefits, it is customary in Switzerland to speak of a three pillar system. The first pillar refers to the Federal Old Age and Survivors (AHV) and the Disability Insurance (IV), the second to the occupational retirement and disability pension schemes (BVG), and the third to the employee’s own savings efforts (life insurance or bank savings). Additionally, these insurances are supplemented by accident insurance, unemployment insurance, health insurance and the so-called income replacement order and maternity benefits (EO) as well as family allowances. Switzerland has concluded social security treaties with many countries. Providing certain conditions are met, exemption is available for a certain period from the Swiss social security system if an employee continues to contribute to his/her home social security system. Please note that special regulations apply to individuals from countries from the European Union. The table below provides an overview on the contributions of the most important social insurances.
Insurance
Contributions (2012)
Federal Old Age and Survivors, Disability Insurance and the income replacement order and maternity benefits (AHV/IV/EO) The Federal Old Age and Survivors provides old-age benefits or benefits to dependents. The benefits depend on the previous income level and the amount of time for which contributions were made. The disability insurance aims to help integrate/re-integrate persons to the workforce who are disabled due to birth defects, illness or accidents. The EO covers maternity benefits and also compensates part of employee's salary during military service or civil defence. All persons are obliged to contribute as of 1 January following the year of the eighteenth birthday.
Basis: earned income The maximum rates apply for a annual income of at least CHF 55,700 and amount to: Employer
Employee
Self-employed
AHV
4.20%
4.20%
(max.) 7.80%
IV
0.70%
0.70%
(max.) 1.40%
EO
0.25%
0.25%
(max.) 0.50%
Total
5.15%
5.15%
(max) 9.70%
Pensions: The old age pension varies between CHF 13'920 and CHF 27'840 for singels and between CHF 20'880 and CHF 41'760 for married couples.