AHV: continue to pay in during a stay abroad

The dream of living and working abroad is as popular as ever. In 2023, for example, almost 122,000 Swiss citizens emigrated. It doesn’t always have to mean transferring your permanent domicile though. Longer trips, language stays, studying, sabbaticals and working abroad temporarily are also very popular.

Many people with a desire to travel tend to forget about their pension provision for the time they are away amid all the euphoria and planning. But this can be disastrous, as there is only a limited period to close gaps in AHV pension provision.

Whether a stay abroad really leads to a pension gap depends on various factors. One thing is clear: with a little planning and foresight, a gap can be avoided. In general, all Swiss citizens domiciled in Switzerland under civil law are obligated to pay in to the AHV pension. This also applies if you travel abroad for a certain period but retain your domicile in Switzerland. If you don’t work during this period, you are obligated to pay AHV contributions of at least CHF 514 per year (as of 2024). Failing to pay this can quickly result in a contribution gap, which may mean a lower pension when you retire.

If you are married or in a registered partnership, you are exempt from the obligation to pay contributions provided your spouse or registered partner is gainfully employed under the AHV and pays in at least CHF 1,028 per year – i.e., twice the minimum amount.

Contact your AHV compensation office to find out which rules apply to you. Find out the current status of your AHV pension provision either before or after your trip. All unpaid contributions can generally be paid within five years. After that, it’s not as easy to close a pension gap.

When your employment relationship ends or you start unpaid leave, you also no longer pay in to your pension fund. The only exception to this is a sabbatical. During unpaid leave, you are still employed by your employer and your payments to the second pillar may continue depending on your pension fund. However, you may also have to pay the employer’s contributions in addition to your own. Check the exact rules with your employer or pension fund in advance.

If you don’t keep your pension fund for the duration of your stay abroad, the retirement assets you’ve already saved must be transferred to a vested benefits account. This enables you to park your pension assets from the pension fund temporarily or until you reach the reference age.

All gaps in your pension fund can be closed by making voluntary purchases until you retire. You can find out how high your purchasing potential is in your pension fund statement. In order to act quickly, you should request it directly after your stay abroad.

Your pillar 3a account needs the least action, and you can continue to maintain it as usual. However, as soon as you do not earn income on which AHV contributions are compulsory, you will no longer be able to pay in to this account. If you invest your assets in an investment fund during your stay abroad, you increase the chances of maximizing returns.

In addition to ensuring your pension provision is continued, there are many other aspects to consider when planning your stay abroad. Our checklist gives you an overview.

All Swiss students have an obligation to pay AHV contributions from 1 January after they turn 20. Until the end of the calendar year in which they turn 25, they pay the minimum contribution of CHF 514 and an administrative premium if they are not gainfully employed in addition to their studies.

But what happens if you go abroad to study? If you give up your domicile in Switzerland to study abroad, you can generally have mandatory AHV insurance until 31 December of the year in which you turn 30. However, this only applies if you’re not gainfully employed abroad and intend to return to Switzerland after completing your studies. Similarly, foreign students who move to Switzerland to study are also subject to contributions.

The exact nature of the obligation to pay contributions should always be clarified with the respective cantonal compensation office.

The obligation to pay AHV contributions is only waived for students who are already married if their spouse pays twice the minimum contribution.

Many Swiss people are uncertain about what happens to their pension provision if they live abroad but work for a company in Switzerland. As a rule, there are no major challenges in this respect, and employees are still integrated into the pension system as normal. However, this only applies if they work for a Swiss company. In EU and EFTA countries, Swiss citizens are considered to be “seconded” and their status is very clearly regulated. Other regulations apply to foreign companies with a branch in Switzerland.

In order to be completely certain, you should nevertheless clarify whether a social security agreement applies in your destination country. Only then can you continue to be insured as normal – provided you have paid the standard contributions to the AHV for at least five years prior to your secondment.

Your occupational pension provision is also maintained if you still have your employment contract with your current employer during your stay abroad. If the obligation to pay AHV contributions has expired, you are no longer permitted to take out voluntary insurance as part of the second pillar.

You should plan carefully beforehand so that you can enjoy your stay abroad to the full. Unfortunately, many travelers forget to include pension provision in their planning. And yet gaps in your state pension can arise quickly and you only have a certain amount of time to rectify this.

You should also think about the second and third pillars. The situation in all three pillars with regard to safeguarding your pension during a stay abroad varies from case to case. Will you travel without working? Are you studying abroad or exploring the world during a sabbatical? With the right planning and sufficient prior knowledge, you will gain valuable experience abroad and not have any pension gaps when you return.