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OASI reform in force since January 2024
What impact will OASI 21 have on my personal pension planning? Read our article to find out what you need to know about the pension reform and what will change, especially for women.
Content:
New regulations have applied to OASI pensions since 1 January 2024. For women, the age from which it is possible to start drawing a pension without any deductions has changed, and they now have more flexibility in relation to retirement benefits. As well as bringing changes for women, the measures introduced will ensure the secure financing of the OASI system until 2030.
The old-age and survivors’ insurance (OASI) was introduced in 1948. Its aim is to safeguard basic income in old age and to pay benefits in the event of death. OASI is part of the state pension system, which also comprises invalidity insurance (IV) and supplementary benefits (EL) for those in need. It represents pillar 1 of the 3-pillar principle that makes up the Swiss pension system.
OASI is compulsory for everyone who lives or works in Switzerland. The obligation to pay contributions begins on 1 January after a person’s 17th birthday (employed persons) or 20th birthday (non-employed persons).
The employer is responsible for settling OASI contributions. Employers and employees share the premiums, each paying half the total amount due. You will receive the highest possible OASI pension if you have an average annual income of just under 90,000 francs and continue to pay contributions without any interruptions. If you haven’t paid OASI contributions for a while, for example because you have spent time abroad, you have five years to make up for the missing payments. Pensions are not received automatically, but on application. You simply need to contact the compensation office five to six months before retirement.
The state pension system involves solidarity-based redistribution, for example from men to women, from high earners to people on low incomes, and from people born in years with a low natality rate to “baby boomers.” This means that some population groups pay more into OASI for the benefit of others than they receive themselves.
When you think about your retirement, you are faced with some important decisions. Let’s draw up a plan together based on your personal wishes, so that nothing stands in the way of a relaxed financial future.
OASI is a contribution-based system. The current working generation is directly financing pensioners. Contributions are paid out directly, not saved. As a result of demographic trends, the number of contributors in relation to the number of recipients has been falling for years. In 1960, the ratio of working people to retired people was 6:1, currently the ratio is 4:1 and in 2050 it is expected to be 2:1.
This creates a funding problem that will continue to worsen if nothing is done about it. This gap is one reason for the OASI 21 reform, which was approved by popular vote in 2022.
The aim is to protect OASI funding until 2030 by introducing a series of individual measures. This does not eliminate the long-term funding problems, which are growing due to demographic change. However, these measures will reduce the existing funding gap between the pensions promised by the state and the expected revenue by more than a third. This will stabilize the OASI system.
The core element of the reform is the harmonization of the reference age for women with that of men at 65. The term “reference age” is now used instead of “normal,” “legal” or “statutory” retirement age. This refers to the first possible year in which a full pension can be drawn. The shift from 64 to 65 for women is the first increase in the OASI age threshold in 25 years.
The reference age for women will be increased gradually. The first increase of 3 months for women born in 1961 will take place on 1 January 2025. One year later, the next increase of 3 months will follow for women born in 1962. Another year later, the next cohort can take normal retirement at the age of 64 years and 9 months. From the beginning of 2028 and the 1964 cohort, the reference age of 65 will apply to all other cohorts.
Year of birth | Year of birth | Reference age for retirement | Reference age for retirement |
|---|---|---|---|
Year of birth | 1960 | Reference age for retirement | 64 years |
Year of birth | 1961 | Reference age for retirement | 64 years + 3 months |
Year of birth | 1962 | Reference age for retirement | 64 years + 6 months |
Year of birth | 1963 | Reference age for retirement | 64 years + 9 months |
Year of birth | 1964 | Reference age for retirement | 65 years |
Women born between 1961 and 1969 form the transitional generation. Compensatory measures have been introduced for the first nine new pension cohorts because the change in reference age often alters people’s plans in life. The compensation will apply to women who start drawing a pension before the reference age and who have a standard retirement date:
Women who will soon be retiring are particularly affected by the gradual increase in the reference age. Women born between 1961 and 1969 will therefore receive lifelong pension supplements to compensate.
Year of birth | Year of birth | Reference age for retirement | Reference age for retirement | Monthly pension supplement (as a % of the basic supplement) | Monthly pension supplement (as a % of the basic supplement) | Pension supplement per month (example for average annual income < 60,480 francs) | Pension supplement per month (example for average annual income < 60,480 francs) |
|---|---|---|---|---|---|---|---|
Year of birth | 1961 | Reference age for retirement | 64 years | Monthly pension supplement (as a % of the basic supplement) | 25% | Pension supplement per month (example for average annual income < 60,480 francs) | 40 francs |
Year of birth | 1962 | Reference age for retirement | 64 years | Monthly pension supplement (as a % of the basic supplement) | 50% | Pension supplement per month (example for average annual income < 60,480 francs) | 80 francs |
Year of birth | 1963 | Reference age for retirement | 64 years | Monthly pension supplement (as a % of the basic supplement) | 75% | Pension supplement per month (example for average annual income < 60,480 francs) | 120 francs |
Year of birth | 1964 | Reference age for retirement | 65 years | Monthly pension supplement (as a % of the basic supplement) | 100% | Pension supplement per month (example for average annual income < 60,480 francs) | 160 francs |
Year of birth | 1965 | Reference age for retirement | 65 years | Monthly pension supplement (as a % of the basic supplement) | 100% | Pension supplement per month (example for average annual income < 60,480 francs) | 160 francs |
Year of birth | 1966 | Reference age for retirement | 65 years | Monthly pension supplement (as a % of the basic supplement) | 81% | Pension supplement per month (example for average annual income < 60,480 francs) | 130 francs |
Year of birth | 1967 | Reference age for retirement | 65 years | Monthly pension supplement (as a % of the basic supplement) | 63% | Pension supplement per month (example for average annual income < 60,480 francs) | 101 francs |
Year of birth | 1968 | Reference age for retirement | 65 years | Monthly pension supplement (as a % of the basic supplement) | 44% | Pension supplement per month (example for average annual income < 60,480 francs) | 71 francs |
Year of birth | 1969 | Reference age for retirement | 65 years | Monthly pension supplement (as a % of the basic supplement) | 25% | Pension supplement per month (example for average annual income < 60,480 francs) | 40 francs |
There is now much more flexibility for starting retirement than under the previous regulations. Instead of being able to retire just one or two years before the standard retirement age, it is now possible to retire in any month between the ages of 63 and 70. In addition, you can now draw a partial pension instead of the full OASI pension in a maximum of three stages. If you retire before the reference age, a deduction applies; if you retire later, a supplement is added.
The OASI 21 reform offers incentives for people who work longer. For example, you can reduce your working hours after the reference age and make up the shortfall in income with part of your old-age pension. In addition, anyone who remains in employment after the reference age can voluntarily waive the personal allowance of 1,400 francs, and choose to pay OASI contributions on their total earnings. On request, these contributions will then be taken into account for calculating their pension. This can close earlier contribution gaps and increase the OASI pension.
Anyone who continues to work after the age of 65 and is not yet 70 can request the recalculation of their pension from 1 January 2024. However, you should only do so if you have given up gainful employment completely or considerably reduced your working hours. This will ensure that you achieve the best possible increase in your pension.
As a result, employees will be able to optimize their pension beyond the reference age and gain financial advantages.
The OASI 21 reform will also strengthen the funding of the OASI system. VAT was increased on 1 January 2024 to provide additional financing. The standard rate rose – for an unlimited period – from 7.7 to 8.1 percent, while the reduced rate rose from 2.5 to 2.6 percent.
The free UBS Pension Check gives you a reliable overview of your current financial situation. Based on the results, you can optimize or increase your private retirement savings.
What does the reform mean for my pension? This question is especially important for women in the transitional age groups. It also affects people who want to continue working and have to decide whether to waive their pension allowance and when to ask for their pension to be recalculated. The younger generations are also impacted by the changes, such as the new retirement age and more flexible rules for advance withdrawal.
Even if the reform has stabilized the financial situation of the state pension system for the coming years, personal responsibility is becoming increasingly important for future pensioners.
A comprehensive pension check can help you to obtain a full overview of your situation.
Insured persons receive a pension fund statement once a year. If you understand the information in it correctly, you can optimize your occupational pension for old age and the event of death or disability.
If you have gaps in your OASI contributions, you will receive a lower pension when you retire. But how do these gaps arise? And what can you do about them?
How can you obtain the maximum OASI pension? Learn about the conditions and how you can close possible contribution gaps before you retire.
Arrange an appointment for a nonbinding consultation, or if you have any questions, just give us a call.
Disclaimer
This publication is for personal information purposes only within Switzerland and is not to be understood as a recommendation, offer or solicitation of an offer for investment or other specific products and services. It is not intended to form investment, legal or tax advice and should not be used as the basis for financial decisions. Before making a decision, you should obtain professional advice.
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