Tips for immigrating
Moving to Switzerland: key information about pensions
Retirement planning is a key issue when it comes to moving to a new country like Switzerland, so it’s best to inform yourself about the Swiss pension system and its specifics beforehand.
Content:
Content:
- Immigrants must familiarize themselves early with the 3-pillar system of retirement provision in Switzerland.
- Existing pension entitlements from your home country remain intact if a social security agreement exists between the country of emigration and Switzerland.
- In addition to pillars 1, 2 and 3, which aim at securing your finances in old age, there are other relevant insurances.
- To the conclusion
According to the Federal Statistical Office, a total of 181,553 people joined the permanent foreign resident population of Switzerland in 2023 (influx). There are many reasons to move to Switzerland. However, the most common is the desire to work there. Upon immigration, migrants receive many rights, but of course, they also have obligations.
The pension system in Switzerland is based on three pillars. It includes a mandatory state and occupational pension as well as voluntary private retirement savings. These three pillars are coordinated, complement each other and provide financial support in the event of disability, retirement or death.
Pillar 1: state pension
Those who are gainfully employed in Switzerland must pay contributions into the old-age and survivors’ insurance (OASI) – also known as pillar 1 – from 1 January following their 17th birthday. 5.3 percent of gross salary is withheld directly for this purpose (as of 2024). The employer tops up this payment by the same amount.
The financing of state pensions is based on the pay-as-you-go system. In addition to retirement benefits, the risks of disability and death are also covered. The amount of the OASI pension depends on the number of contribution years and the respective contribution amount.
For self-employed individuals, the contribution amount depends on their income. Above an earned income of CHF 58,800, the contribution rate is 10 percent of the total income (as of 2024).
- New residents are automatically insured under the state pension scheme.
Anyone moving to Switzerland from abroad is – like all Swiss citizens – automatically subject to compulsory OASI insurance, with only a few exceptions. Persons between the ages of 21 (18 if employed) and retirement age must pay contributions. Women in Switzerland can retire at 64, men at 65. From 2025, the reference age for women will be gradually increased from 64 to 65 years, so that by 2028 it will also be 65 for women. - When immigrating to Switzerland, the Central Compensation Office OASI/IV assigns a lifelong OASI number, which serves as a social security number.
Plan your retirement at an early stage
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.
Pillar 2: occupational pension
Employees who earn more than CHF 22,050 per year (as of 2024) must by law be insured by their employer within the occupational pension scheme. Depending on their age, salary and pension fund, a certain percentage is deducted from their salary. The employer also pays a contribution.
An occupational pension is a personal savings account that earns interest. The annual pension fund statement and the regulations provide information about the current balance and the potential benefits in case of old age, disability or death. Nowadays, many pension funds also have an online portal that lets you access your data via your own user account.
To improve your occupational pension, you can also make voluntary contributions into your pension fund. These pension fund buy-ins allow you to save on taxes because they are generally deductible from your taxable income.
For immigrants who have never been part of a pension fund, an upper limit applies. In the first five years, they may voluntarily contribute up to 20 percent of their insured income annually and claim it as a tax deduction. If you are subject to withholding tax and earn less than the threshold set by the canton (usually CHF 120,000 gross salary per year), this is only possible if you apply for a regular tax return procedure. Whether this is worthwhile must be calculated individually, as this entails a tariff change and you are then subject to regular taxation and no longer to withholding tax.
Worth knowing
The pension fund is tied to the employer. A job change within Switzerland usually requires switching pension funds as well. The accumulated balance, known as vested benefits, will be transferred to the new employer’s pension fund. The self-employed can voluntarily join a pension fund.
Pillar 3: private pension provision
Private pension provision refers to individual retirement savings under your own responsibility. There are two categories: restricted (pillar 3a) and unrestricted (pillar 3b).
Deposits into pillar 3a are tax-advantaged and benefit from preferential interest rates. Those who belong to a pension fund can deduct payments into pillar 3a up to an annual maximum amount of CHF 7,056 (as of 2024) from their taxable income. Employed persons without a pension fund are entitled to pay up to 20 percent of their net earned income up to a maximum of CHF 35,280 (as of 2024) per year into pillar 3a. Here too, a tax deduction for individuals subject to withholding tax with an income of less than the cantonal threshold (approx. CHF 120,000 gross salary) is only possible if an ordinary tax return is applied for.
Pillar 3a can be used by any employed person residing in Switzerland with OASI earned income to build wealth as part of private retirement savings.
With unrestricted retirement savings in pillar 3b, you can flexibly increase your private retirement savings and maintain your desired standard of living even after retirement. Whether annuities, stocks, real estate, savings accounts or other types of investments – the choice is up to each individual. Deposits can be made in any amount, and the payout is not tied to retirement.
Immigrants can also invest in private pension plans. Persons with a C residence permit are taxed like Swiss citizens. Holders of a B residence permit are subject to withholding tax. A person who is married to a Swiss citizen or a person who holds a C residence permit is taxed like a Swiss citizen. Taxable income includes earned income and replacement income such as disability pensions.
Every employed person residing in Switzerland with an income subject to OASI contributions has the right to build up a private pension with pillar 3a, regardless of the type of taxation. Persons subject to withholding tax with a gross salary of less than the cantonal threshold (usually CHF 120,000 gross salary) must individually examine the possible tax advantages.
Three pillars, one goal: overview of financial security in old age
Pension system | Pension system | Pillar 1: | Pillar 1: | Pillar 2: | Pillar 2: | Pillar 3: | Pillar 3: |
|---|---|---|---|---|---|---|---|
Pension system | Type of pension insurance | Pillar 1: | OASI > Old-age and survivors’ insurance IV > Disability insurance EL > Supplementary benefits | Pillar 2: | BVG > Federal law on occupational retirement, survivors’ and disability pension plans | Pillar 3: | Restricted pension plan (3a) Unrestricted pension plan (3b) |
Pension system | Primary goal | Pillar 1: | To cover basic costs | Pillar 2: | To continue to enjoy the accustomed standard of living | Pillar 3: | Meeting additional needs |
Do I have a pension gap?
If the benefits from pillars 1 and 2 are not enough to maintain your desired standard of living in retirement, you’ll need to save more. Find out how much today.
The average age of immigrants to Switzerland is 30. As a rule, most people have already acquired pension rights in their home country by this time. Social security agreements ensure that these claims are not lost. Switzerland has concluded such an agreement with almost 50 countries worldwide. They prevent those affected from being disadvantaged in international matters, such as double contribution burdens or loss of entitlements, for example, in the case of pension payments. They also safeguard early retirement benefits or survivors’ and death benefits. Of particular importance in this context are bilateral agreements and social security agreements with the EU and EFTA.
If you have lived, worked and/or paid social security contributions in a European Union country, your stay, employment period or the contributions paid there may be credited. This entitles you to certain benefits in Switzerland. When moving within Europe, the applicable regulations between the European Union and Switzerland protect social insurance entitlements. They apply to nationals of EU member states and Switzerland.
Insurances at a glance
Depending on your personal and professional situation as well as retirement wishes, taking out additional insurance is not only advisable but even mandatory, such as for health insurance, for example. Proof of health insurance must be provided within three months. Unlike in Germany, for example, Swiss employers usually do not contribute to the premiums.
Landlords sometimes require private liability insurance, and it is also advisable to have household insurance. As a car owner, third-party liability insurance is mandatory. If you are transferring your car from your home country, don’t forget to register the import of the vehicle.
If you have decided to relocate to Switzerland permanently rather than only temporarily, retirement planning is just one of many topics you should address early on. It is best to inform yourself about the Swiss tax system and your general insurance obligations before your move. Your financial situation will also change with your move to Switzerland. In this regard, it may be worth finding a direct contact person for all kinds of financial and insurance questions.
Disclaimer
Disclaimer
