Pensions in Switzerland are based on a 3-pillar concept, designed to provide financial security for the worker in retirement. The first pillar is the state pension provision. The second pillar is the occupational pension provision, and the third pillar is the private pension provision. In this news bulletin, we highlight some major changes planned for the First Pillar, that will come into effect from January 2024.
1. Reference age 65 for women and men
The first new update is that the same reference age for pensions will now apply to both women and men. In order to facilitate this change, the following schedule will apply:
- For women, the retirement age will gradually increase from 64 to the reference age of 65.
- This will happen in increments of 3 months each year.
- This means that for women born in 1960, nothing will change as yet.
- For those women born later, the following applies:
- 1961 – reference age 64 + 3 months
- 1962 – reference age 64 + 6 months
- 1963 – reference age 64 years + 9 months
- 1964 and younger – reference age 65 years
2. Compensation for women of the transition generation
Women born between 1961 and 1969 will receive financial compensation for the increased reference age:
- They will receive lifelong supplement to their pension, if they draw their retirement pension at the reference age or later.
- The supplement amounts to up to CHF160, depending on the year of birth and average annual income.
- They will however receive a lower reduction rate if they draw the retirement pension before the reference age.
- The reduction rate depends on the age at the time of early withdrawal and the average annual income.
- With an average annual income of CHF57’360 or less, the retirement pension can already be drawn at 64 without any reduction.
3. Flexible retirement from the age of 63
Both women and men can draw their old-age pension between the ages of 63 and 70, starting in a month of their choice.
- Those who draw the pension before the reference age of 65 receive a reduced pension.
- Those who draw the pension later than 65 receive a supplement.
- It is also possible to draw only part of the pension earlier and the rest later.
- The proportion can be freely chosen from 20 to 80 percent.
4. For transitional generation, the pension is still possible from age 62
Women born between 1961 and 1969 can continue to draw their old-age pension from the age of 62 under the following conditions:
- A lower reduction rate applies to them.
- They receive a higher pension thanks to AHV (Old Age and Survivors Insurance) contributions after 65.
- Women and men who continue to work after the reference age, can have their AHV contributions credited.
- Thus, under certain conditions, they can fill contribution gaps and increase their retirement pension (up to the maximum pension of CHF2’450 for a single person and CHF3’675 for a married couple). The allowance of CHF1’400 per month is optional.
Up until now, women were entitled to their full pension after 43 years of contributions, while men had to pay into the system for 44 years to obtain a full state pension. A national referendum regarding the pension age for women was held on 25 September 2022. It was a close call with 50.6% of voters coming out in favour of raising the retirement age of women to 65 from 64 while 55.1% endorsed an increase in value added tax (VAT), to part fund the state pension.
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As a Swiss national Michael has a broad experience of Switzerland.
