In Switzerland, AVS is compulsory for residents and workers.
In Switzerland, AVS is compulsory for residents and employees. It is the 1st pillar of the Swiss pension system. Here are the obligations associated with this insurance:
Mandatory contribution.
All people, whether working or not, must contribute to the AVS. Working people must start paying contributions on 1 January following their 17th birthday, while non-working people, including students and people receiving an invalidity pension, must start paying contributions on their 20th birthday. Contributions amount to 8.7% of gross income, 50% of which is paid by the employee and 50% by the employer. In addition, there are deductions of 1.4% for invalidity (AI) and 0.5% for loss of earnings (APG), giving a total of 10.6%.
Retirement age
The AVS retirement age is currently 64 for women and 65 for men. It will rise to 65 for women in 2024.
Guaranteeing vital living conditions in retirement
The AVS aims to ensure that people working in Switzerland have a decent standard of living when they retire. To be entitled to a full pension, you must have paid AVS contributions without interruption from age 21 and have an average income of CHF 88,200. Each missing year reduces the amount of your pension by 1/44.
Automatic recording
Employees are automatically registered in the system by their employer and must pay AVS contributions without interruption for the duration of their employment. However, if they are not working for an extended time, such as abroad, they should check with their compensation office to see whether they should continue to pay contributions.
Pension application
To receive an AVS pension, you need to apply for it, ideally to your relevant compensation fund, a few months before you retire. If your spouse already receives a pension, your spouse's compensation fund is responsible.
Deferring annuity payments
It is possible to defer the pension payment for up to five years. However, if you earn more than CHF 16,800 during this period, you must continue to pay AHV contributions. A deferral can result in a pension increase of up to 31.5%.
And in the event of divorce?
Marital separation can lead to a division of your AVS pension assets. The division of the three-pillar pension assets after a divorce is strictly defined by law. The total retirement savings accumulated by both spouses are divided into two equal shares. The income distribution considers all the calendar years corresponding to the duration of the marriage.
Contributions for persons not in gainful employment
As it is compulsory to contribute to the AVS, people not subject to it through employment must also register and pay contributions. Examples include students, pensioners and people who have taken early retirement.
The amount due depends on the pensions received multiplied by 20 and the net assets. There is a table defining the contributions. The minimum contribution is CHF 514, with a maximum of CHF 25,700 per year (as of 2023).