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Working in Switzerland
Claiming Retirement Pensions or Disability Benefits
Social security in Switzerland is a well-thought-out system, built to ensure that every Swiss resident has a backup plan for retirement, as well as any unexpected circumstances that may arise. Our InterNations GO! article guides you through the system of public welfare benefits, advising expats on what they have to pay and why.
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Unexpected Circumstances: When Times Are Tough
The disability pension (IV) works slightly differently than the old age (AHV) pension: although everyone is required to contribute, you are only entitled to receive it if it becomes necessary — in other words, it’s a “safety blanket”. The aim of the IV pension is to reintegrate a resident with a disability into the labor market before they receive their AHV pension.
The IV fund covers the following reintegration measures if the person in question meets the requirements:
- medical treatment for young people under 20
- therapies and integration measures to help them resume professional activity
- supply of any necessary medical equipment
- advice and support during the reintegration period
If reintegration into a working environment is not possible, then the IV contributions will fund a disability pension instead. You are entitled to an IV pension if the following factors apply to you:
- Reintegration is not possible.
- Health-related matters prevent you from earning a living.
- Your incapacity to work is as defined as more than 40% for at least one year.
- Your incapacity to work will remain at 40% for the foreseeable future.
Depending on the level of your disability, the amount of compensation you receive can vary. If your degree of invalidity is at least 40%, you will receive a quarter of your full IV pension. If it’s 50%, you will receive half the pension, and those with a disability level of 60% receive three-quarters of the sum. If you are classed as 70% invalid, you will receive your full IV pension.
The degree of invalidity is assessed based on the income that you would be able to earn as an able-bodied person, compared to that income which you could currently be expected to earn with the disability. If you are not working, your level of invalidity will be assessed based on your ability to complete everyday tasks.
Who Is Entitled to a Disability Pension?
Any citizen of Switzerland is entitled to a disability pension, should they need it. Expats living in Switzerland who are nationals of any EU or EFTA member state have the same rights as Swiss citizens when it comes to the IV pension.
If you are from any one of the 44 countries that have a social security agreement with Switzerland, the easiest way to find out if you are entitled to a disability pension or not is to check the treaty.
If neither of the above-mentioned categories apply to you, it is best to contact your local AHV fund office for help.
Your AHV contributions also cover your maternity benefits in Switzerland, but you can get more information on this topic in our article on maternity benefits.
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Ready to Retire: Claiming Your Compensation
Expats are entitled to claim their AHV pension as soon as they reach the official retirement age, provided they still live in Switzerland and have contributed towards the AHV fund for more than one year. Claiming your pension is fairly straightforward: just remember that, in the majority of cases, you need to apply for it roughly three months in advance of your retirement if you want to start receiving payments straight away.
Every resident in Switzerland is entitled to an individual pension from the AHV fund, and the amount that you will receive is based on how long you’ve been contributing towards the fund, and how much you have contributed.
Unless you have lived in Switzerland from the age of 17 and have been contributing into the AHV fund for the full period — from 1 January after your seventeenth birthday until you reach the official retirement age — you will only be entitled to a partial pension. As of November 2016, the maximum pension entitlement for an individual retiree is 28,200 CHF per year, and the minimum is 14,100 CHF per person.
Early or Late Retirement
If you decide to take early retirement, you are still entitled to claim your pension. However, the amount you receive will be adjusted according to how early you claim it. The average early pension will be reduced by 6.8% for each year below the standard retirement age.
If you decide you’d prefer to keep working when you reach the standard retirement age, you can defer your pension for up to five years. This deferral will also alter the amount you receive: depending on the amount of time that you continue to work, your payments can increase by up to 31.5%.
As has already been mentioned in the article, married couples’ income is calculated on a household basis. This means that each spouse’s pension entitlement is calculated based on the household income, as long as both spouses are entitled to an AHV pension. The gross income is split in two, with each spouse assumed to have earned half while working.
The maximum compensation a couple can receive cannot exceed 150% of 3,525 CHF — one and a half times the maximum compensation for an individual retiree.
When a married couple in Switzerland gets divorced, it changes the way in which their entitlement to an AHV pension is calculated. Instead of their pensions being calculated separately, as if they had never been married at all, each pension is based on their combined income during the years that they were married.
The total household income during the years of their marriage is added together and then split equally between the two spouses to determine their pension entitlement. The income earned in the year they were married, as well as the income earned in the year they were divorced, will not be taken into account for this calculation.
The income splitting process also applies to couples who are in a civil partnership.
Living the High Life: Retiring Abroad
As long as you are a national of Switzerland, or an EU or EFTA member state, you are still entitled to receive your AHV pension even if you move abroad after you retire.
You simply need to contact your local AHV compensation office before you move abroad, informing them of where you are going and when you are leaving. Your pension application will then be passed onto the Swiss Compensation Fund Office in Geneva, who will take over your application from this point on.
Every Swiss resident entitled to an AHV pension has the right to choose their payment address, whether in Switzerland or abroad. If that isn’t enough good news, you’ll also be happy to know that Switzerland normally pays your AHV pension in the local currency of your country of residence — even if you live abroad.
When it comes to expats who are citizens of countries with which Switzerland has entered into a social security agreement, they can also receive their AHV pension abroad. There is also the option of applying for a reimbursement of your AHV contributions, but you should weigh up your options carefully to decide which you prefer.
All other foreign nationals, however, are not entitled to an AHV pension. Before leaving Switzerland, they should contact their local AHV contribution office and apply for a reimbursement of any contributions that they have made.
Unfortunately the same principles do not apply to people who are entitled to an IV allowance or any other supplementary benefits. If you choose to move abroad while you are still eligible to claim these benefits, you will stop receiving them. All supplementary benefits are only paid to people who live in Switzerland.