AVS 2030: changes for Ticino cross-border workers (cross-border guide)

Context

In brief

• Minimum retirement age rises to 63 years
• New rates for those who retire early or defer their pension
• Funding of the 13th AVS still under discussion

Key facts

• What: AVS 2030 Reform
• When: In consultation until September 11th
• Where: Switzerland
• Who: Federal Council
• Amount: Additional revenue of 600 million francs per year

The Federal Council has proposed a reform of the AVS aimed at discouraging early retirement without increasing the reference age. The reform, called AVS 2030, is under consultation until September 11th. The reform provides for a gradual increase in the minimum retirement age from 58 to 63 years, with some exceptions in case of company restructuring or collective labor agreements. However, the minimum age will not be able to fall below 60 years.

The reform also introduces new reduction rates in case of early retirement benefits and new increase rates in case of deferment. This is to make early retirement less attractive and deferment more interesting. In addition, the 70-year limit to improve one's pension will be abolished, allowing the deferment of the pension beyond this age.

Incentives to work beyond 65 years

To encourage the continuation of gainful activity after the age of 65, employed workers will have the possibility to remain affiliated to a 2nd pillar pension institution. It will also be possible to transfer the withdrawal benefit to a new pension institution.

The Federal Council also proposes to increase the franchise applied to income earned after the reference age from 16,800 to 22,680 francs per year, adjusting it at regular intervals. This is to take greater account of income from gainful activity carried out after reaching the reference age.

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Operational details

Implications for Ticino Cross-Border Workers

The AVS 2030 reform will have a significant impact on Ticino cross-border workers, particularly those planning their retirement. The increase in the minimum retirement age to 63 years means that workers will have to wait longer to access their pension, unless they fall under the exceptions provided.

New Reduction and Increase Rates

The new reduction rates for early pension withdrawal and the new increase rates for deferral will make early retirement less attractive. This could influence the decision of many cross-border workers who were considering retiring early. On the other hand, deferring retirement might become more interesting, thanks to the new increase rates.

Possibility of Remaining Affiliated to the 2nd Pillar

The possibility of remaining affiliated to a 2nd pillar pension institution after the age of 65 is an important incentive for workers who wish to continue working. This could be particularly useful for Ticino cross-border workers who wish to extend their working career.

Adjustment of the Franchise on Income

The increase in the franchise applied to income earned after the reference age from 16,800 to 22,680 francs per year is another important aspect of the reform. This adjustment will make it more advantageous for workers to continue working after reaching the reference age, as their income will be taken into greater consideration.

Financing of the 13th AVS

The financing of the 13th AVS is another crucial aspect of the reform. If the Parliament fails to reach an agreement on long-term financing, it may be necessary to increase VAT or contributions. This could impact Ticino cross-border workers, who may see an increase in their taxes or contributions.

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Key points

What to do for Ticino cross-border workers

For Ticino cross-border workers planning their retirement, it's important to be aware of the new provisions of the AVS 2030 reform. Here are some concrete steps that can be taken:

Check your retirement age

Cross-border workers should check their retirement age and consider whether they fall under the exceptions provided by the reform. If they do not fall under the exceptions, they will have to wait until the age of 63 to access their pension.

Evaluate the new reduction and increase rates

Cross-border workers should evaluate the new reduction rates in case of early retirement and the new increase rates in case of deferral. This could influence their decision to retire early or extend their working career.

Consider staying affiliated with the 2nd pillar

Cross-border workers who wish to continue working after the age of 65 should consider the possibility of remaining affiliated with a 2nd pillar pension institution. This could be particularly useful for those who wish to extend their working career.

Adjust your financial planning

The increase in the franchise applied to income earned after the reference age from 16,800 to 22,680 francs per year could influence the financial planning of cross-border workers. They should consider this adjustment in their financial planning.

Monitor the funding of the 13th AVS

Cross-border workers should monitor the funding of the 13th AVS. If the Parliament fails to reach an agreement on long-term funding, it may be necessary to increase VAT or contributions. This could impact their financial situation.

For more information and to plan your pension, use our pension calculator.

Source: tvsvizzera.it