The financial outlook for AHV and IV worsens (cross-border guide)

Context

In brief

• The financial outlook for AHV and IV is worsening.
• AI distribution deficit could reach 800 million by 2030.
• The AHV will be affected by the introduction of the 13th pension.
• Increase in VAT by 0.4 percentage points to finance the 13th annuity.

Key facts

• What: Worsening of the financial outlook for AHV and IV.
• When: Updated data published on Thursday.
• Where: Switzerland.
• Who: Federal Social Insurance Office (FSIO).
• Amount: IV distribution deficit could reach 800 million by 2030. The financial outlook for the Old-Age and Survivors' Insurance (AHV) and the Disability Insurance (IV) is deteriorating. This is according to the latest data published by the Federal Social Insurance Office (FSIO) on Thursday. For the IV, the distribution deficit was 209 million francs in 2025 and, due to the sharp increase in new pensions, could reach 800 million by 2030. The AHV will also be affected by the introduction of the 13th pension, which is scheduled to start in December and is currently without definitive financing. According to FSIO estimates, the distribution deficit will increase from CHF 1.3 billion in 2026 to CHF 4.9 billion in 2035.

Implications for cross-border commuters

The increase in AHV and IV deficits could have significant implications for cross-border commuters who depend on these insurances. The introduction of the 13th annuity, although well received, could lead to an increase in taxes to finance the deficit. This could affect the purchasing power of cross-border commuters and their long-term financial planning.

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Operational details

Practical analysis

Implications for cross-border commuters

The increase in AHV and IV deficits could have significant implications for cross-border commuters who depend on these insurances. The introduction of the 13th annuity, although well received, could lead to an increase in taxes to finance the deficit. This could affect the purchasing power of cross-border commuters and their long-term financial planning. For example, a cross-border commuter who lives in Lugano and works in Milan could see his taxes increase by 2% in 2028, if the VAT increase of 0.4 percentage points is approved by the people.

Comparison with the previous situation Before the introduction of the 13th pension, the AHV and IV were in a more stable financial situation. The increase in deficits is mainly due to the sharp increase in new pensions and the lack of definitive financing for the 13th annuity. This change could lead to a revision of tax policies and social insurance in Switzerland. For example, in 2020, the AHV deficit was around CHF 1.5 billion, while in 2023 it is expected to reach CHF 2.7 billion.

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Key points

Action

What to do Cross-border commuters should closely monitor the decisions of parliament and the people regarding the increase in VAT and the financing of the 13th pension. It is important to be informed about the possible tax and financial implications of these changes. In addition, cross-border commuters should consider planning their retirement and personal finances more carefully, taking into account potential tax increases and social insurance deficits.

Concrete examples For example, if VAT were to increase from 7.7% to 8.1%, a cross-border worker who lives in Lugano and works in Milan could see an increase in daily expenses. Let's say you spend an average of 200 francs per month on goods subject to VAT; With an increase of 1%, this would mean an increase of 2 francs per month, which might seem little, but on an annual basis it would translate into 24 francs.

Regulations and dates

The popular vote on the VAT increase is scheduled for September 27, 2024. If approved, the increase will come into force from 1 January 2025. It is crucial for cross-border commuters to be aware of these dates in order to plan their finances properly.

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