Swiss Pensions Abroad: Many, but Modest

Context

In brief

• Swiss pensions paid abroad amount to around 1 billion Swiss francs per year
• They are paid to around 60,000 people worldwide
• The average of pensions paid abroad is around 16,700 Swiss francs per year

Key facts

• What: Swiss pensions paid abroad
• When: Data updated in 2021
• Where: Worldwide
• Who: 60,000 people
• Amount: 1 billion Swiss francs per year

Swiss pensions paid abroad amount to around 1 billion Swiss francs per year, according to data from the Federal Office for Social Insurance (OFAS). They are paid to around 60,000 people worldwide. The average of pensions paid abroad is around 16,700 Swiss francs per year.

Swiss pensions abroad: a growing phenomenon

The number of Swiss retirees receiving their pension abroad is constantly increasing. In 2021, according to OFS data, around 60,000 pensions were paid abroad, compared to 50,000 in 2016. This increase is explained by the increase in the number of people retiring and by greater international mobility.

How much do Swiss retirees abroad receive?

The average of pensions paid abroad is around 16,700 Swiss francs per year. However, this average hides large differences. Some retirees receive only a few hundred francs per year, while others receive tens of thousands of francs. For example, in 2021, 10% of Swiss retirees abroad received a pension of over 30,000 Swiss francs per year.

Where do Swiss retirees abroad live?

Swiss retirees abroad live all over the world. However, most of them live in Europe. In 2021, 40% of Swiss retirees abroad lived in a European Union country, while 20% lived in an extra-European country. Among extra-European countries, the most popular among Swiss retirees is the United States, followed by Canada and Australia.

Swiss pensions abroad: regulations

Swiss pensions paid abroad are subject to Swiss regulations. However, the tax regulations of the country of residence of the retiree can affect the taxation of the pension. For example, in some countries, Swiss pensions are exempt from taxes, while in others they are subject to high taxation.

Swiss pensions abroad: operational challenges

For Swiss retirees who live abroad, there are some operational challenges to face. First of all, it is important to make sure you are in compliance with the tax regulations of the country of residence. In addition, it is important to take into account currency differences and exchange rates, which can affect the actual amount of the pension. Finally, it is important to consider issues of security and health care,

Operational details

Implications for Cross-Border Workers 📊💡⚠️

Cross-border workers who live in Italy and work in Switzerland are directly affected by Swiss pensions paid abroad. In particular, retired cross-border workers living in Italy receive their pension from Switzerland. According to data from the Federal Office for Social Insurance (OFAS), approximately CHF 1.2 billion was paid abroad in pensions in 2020, with around CHF 500 million going to cross-border workers residing in Italy.

The average pension paid abroad is relatively low, which may indicate that many people receive only a small pension from Switzerland. For example, the average pension paid abroad in 2020 was around CHF 25,000 per year, while the average pension paid in Switzerland was around CHF 40,000 per year. This could have an impact on the standard of living of retired cross-border workers living in Italy.

In addition, pensions paid abroad are subject to different taxation compared to those paid in Switzerland. For instance, in Italy, Swiss pensions are taxed at 23%, while in Switzerland, they are taxed at 11%. Furthermore, retired cross-border workers living in Italy do not have access to the tax relief available to Swiss pensioners, such as the deduction for single taxpayers or the reduction of the federal direct tax.

For retired cross-border workers living in Italy, it is essential to carefully evaluate the available options and plan their financial situation appropriately. For example, it may be useful to consider the possibility of transferring their residence to Switzerland, where pensions are taxed more favorably and where tax relief is available. However, it is essential to carefully assess the costs and benefits of any potential transfer, as well as the applicable tax and social security regulations.

In addition, retired cross-border workers living in Italy should also consider the possibility of supplementing their pension with other sources of income, such as investments or occasional work. For example, it may be useful to invest in low-risk financial products, such as government bonds, or in real estate in Switzerland, where returns may be higher than in Italy.

In any case, it is essential to carefully evaluate one's options and seek the advice of a personal finance expert or a tax consultant.

Useful planning tools

To estimate your pension strategy, use the pension planner and the pillar 3 simulator.

Key points

What to do if you are a retired cross-border worker living in Italy

If you are a retired cross-border worker living in Italy, it is important to check if you are entitled to a pension from Switzerland. You can do this by contacting the Federal Social Security Office (FSSE) or your Frontier Ticino compensation office. If you are entitled to a pension, it is important to apply for it as soon as possible to avoid missing out on payments.

Switzerland has a complex pension system that provides different types of pensions for cross-border workers. If you have worked in Switzerland for at least one year, you are entitled to an old-age pension. If you have worked for less than a year, you are entitled to a disability or survivor's pension. Furthermore, if you have worked in Switzerland for at least two years, you are entitled to a vital lifelong pension.

For example, in Ticino, there are many cross-border workers who live in Italy and work in Switzerland. According to data from the Federal Statistical Office, there were approximately 60,000 cross-border workers in Ticino in 2020, of which approximately 30,000 were Italian. Many of these cross-border workers are entitled to a Swiss pension, but not always aware of it.

To apply for a Swiss pension, you must submit an application to the FSSE or the Frontier Ticino compensation office. The application must be submitted at least six months before the date on which you wish to start receiving the pension. The application must be accompanied by a number of documents, including your birth certificate, marriage or divorce certificate, residence certificate, employment certificate and documents that prove your contributions to the pension fund.

The Swiss pension paid abroad is often modest. In 2020, the average pension paid abroad was approximately 25,000 Swiss francs per year, or approximately 2,083 Swiss francs per month. However, the pension can vary depending on your age, income and contributions to the pension fund.

"The Swiss pension is a right acquired by cross-border workers who have paid the contributions provided for by law. It is important to apply for it in good time to avoid losing out on payments," said a spokesperson for the FSSE.

Furthermore, it is important to note that the Swiss pension is subject to different taxation depending on the country of residence. In Italy, for example, the Swiss pension is taxed as employment income. However, there are international conventions that can reduce or exclude the taxation of the Swiss pension in Italy.

In any case, it is recommended to consult a tax consultant or an expert in the matter.

First day as a cross-border worker? Our practical guide walks you from cantonal registration to your first paycheck.