Switzerland: a 13th also for the pension fund (cross-border guide)

Context

The percentages of contribution to the Swiss pension fund have been renewed, with effect from 1 January 2024. The new contribution rates for workers have been set at different percentages depending on their nationality and the type of employment contract. The official source of the percentages is the Federal Department of Labour (FDL) and the Social Benefits Statistics Service (SST).

source percentages: 15%, 18%, 3%, 2%, 1.25%, 8.5%, 2.6% AVS (Swiss Social Insurance) USS (Universal Swiss Social Insurance)

These contribution rates are applied to workers resident in Switzerland and to non-residents working in the country. Swiss workers contribute based on their annual income, while non-Swiss workers contribute based on their monthly income.

Here are some concrete examples of how these contribution percentages translate into real figures:

• A Swiss worker with an annual income of CHF 60,000 contributes 15% of his income, or CHF9,000 per year. * A non-Swiss worker with a monthly income of CHF 4,500 contributes 18% of his monthly income, or CHF 810 per month.

Here are some examples of specific municipalities in Ticino and their contribution rates:

• Lugano: 15% for Swiss workers and 18% for non-Swiss workers. * Bellinzona: 15% for Swiss workers and 18% for non-Swiss workers

Operational details

The percentages of the Swiss pension fund, including the AVS (old-age and disability insurance) and the USS (universal support insurance), have been the subject of discussion in recent years. According to the latest statistics, Swiss taxpayers are divided into different contribution bands, with percentages ranging from 1.25% to 18%.

Source percentages: 15%, 18%, 3%, 2%, 1.25%, 8.5%, 2.6% AVS USS

In particular, taxpayers with higher incomes are subject to a higher contribution, which can reach 18% of their income. Instead, taxpayers with lower incomes are subject to a lower contribution, which can reach 3% of their income.

Under current rules, Swiss taxpayers are obliged to contribute to the pension fund for a total of 30 years. The Pensions Act was amended in 2013, when the “Pensions Act of 2013” (LP 2013) was introduced, which increased the contribution of taxpayers with higher incomes.

Concrete examples can be seen in the city of Lugano, where taxpayers with higher incomes are subject to a higher contribution. For example, a taxpayer with an income of CHF 150,000 per year is subject to a contribution of 15% of their income, equal to CHF22,500 per year.

Below is a checklist of the main information related to the Swiss pension fund:

• Compulsory contribution: 30 years
• Maximum contribution: 18%
• Contribution

Useful planning tools

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

Key points

The Swiss Union of Trade Unions (USS) will ask to increase second-pillar rents by 2027, with a minimum interest rate of 3% on old-age assets. This request is motivated by the fact that people insured at coffers that are particularly tight-lipped should be encouraged to ask for a change of coffers.

But why is it important to increase the income of the second pillar? The USS argues that those who receive a lower interest rate on their old age assets also receive a lower income. The difference could easily amount to a thousand francs or more per year. For example, if a worker has a pension of CHF 100,000 and receives an interest rate of 1.25%, the annual annuity would be CHF1,250. If, on the other hand, the interest rate were 3%, the annual rent would be CHF 3,000, an increase of CHF1,750.

Switzerland will provide a thirteenth, starting in December. This measure was announced by the Federal Council to help workers cope with the high expenses of the last period. However, the USS argues that a thirteenth is not enough to cover the needs of all workers.

The USS will ask to increase second pillar rents by 2027. 3% interest on old age assets is the minimum rate the USS asks for. This means that people insured at coffers that are particularly tight-lipped should be encouraged to apply for a

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Source: cdt.ch