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EXPLAINED: Everything you need to know about retiring in Switzerland

There are several reasons why Switzerland makes an excellent retirement destination - just ask Tina Turner. Here’s what you need to know about retiring in Switzerland.

EXPLAINED: Everything you need to know about retiring in Switzerland
Do you want to retire in Switzerland? Photo: Photo by Max Harlynking on Unsplash

Never shy of trying to top each and every list, Switzerland has frequently ranked highly as a retirement destination. 

The reliability of public transport, the high quality of the healthcare system, the relative safety and the tranquility of the country as a whole see it as a preferred retirement destination for many. 

But of course retiring in such a sought-after destination is not easy – and it is not likely to be cheap. 

Here’s what you need to know about retiring in Switzerland. 

How can you retire in Switzerland? 

Swiss retire relatively early, with a retirement age of 65 for men and for women. 

This was different until June 2021, where the retirement age for women was raised from 64 to 65. 

The retirement was surrounded by heated debate surrounding the amount of money it will cost to sustain pensions for baby boomers. 

That’s because the population is living longer and the old-age insurance funds are being depleted. If nothing is done, spending will exceed revenues by 2030, authorities say.

The move is part of a wider AHV / AVS reform aiming to stabilise the scheme until 2030.

However, while this does represent a slight increase for women, it’s still much lower than the retirement age in most other European countries. 

How does the Swiss pension system work?

The Swiss pension system consists of three pillars: state pension, occupational pension and the private pension. 

The first pillar – otherwise known as the OASI (Old Age and Survivor’s Insurance) – seeks to cover the basic costs of life and is mandatory. 

This includes old-age insurance and survivors insurance (OASI/AHV/AVS), disability insurance (DI/IV/AI) and any supplementary benefits (EL/PC). 

The second pillar, the occupational pension, includes everything from the first pillar and is compulsory for employees who earn more than CHF21,300 per year. 

EXPLAINED: How does the Swiss pension system work – and how much will I receive?

The goal of this pension is to allow retirees to retain their previous lifestyle in old age, or if they incur a disability. 

Together, the two pillars aim to achieve a total pension income of 50 to 70 percent of pre-retirement earnings.

The third pillar, which is optional, takes into account private savings and investments, such as property. 

There are two types of private pension plans: restricted and unrestricted. 

The restricted pension plan involves paying into a particular pension fund with a bank or insurance company 

The unrestricted plan involves all forms of investments and while it is more flexible than the restricted plan, it does not provide tax benefits. 

It is important to note that there is no official unrestricted pension scheme – it simply refers to the types of investments that one makes in order to provide for a better financial position in retirement. 

What about if I did not work in Switzerland? 

Switzerland is not only an enticing retirement destination for those who live there, but for people from all over the world. 

Obviously, retiring in a different country to where you live can be difficult, but there are plenty of people who have decided to retire in Switzerland so it is not impossible. 

Hey, just ask Tina Turner, who has lived in Château Algonquin in Küsnacht, Zurich, since 1994. 

Turner gave up her American citizenship in 2013 and became a Swiss citizen, despite not speaking German, French or Italian. 

While speaking a Swiss language is a pre-requisite of citizenship, as with plenty of other things in Switzerland, the authorities appear willing to make exceptions when the price is right. 

How do I switch my pension to Switzerland? 

If you want to move to Switzerland to retire, it’ll make things a little easier if you can transfer your pension. 

This will largely depend on the country you are coming from, with many countries having a bilateral arrangement which allows people to transfer their pensions into the Swiss pension scheme. 

This includes EU/EFTA countries along with Australia, the United States, Chile, Canada, Israel, Japan, Turkey and several others. 

Due to Brexit, the UK operates under a different system called a Qualified Recognised Overseas Pension Scheme which helps you put your funds in the one place. 

You will still only be allowed to claim that pension when you reach retirement age in Switzerland. 

More information is available on the official Swiss government website. 

What about moving to Switzerland to retire? 

OK, so this is where things get a little trickier – although moving to Switzerland to retire is far from impossible. 

For people from the EU and EFTA countries, this is far easier, due to freedom of movement rules. 

If you are working, then your residency can be tied to your work. If not, you can apply for a non-working residency permit. 

If you are applying from outside the EU/EFTA, you will be categorised as a ‘third country’ citizen, which makes the threshold a little higher. 

EXPLAINED: How to get a visa to retire in Switzerland

You will need to apply for a residency permit and prove you have adequate financial resources to support you in Switzerland. 

You’ll also need Swiss health and accident insurance – and you’ll need to demonstrate a close link to Switzerland. 

This can be past residency, family ties, frequent holidays there or real estate. This is then a decision for cantonal authorities and is often highly discretionary. 

More information on residency can be found in the following link. 

READ MORE: How to apply for a Swiss residency permit

How much money do you need to retire in Switzerland? 

This question obviously depends a lot on your personal circumstances and lifestyle, however a recently completed study (from 2021) found that you should save around 14 percent of your salary in order to retire in Switzerland. 

Residents of Switzerland need more savings nowadays than four years ago, according to an analysis by UBS bank, which compared the pension systems of 24 countries.

In 2017, the last time UBS conducted a similar study, that number was 11 percent.

The new UBS International Pension Gap Index found that “the Swiss pension system still enjoys a high reputation. However, contrary to other countries, it is more difficult to push through urgently needed reforms to ensure this reputation will last” .

More information about the amount of money you need to retire in Switzerland is available at the following link. 

READ MORE: How much should you save for a ‘comfortable’ retirement in Switzerland?

Please note: As with all of our explainers, they are intended as a guide only and do not constitute legal or financial advice. Please discuss any financial decisions with a certified expert in the field. 

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OFFBEAT

Is Switzerland’s male-only mandatory military service ‘discriminatory’?

Under Swiss law, all men must serve at least one year in compulsory national service. But is this discriminatory?

Swiss military members walk across a road carrying guns
A new lawsuit seeks to challenge Switzerland's male-only military service requirement. Is this discriminatory? FABRICE COFFRINI / AFP

All men aged between the ages of 18 and 30 are required to complete compulsory military service in Switzerland. 

A lawsuit which worked its way through the Swiss courts has now ended up in the European Court of Human Rights, where the judges will decide if Switzerland’s male-only conscription requirement violates anti-discrimination rules. 

Switzerland’s NZZ newspaper wrote on Monday the case has “explosive potential” and has “what it takes to cause a tremor” to a policy which was first laid out in Switzerland’s 1848 and 1874 Federal Constitutions. 

What is Switzerland’s compulsory military service? 

Article 59 of the Federal Constitution of Switzerland says “Every man with Swiss citizenship is liable for military service. Alternative civilian service shall be provided for by law.”

Recruits must generally do 18 weeks of boot camp (longer in some cases). 

They are then required to spend several weeks in the army every year until they have completed a minimum 245 days of service.

Military service is compulsory for Swiss men aged 18 and over. Women can chose to do military service but this is rare.

What about national rather than military service? 

Introduced in 1996, this is an alternative to the army, originally intended for those who objected to military service on moral grounds. 

READ MORE: The Swiss army’s growing problem with civilian service

Service is longer there than in the army, from the age of 20 to 40. 

This must be for 340 days in total, longer than the military service requirement. 

What about foreigners and dual nationals? 

Once you become a Swiss citizen and are between the ages of 18 and 30, you can expect to be conscripted. 

READ MORE: Do naturalised Swiss citizens have to do military service?

In general, having another citizenship in addition to the Swiss one is not going to exempt you from military service in Switzerland.

However, there is one exception: the obligation to serve will be waved, provided you can show that you have fulfilled your military duties in your other home country.

If you are a Swiss (naturalised or not) who lives abroad, you are not required to serve in the military in Switzerland, though you can voluntarily enlist. 

How do Swiss people feel about military and national service? 

Generally, the obligation is viewed relatively positively, both by the general public and by those who take part in compulsory service. 

While several other European countries have gotten rid of mandatory service, a 2013 referendum which attempted to abolish conscription was rejected by 73 percent of Swiss voters. 

What is the court case and what does it say? 

Martin D. Küng, the lawyer from the Swiss canton of Bern who has driven the case through the courts, has a personal interest in its success. 

He was found unfit for service but is still required to pay an annual bill to the Swiss government, which was 1662CHF for the last year he was required to pay it. 

While the 36-year-old no longer has to pay the amount – the obligation only lasts between the ages of 18 and 30 – Küng is bring the case on principle. 

So far, Küng has had little success in the Swiss courts, with his appeal rejected by the cantonal administrative court and later by the Swiss Federal Supreme Court. 

Previous Supreme Court cases, when hearing objections to men-only military service, said that women are less suitable for conscription due to “physiological and biological differences”.

In Küng’s case, the judges avoided this justification, saying instead that the matter was a constitutional issue. 

‘No objective reason why only men have to do military service’

He has now appealed the decision to the European level. 

While men have previously tried and failed when taking their case to the Supreme Court, no Swiss man has ever brought the matter to the European Court of Human Rights. 

Küng told the NZZ that he considered the rule to be unjust and said the Supreme Court’s decision is based on political considerations. 

“I would have expected the Federal Supreme Court to have the courage to clearly state the obvious in my case and not to decide on political grounds,” Küng said. 

“There is no objective reason why only men have to do military service or pay replacement taxes. On average, women may not be as physically productive as men, but that is not a criterion for excluding them from compulsory military service. 

There are quite a few men who cannot keep up with women in terms of stamina. Gender is simply the wrong demarcation criterion for deciding on compulsory service. If so, then one would have to focus on physical performance.”

Is it likely to pass? 

Küng is optimistic that the Strasbourg court will find in his favour, pointing to a successful appeal by a German man who complained about a fire brigade tax, which was only imposed on men. 

“This question has not yet been conclusively answered by the court” Küng said. 

The impact of a decision in his favour could be considerable, with European law technically taking precedence over Swiss law.

It would set Switzerland on a collision course with the bloc, particularly given the popularity of the conscription provision. 

Küng clarified that political outcomes and repercussions don’t concern him. 

“My only concern is for a court to determine that the current regulation is legally wrong.”

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