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COST OF LIVING

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

Planning on retiring in Switzerland or want to make sure you’re in a good position when you do? Here’s what you need to know about retiring in Switzerland.

EXPLAINED: How does the Swiss pension system work - and how much will I receive?
How much pension will you receive for a happy retirement in Switzerland? Photo by Edu Carvalho from Pexels

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 – although this change has not yet been formalised (as at October 2021). 

Switzerland does have a strong pension scheme, although the amount you earn and put into it over your time in Switzerland is key. 

You can also switch your non-Swiss pension for a Swiss one in some cases (see below). 

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

The pillars are laid out separately below. 

Pillar one: OASI (Old Age and Survivor’s Insurance) 

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). 

EXPLAINED: Everything you need to know about retiring in Switzerland

The level depends on a variety of underlying factors, including the number of years you have chipped in, the amount of your income and contribution credits. 

You can receive contribution credits for bringing up children or for caring for other people. 

You will receive the full OASI pension in Switzerland if you and your employer have contributed without interruption from the age of 20 until retirement. 

You are also allowed to defer your pension for up to five years, which will increase the amount you receive each month. 

For a direct estimation of what you may receive, please check out the following official government link. 

It will take into account a variety of factors including where you live to provide you with an estimate. 

Pillar two: Occupational pension

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. 

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

The more you contribute to this pension, the more you will receive in retirement. 

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

Benefits can be paid out as a pension, or as a lump sum in some cases. 

You will receive a minimum of 6.8 percent of your retirement savings per year once you retire.

According to an example laid out by the Swiss government in its retirement advice, people who have saved CHF400,000 in their pension will receive CHF27,200 a year, or CHF2,267 a month pursuant to this 6.8 percent figure.

Pillar three: Private pension

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. 

Therefore, it is impossible to lay out how much this will be due to the wide variety of pension options on the table. 

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. 

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. 

Member comments

  1. Ok as an introduction to the 3 pillars, but this article could go into much more detail, for example about the conditions of the 1st pillar and the fact that contributions to the 2nd pillar are tax deductible.

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COST OF LIVING

Can I have a fire in my backyard or courtyard in Switzerland?

The winter months are on their way and the weather is getting colder. If you’re lucky enough to have a backyard, can you light a fire?

White marshmallows toast over a fire
If you want to toast marshmallows in your backyard in Switzerland this winter, first make sure it's OK. Photo by Leon Contreras on Unsplash

Even if you own a property, the rules for what you can and cannot do in Switzerland can be relatively restrictive. 

As we covered in the following article, laws or tenancy rules can prevent you from doing several types of activities in your own backyard, including felling trees or washing your car. 

You can also be prevented from certain activities on particular days. For instance, rules, bylaws and tenancy arrangements may prevent you from mowing your lawn or hanging out your laundry on a Sunday. 

READ MORE: What am I allowed to do in my backyard or apartment courtyard in Switzerland?

As the weather gets colder, you might be tempted to stock up the fire pit, fire basket or fire bowl with wood and set it alight. 

The rules for lighting fires are also relatively complex. What you are allowed to do will depend on your canton, your tenancy arrangement and the type of fire. 

Can I light a fire on my own property in Switzerland? 

If you’re living in one of the few Swiss houses to have a fireplace, then you are presumably allowed to use it, unless tenancy regulations prevent it at certain times. 

You are also usually allowed to have a barbecue or grill either on your balcony or in your backyard, provided the noise and smoke is not excessive. 

READ MORE: Can I have a barbecue on my balcony in Switzerland?

Whether or not you are allowed to have a fire in your backyard however will depend on the rules in your canton. 

You are generally prohibited from burning any waste in Switzerland, other than typical forest or garden waste (i.e. wood, grass, twigs, sticks and leaves). 

That however can also be restricted at certain times of the year.

In Zurich, for instance, fires in backyards are only permitted from March to October, meaning that you will need to find other ways to stay warm in the winter months in Switzerland’s most populous canton. 

Even if lighting fires is permitted, you may want to check with the rules of your rental contract to see if you are technically allowed a fire. 

What about fires in the forest or open parks? 

A campfire might also sound like a nice way to spend a winter evening, but this may be restricted or completely prohibited depending on the circumstance. 

There is no federal ban on fires in forests and other outdoor areas, provided you are not burning waste (other than garden waste etc) and you are not producing excessive emissions. 

The rules are the same on August 1st, Swiss National Day, where special bonfires usually require a permit. 

Note that there are special rules for burning old Christmas trees, which is prevented by law. 

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