Switzerland has a flexible approach to retirement and many retirees opt to work either part-time or on a freelance basis.
Yet, there are certain conditions and limitations to consider.
Here’s everything you need to know when it comes to working in your retirement years.
Who can work after retirement in Switzerland?
Every retiree residing in Switzerland can continue to work or return to their job after enjoying some of their retirement so long as their employer agrees.
In Switzerland, your employment contract automatically ends once you reach the retirement age – usually 65 for men and 64 for women.
This means that if you will need your employer’s consent to stay on with your company if you are not quite ready to retire.
Generally, it is advised to plan your past-retirement work life in advance – ideally around six months before retiring - so that your current or future employer can also get organised.
Also note that Switzerland has no upper age limit dictating how long an employee can work. You will have the option to work as long as you wish, provided that your employer is willing to continue employing you and you are physically and mentally capable of doing the job.
READ MORE: How does the Swiss pension system work - and how much will I receive?
What happens to my benefits?
If you choose to work again after having enjoyed your retirement years for a bit, rest assured that you will continue to receive your AHV / AVS pension, and your pension fund benefits while you work.
Your new salary will just be an added bonus in that case.
If you happen to earn more than a gross salary of 1,400 Swiss francs per month, however, you will need to pay into your AHV / AVS again.
Those earning salaries larger than 1,400 Swiss francs per month are required to make social security contributions, but this does not result a larger pension, which makes working beyond the reference age less appealing for many.
What happens if I work as a freelancer?
If you choose to freelance in Switzerland, it is important to remember that Swiss law does not recognise the term freelancer, but instead distinguishes between self-employed and employed work.
But while all freelancers in Switzerland are self-employed, not all self-employed people are freelancers. The latter usually have more structured business models, while the former are more “free” in their activities (hence the term “freelancer”), handling multiple projects and clients at once, often without the need for a physical office.
Legally speaking, however, both are pretty much the same.
As a self-employed person in Switzerland, you will be required to make social security (AHV/IV/EO) contributions at a maximum rate of 10 percent of your income if your wages exceed the monthly 1,400 Swiss francs.
READ MORE: Freelancing in Switzerland: What foreign nationals need to know
Will my wage stay the same as an employed person?
The freelancing option
If you would like to keep working for the same company after retirement, but with lower financial burden, propose to your boss that you will continue to do your job, but as a freelancer rather than a 'regular' employee.
Why is this more beneficial to you?
As an independent contractor, you will be responsible for paying AVS / AHV contributions yourself. Since social contributions of self-employed persons are a bit lower after retirement, this arrangement will be more advantageous tax-wise.
Will I still be insured against accidents and illness?
Yes, but you must work at least eight hours per week to benefit from accident insurance.
Read more on the topic in The Local’s article here.
Should I expect higher taxes if I continue to work past the retirement age?
If you combine your wage with your pension your overall income will increase and hence result in higher tax payments.
You can avoid this by deferring your AHV pension for up to five years.
According to Swiss insurance company Pax, if you push your AHV / AVS pension back a year, it increases by 5.2 percent, and 31.5 percent if you push it back the maximum five years.
Will I receive more benefits if I continue to pay into the pension fund?
Yes.
Employees who work past their retirement age and continue to pay into their pension fund will as a result accumulate more money and receive higher benefits later in life.
Am I entitled to unemployment benefits if I am laid off in my retirement years?
The short answer is no.
If you are let go in your retirement years, you will receive your AHV / AVS pension alongside your pension fund benefits, as well as the money from Pillar 3a as you would without continuing to work past 64/65.
READ MORE: What is Switzerland's retirement age - and will it rise?
What happens to my pension fund?
As of this year, Switzerland still does not have a uniform regulation when it comes to deferring one’s pension.
This means that not every pension fund will allow you to defer your pension after you reach the retirement age.
Should your pension fund not allow you to defer your pension, you will be entitled to your pension while you continue to work and will no longer be required to pay in pension fund contributions.
If your pension fund allows you to defer your pension beyond the normal retirement age, you will need to pay in a contribution from your wage as a normal employee would depending on the amount you earn.
Likewise, currently most pension funds that do allow you to defer expect you to defer for at least a year and a maximum of five years.
If you do plan to defer, you will need to request the deferral no later than one year after reaching the normal retirement age.
You may also withdraw your Pillar 3a up to five years after the normal retirement age if you continue to work. However, you must then withdraw the money and can no longer postpone the date.
AHV 21 reform restructures pension system from 2024
This is set to change on January 1st, 2024 when Switzerland’s AHV 21 reform, which was approved by the Swiss people on September 25th, 2022, comes into force.
From then on, every pension fund in Switzerland will have to allow an individual to defer their pension beyond the normal retirement age or as it will then be known, their ‘reference age’.
The new reference age also raises the age for women to 65 from 64.
Once the new reform comes into force, AHV / AVS contributions paid in by working employees aged 65 and over will count towards their pension and boost their AHV / AVS pension in old age.
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