The 1st pillar: old age and survivors pension fund (AVS)
The second pillar: occupational pension fund
The retirement age in Switzerland is 64 for women and 65 for men. It is also possible to retire early, sacrificing 6.8% of the sum of the yearly retirement pension.
The benefits of retirement vary in accordance with the number of years of work to be remunerated, the years of employment the salary received before retiring, the absence of all lucrative activities, the state of health, the civil status, etc.
The federal constitution defines three pillars on which the Swiss retirement system is based:
The AVS contribution is mandatory for every person who works or resides in Swiss territory as of January 1 of their 18th year.
AVS pension is meant to cover basic living needs. It is an automatic right beginning the first day of the month following a person's 64th or 65th birthday.
However certain necessary steps must be followed because it is not paid out automatically. A request must be made between three and six months before the retirement age to the compensation fund affiliated with their last employer.
A calculation of the future pension pay out must be communicated to the AVS compensation fund. It should be about 1,100 CHF minimum per month up to 2,300 CHF maximum (it varies depending upon the income for which there was a contribution).
The occupational pension fund is a complement to the AVS, a minimum mandatory rate is taken directly out of the salaries of employees who are 25 years of age or older. The employer pays a portion equal to that paid by the employee.
A mandatory system was established by law so that occupational pension benefits allow retirees to maintain their standard of living at an appropriate level or percentage of their former salary.
Occupational pension benefits can be paid out in capital or in annuities, or 50% in capital and 50% in annuities.
The individual pension fund is optional and is meant to improve the standard of living of the retiree by affording them a complementary revenue.
This is a personal savings account which can be either a insurance account (with gold, stocks, bonds, savings, property, life insurance, etc..), or be exclusively a pension for old age with the advantage of tax deductions (contract with the bank or an insurance company- the saved capital is released only upon retirement).