Understanding the New Swiss "Reference Age"
Switzerland's official retirement age, now termed the "reference age" due to the AHV 21 reform, is transitioning towards a standard of 65 for everyone. This change aims to enhance the state pension system's financial stability. While the ultimate goal is uniformity, a transitional phase is in place.
The AHV 21 Reform: Standardizing the Retirement Age
The AHV 21 reform, effective January 1, 2024, is gradually increasing the reference age for women from 64 to 65, aligning it with men's. This reform addresses demographic shifts, including increased life expectancy.
The gradual increase for women
For women, the increase to a 65 reference age is phased based on their birth year. This gradual approach, adding three months annually, helps those nearing retirement adjust their plans.
| Year of Birth | Reference Age for Women |
|---|---|
| Up to 1960 | 64 years |
| 1961 | 64 years + 3 months |
| 1962 | 64 years + 6 months |
| 1963 | 64 years + 9 months |
| 1964 or later | 65 years |
Flexible Retirement Options: Early and Deferred
The AHV 21 reform introduces greater flexibility. Individuals can retire earlier or later than the reference age, with corresponding adjustments to their pension benefits.
- Early Retirement: Generally available from age 63 for all insured individuals. Women in the 'transitional generation' (born 1961-1969) can retire from age 62. Early retirement results in a permanent reduction in pension benefits, currently 6.8% per year. Partial retirement is also an option.
- Deferred Retirement: Deferring your AHV pension is possible for up to five years after reaching the reference age, until age 70. This leads to increased monthly pension payments.
The Swiss Three-Pillar Pension System
Understanding Swiss retirement requires knowing its three-pillar system, where the AHV pension is just one part.
- Pillar 1: State Pension (AHV/OASI): The mandatory state insurance covering basic living costs in retirement, funded by contributions.
- Pillar 2: Occupational Pension Fund (BVG/LPP): Mandatory employer-sponsored funds, aiming to maintain your standard of living alongside Pillar 1. Provides a pension or lump sum.
- Pillar 3: Private Provision: Voluntary private savings (tax-advantaged Pillar 3a and flexible Pillar 3b) to supplement income and provide extra security.
Implications for Expats and Foreign Workers
Non-Swiss citizens are largely subject to the same rules, with some nuances.
- Eligibility: Eligibility for an AHV pension requires at least one year of contributions in Switzerland. The pension amount is based on your total contribution years.
- EU/EFTA vs. Third-Country Nationals: Bilateral agreements affect residency and pension coordination for EU/EFTA citizens. Non-EU/EFTA nationals follow different residency procedures, but pension eligibility is contribution-based.
- Leaving Switzerland: Generally, Pillar 2 and 3 funds can be withdrawn upon leaving permanently. Pillar 1 pensions are usually paid as a monthly annuity to retirees living abroad.
Comparison with European Neighbors
Switzerland's move to a 65 reference age aligns it with other European countries.
| Country | Retirement Age | Notes |
|---|---|---|
| Switzerland | 65 (Standardized from 2028) | Flexible retirement from 63-70 available with reductions/supplements. |
| Germany | 67 (Gradually increasing) | Retirement age is rising progressively. |
| France | 64 | Recently increased from 62. |
| Italy | 67 | Standard retirement age since 2019. |
| United Kingdom | 66 (Increasing) | Scheduled to increase further to 67 by 2028. |
Key Considerations for Planning Your Swiss Retirement
Effective retirement planning in Switzerland necessitates understanding the three-pillar system and your specific reference age, particularly for women born in the early 1960s. The reforms aim for sustainability and flexibility, requiring proactive consideration of options like working past the reference age, early retirement costs, and managing contributions.
For comprehensive details on the AHV 21 reform, consult official resources like the Federal Social Insurance Office (FSIO), which offers guidance and information on the changes. For more information, please see: Stabilisation of the OASI (OASI 21) What's changing?
Conclusion
Switzerland is standardizing its official retirement age at 65 for both genders through the AHV 21 reform, with a gradual transition for women born between 1961 and 1963. This reform offers retirement flexibility between ages 63 and 70. Successful retirement planning in this evolving landscape requires understanding the three-pillar system and the impact of early or deferred retirement decisions.
