Switzerland is renowned for its robust social system, which is comprised of three pillars: the state-run old-age and survivors’ insurance (AHV), mandatory occupational pensions (BVG), and the voluntary private savings and insurance plans. We will examine the fundamentals of each pillar, how they function, and what younger people can do to get ready for the future in this blog series.
The Swiss social system is built on the first pillar, the AHV. It is mandatory for all Swiss citizens and residents, and it is paid for by payroll taxes. The AHV offers retirees a minimal pension as well as financial support for survivors and disabled people. The present AHV pension amounts to approximately CHF 1,400 for a single individual and CHF 2,200 for a couple each month.
The BVG, the second pillar, is Switzerland’s compulsory retirement savings program for all employees. It provides supplementary retirement income on top of the AHV pension and is supported by both the employee and the employer. The employee’s pay and length of service both affect how much they will get from the BVG pension.
The optional private savings and insurance plans, which are optional nevertheless provide people the chance to put money aside and make investments for the future, serve as the third pillar. These programs include savings plans, life insurance, and disability insurance.
The three pillars of the Swiss social system should be understood by younger people, who should also take actions to prepare for the future. This entails knowing how each pillar functions and ensuring that they are making a sufficient contribution to their required plans, such as the BVG. A good way to enhance their retirement income can also be found in taking into account the advantages of voluntary private savings and insurance programs.
We will examine how the first pillar, the AHV, functions, what it offers, and how to get ready for it in more detail in the upcoming blog article. Stay tuned!
