What about a Pension, Disability Allowance or Loss of Earnings Benefit?

The following is a rough explanation of the Swiss system. The retirement plan consists of three layers: one which is the same for everyone (AVS), one which is related to your professional activity (LPP), and one which is entirely voluntary.

The first layer (called AVS) is financed by 5.05% of your gross salary and 5.05% paid by the employer. This goes into a global fund, which is then distributed more or less equally among the population. These contributions are paid into the AVS insurance fund by the employer, who deducts half the contributions (5.05%) from the employee’s salary. Since they are compulsory contributions, all people earning a living in Switzerland must pay them. The mandatory contribution is also relevant for foreign citizens living in Switzerland. The employee receives, a “Certificate d’assurance AVS” (grey letter), with a personal number which represents their account. When you retire your AVS is paid back to you in regular monthly instalments.

The second layer (called LPP) is financed by a given amount taken from your gross salary, and again is matched by the employer. This money goes into your “private account". The method used to calculate these amounts is very complicated as this payment will evolve with time, as your gross salary changes. However, the general idea is that when you retire you can either take your LPP in regular instalments or as a lump sum. If you choose to take the LPP in regular monthly payments then the LPP amount, plus the AVS instalment, represents a reasonable percentage of your last salary before you retired (approx 80%).

The third layer is the money that you save yourself, and can take many forms, but in most cases neither the state nor the employer will interfere with this. When you leave Switzerland you may be eligible to take these funds with you. If you have any further questions regarding these payments please contact Mrs Sandra Micheloud, The Finance Manager Edward GREGG