When can I retire in Switzerland?

Last update: 28.09.2024 14:15

When can I retire? The answer to this question has recently changed significantly in Switzerland. This is because the Swiss population’s acceptance of the AHV21 reform has brought major changes. Not only women are affected by the change in the start of retirement. It also affects everyone who wants to take early retirement or continue working beyond the age of 65. We have analyzed the changes. What opportunities does the change bring?

In this article, we first look at when you can retire as a man or woman under current law. We will also show you which rules apply to early retirement in the AHV and pension fund. And what it means if you take your pension later than the age of 64 or 65. We then look at the opportunities that the AHV21 reform offers you. And there are quite a few.

Until now, the retirement age in Switzerland has been different for men and women. The “normal retirement age” is 65 for men and 64 for women. Your entitlement to an old-age pension from the AHV and – if available – the occupational pension scheme begins at ordinary retirement age.

Do you have a private pension in pillar 3a and want to withdraw it? Then you also need to let your provider know that you want to withdraw your money.

You can also take early retirement or defer your pension and continue working. With the AHV, you can retire either 1 or 2 whole years before the normal retirement age: So men at 64 or 63, women at 63 or 62. Such an early withdrawal reduces your pension by 6.8 percent for each year of early withdrawal – for the rest of your life. Here too, you should do this 3-4 months before the desired retirement age. Because if you are too late, you will only receive your pension from the following birthday.

The BVG does not actually provide for early retirement. However, many pension funds now allow early retirement from the age of 58 for both men and women.

Incidentally, you can withdraw pillar 3a up to 5 years before the normal retirement age. This means at the age of 60 for men and from the age of 59 for women. Please note that you can only withdraw each account/balance in full (not in partial amounts). If you would like to make an early withdrawal from your pillar 3a account, it is best to contact your provider a few months in advance.

Can I retire and continue working? Perhaps you enjoy your job, would like to stagger your pension benefits or simply need the income from work? In Switzerland, it is possible to work beyond the normal retirement age. You can then defer your AHV pension by 1 to 5 years. In other words: as a man, you can take it until you reach the age of 70 years of age and as a woman up to the age of 69. In return, you will receive a pension supplement, the amount of which (+5.2 % to 31.5 %) depends on the length of the deferral. However, you must defer your AHV pension for at least one year, less is not possible. You can then have the AHV pension paid out in any month. Today, however, you still have to pay AHV contributions on income that exceeds the so-called “AHV pensioner’s allowance“. Even though they do not increase your pension. Hello?

But the AHV21 reform will change a few things in the future.

On September 25, 2022, the Swiss population approved the AHV21 reform, which is now expected to come into force on January 1, 2024. The AHV reform will make retirement much more flexible. When can I retire in Switzerland? – You will be able to decide this much more freely in future.

Nevertheless, there needs to be a reference point for when you can draw your full pension (without a reduction for early withdrawal or a supplement for deferral): the so-called “reference age”. From 2028, this will be the same for men and women at the age of 65. Nothing will change for men until then, as the normal retirement age for them is already 65 today. For women, the reference age will gradually increase to 65. Incidentally, this applies not only to the AHV, but also to your pension fund.

The harmonized reference age replaces the previous retirement age of 65/64. As soon as you reach the reference age, you are entitled to a full pension. The old-age pension will continue to be paid from the month following your birthday when you reach the reference age. Let’s take a look at some examples.

Karin was born in December 1960. She will turn 64 in December 2024 and will therefore be entitled to an old-age pension from January 1, 2025. Nothing will change for her and her 1960 cohort compared to today.

The situation is different for Elisabeth. She was born in June 1961 and will turn 64 in June 2025. As a transitional generation, Elisabeth is affected by the increase in the reference age. Her entitlement to an old-age pension does not begin on July 1, but only 3 months later: on October 1, 2025.

Anna’s birthday is in March 1963. She will therefore celebrate her 64th birthday in March 2027. As a transitional generation, Anna is also affected by the increase in the retirement age. Her entitlement to an old-age pension does not arise on April 1, but only 9 months later due to her year of birth in 1963: on January 1, 2028.

So far so clear? I think that with these three examples and the table, you as a woman understand the answer to the question "when can I retire?".

The AHV21 reform will make retirement much more variable. You can now draw your AHV pension flexibly from the age of 63 to 70. It is now also possible to withdraw your pension early and defer it for any month. And you can now also draw only a partial pension of at least 20 to 80 percent and defer the rest of your AHV pension. This is intended to facilitate a gradual transition to retirement from 2027 at the earliest. Until then, the current rates will continue to apply (in 2022: 6.8% for one year of early withdrawal and 13.6% for two years of early withdrawal). These new options allow you, for example, to work less and make up the shortfall in income by drawing part of your AHV pension.

If you retire before the reference age, a discount will be applied to your AHV pension, and if you retire after the reference age, a supplement will be applied. The Federal Council will determine the exact rates that will apply shortly before their introduction. It is already clear that the reductions for early withdrawals and supplements for deferrals will be adjusted to the average life expectancy and reduced accordingly. Furthermore, the reductions for lower average annual incomes (those below CHF 57,360) will be lower. The draft AHV ordinance provides for the following supplements for pension deferrals:

Two compensatory measures apply to women of the transition generation (born between 1961 and 1969). They can either draw their pension early from 62. For them, the pension reduction for early withdrawal is then lower; this is intended to compensate for the increased reference age. They can therefore take early retirement with less pension loss. As a further compensatory measure, the pensions of these women with low incomes will be reduced less than those of women with higher incomes.

If these women decide to take a regular pension instead, they receive a lifelong pension supplement. This is not subject to the cap on the retirement pension of married women and is paid out in excess of the maximum pension. You can enquire about the supplement at the Federal Social Insurance Office in the "Individual inquiries" section.

This pension supplement is also higher for women with lower incomes. It is calculated as a percentage of an income-dependent basic supplement:

• 160 francs / month for low average annual incomes (≤ CHF 57 360),
• 100 francs for average annual incomes (CHF 57,361 - CHF 71,700) and
• 50 francs for high average annual incomes (≥ CHF 71,701).

The bonuses are not adjusted in line with wage and price trends. Let's look at this using an example. Anna was born in 1963 and falls into the "low average annual income" category. She therefore receives a monthly supplement of CHF 160 * 0.75% (born in 1963) = CHF 120. on her AHV pension.

Until now, if you work at retirement age, your AHV contributions do not increase your pension. This will now be remedied with the AHV21 reform. This is because you now have the right to choose whether or not the AHV pensioner's allowance should be applied to income at retirement age. You can therefore decide to pay AHV contributions on your entire salary or only on the part above the AHV pensioner's allowance.

In addition, AHV contributions paid will now also be taken into account for your pension calculation after the age of 65. This allows you to compensate for missing years and increase your contribution period as well as increase your average annual income. This allows you to increase your pension up to the maximum pension. This adjustment makes it financially more attractive to work beyond the reference age.

By the end of 2023, men will receive the AHV retirement pension from the age of 65, women from the age of 64. The AHV21 was adopted in September 2022. It raises the retirement age for the first time in 25 years and thus takes account of demographic trends. Accordingly, from January 1, 2024, there will be a uniform reference age of 65 for men and women for the full retirement pension. If you retire earlier, there will be deductions, if you work longer there will be supplements. Deductions and supplements are also adjusted in line with longer life expectancy. To compensate for the higher reference age, women of the transition generation (born between 1961 and 1969) receive either lower reductions in the event of early retirement or pension supplements if they take regular retirement. They benefit from both advantages for the rest of their lives. and finally, in future you will be able to choose your retirement start date flexibly and thus organize the last phase of your working life flexibly. You can work for longer or shorter than 65 and make the transition to retirement immediate or gradual.