The AHV/AVS 21 reform will enter into force on 1 January 2024. As part of this reform, the retirement age (now reference age) will be standardised, pension withdrawal will be made more flexible, and the VAT rate will be increased in favour of the AHV/AVS. We provide an overview of the main changes and explain how you can provide for the future in order to remain self-determined in old age.
What are the aims of the AHV/AVS 21 reform?
The reform is intended to maintain the benefit level of AHV/AVS pensions and to safeguard the financial equilibrium of the AHV/AVS by 2030. The reform is also designed to meet the need for flexibility.
What is changing with the AHV/AVS 21 reform?
As part of the reform, the following changes have been decided:
- The retirement age will now be referred to as the reference age and will be standardised at age 65. To this end, the reference age for women will be gradually raised from 64 to 65. The increase will take place annually in three-month increments from 1 January 2025. From 2028, the standard reference age of 65 will apply for women and men.
- Compensation measures for women: The reform provides for compensatory measures for women in the transitional generation born between 1961 and 1969. If women in this age group retire earlier, their AHV/AVS pension reductions will be smaller. If they retire at the reference age or later, they will receive a lifelong supplement to their AHV/AVS pension.
- Flexible pension withdrawal: The AHV/AVS pension can now be drawn from any month between the ages of 63 and 70. A partial early withdrawal or deferral of the pension is now also possible.
- Incentives to work longer: Those who work beyond the statutory reference age can now close contribution gaps and thus improve their AHV/AVS pension.
- Additional financing through VAT: In order to secure the AHV/AVS, VAT is being increased by 0.1 and 0.4 percentage points respectively.
- Reduction of waiting period for attendance allowance: People who are dependent on the help of others are now entitled to an attendance allowance after six months instead of the previous 12 months.
Self-determined pension withdrawal
The AHV/AVS 21 reform is making pension withdrawal more flexible. Men and women can draw their retirement pension between the ages of 63 and 70 from a self-determined month, if desired also gradually (partial retirement).
As before, the AHV/AVS pension will be reduced in the event of an early withdrawal. A supplement to the AHV/AVS pension will be paid if the pension is drawn after the age of 65. As part of the reform, the reduction rates and the supplements for pensions drawn after 65 will be adjusted in line with life expectancy. You should bear in mind that you are still obliged to contribute to the AHV/AVS until you reach the reference age (or stop working after 65).
Will the reform affect the 2nd pillar (occupational provisions)?
Yes, the AHV/AVS reform will also standardise the reference age for occupational provisions (2nd pillar) at 65. This raise in the reference age means that women will save for an extra year for their occupational pension. The accumulated retirement savings, including interest, will therefore be higher at the time of retirement.
In addition, pension funds must now also allow for flexible retirement, although they have often done this voluntarily in the past.
Demarcation of 1st and 2nd pillars: Switzerland’s three-pillar system
What does the “reference age” mean?
The reference age means the age at which the AHV/AVS pension can be drawn without any deductions or supplements. Under the AHV/AVS 21 reform, this age will be standardised at 65 years for men and women.
Will the standardisation of the reference age affect the level of the AHV/AVS pension?
The level of AHV/AVS pensions will not change under the AHV/AVS 21 reform and the associated standardisation of the reference age. The amount depends on the average annual income, which is made up of different elements
- the revalued average annual income, and
- any parenting and care-giving credits.
When calculating the pensions of married people, their incomes during the years of marriage are added together, with half being credited to each spouse (split). Depending on the level of the average annual income, an entitlement arises to the minimum pension (2023: CHF 1225 per month), or at most the maximum pension (2023: CHF 2450 per month). The two individual pensions of a married couple together amount to no more than 150% of the maximum pension (capped). Find out more about the financial implications for married couples here.
The other basis for calculating the AHV/AVS pension is the contribution period. People with a full contribution period (i.e. those who have fulfilled their duty to pay contributions each year between the ages of 21 and 65) receive a full AHV/AVS pension. The AHV/AVS pension is reduced by 1/44 for each missing contribution year (partial pension).
How much will my personal AHV/AVS pension be?
The amount of your personal AHV/AVS pension depends to a large extent on your individual career history. The level of your personal AHV/AVS pension mainly depends on two factors:
- the number of contribution years completed, and
- the average annual income during the contribution period
If you would like to calculate the amount of your AHV/AVS pension more precisely, you can order an individual account statement (IA) from the AHV/AVS or request a pension calculation using the form. Alternatively, you can estimate the annuity benefit yourself online.
How will the AHV/AVS 21 reform affect the 1st pillar of self-employed persons?
The reform will have no direct impact on the AHV/AVS insurance for self-employed persons. People who are considered self-employed as defined by the AHV/AVS will continue to pay AHV/AVS, IV and EO (first pillar) contributions as before. The amount of the contributions is calculated on the basis of the current income for the contribution year.
What will the AHV/AVS reform mean for women?
The standardisation of the reference age at 65 means that the reference age for women will be raised from 64 to 65. The increase will take place annually in three-month increments from 1 January 2025. Women born in 1960 or earlier will not be affected by the increase. This means that a woman born in 1962 who retires in 2026 will have a reference age of 64 years and 6 months.
All women born between 1961 and 1969 (called the transitional generation) will receive compensatory measures to cushion the reference age: They will receive lower reduction rates if they withdraw their AHV/AVS pension early, or a lifelong pension supplement if they retire at the reference age or later. Women in the transitional generation can also continue to draw their AHV/AVS pension early from the age of 62.
What can I do now to provide for my old age?
Invest in your private pension provision, and make regular payments into the third pillar (private provisions). You have two options here, pillars 3a and 3b. You should also avoid any AHV/AVS contribution gaps that arise due to interruptions in employment. If you have not always paid contributions, you will receive a lower AHV/AVS pension. Supplementary payments can only be made within five years.
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