Retirement provision when abroad A stay abroad: should you keep paying into the AHV?

Whether for a long trip, an extended vacation, a language exchange, further education, study, an internship or work abroad: time spent outside Switzerland is enriching and good for the soul. Thinking about your retirement provision and insurance arrangements before you leave will prevent financial penalties in old age or during your stay abroad. Should you wish to move abroad for an indefinite period, read our article on emigration.

The risk of a pension gap if you decide to live abroad for a while depends on the length of time you are away and the realities of Switzerland’s three-pillar pension system. Health and accident insurance also need careful attention to prevent financial shortfalls – learn more in our checklist.

The AHV distinguishes between employed and non-employed persons. The latter are people with little or no earned income, e.g., you are considered not to be in permanent, full-time employment if you work less than nine months a year or less than 50% of standard working hours. If you do not receive an AHV salary for more than three months due to your stay abroad, you should check whether you have to pay “AHV contributions for the non-employed.”

If you are married or living in a registered partnership, you do not have to pay your own contributions provided your wife or husband or partner is employed in the sense understood by the AHV and pays contributions of at least CHF 1,006 per year (double the minimum contribution).

Once the five-year limitation period has passed, AHV contributions can be neither recovered nor paid in voluntarily at a later date to make up for lost contributions.

Tip for everyone of working age: Request an account statement from your AHV compensation fund every three to five years. Any missing contributions could mean a lower AHV pension when you retire. An account statement is free of charge and helps you identify and close gaps.

No further contributions will be paid into your pension fund after you leave a job or from the start of unpaid leave. Depending on the pension fund, you can continue to pay contributions in the event of unpaid leave but a continuing employment relationship, for example, in the case of further study or training. However, in this situation you’ll need to pay both your own contribution and that of your employer.

If you cannot continue in the pension fund, pillar 2 vested benefits or termination benefits must be transferred to a vested benefits account. With the solution offered by UBS, you can also invest your money gradually in an investment savings plan. This should increase your chances of a good return.

Unlike the AHV, you can close any pension gaps in your pension fund at any time in your working life by making voluntary contributions (pension fund buy-in). As soon as you start working again after your return from abroad, your new pension fund statement will show you how high your potential buy-in can be. Good to know: voluntary contributions qualify for tax relief.

If you do not start a new job, your accident insurance coverage will end 30 days after your final salary payment. However, you can take out interim accident insurance, which will extend coverage for accidents outside of the workplace for up to six months. With some pension funds, you can continue to be insured against death and disability for between six and twelve months. Individual insurance offers to protect against disability or death due to illness or accident are also available.

You cannot pay into a pillar 3a account if you are not earning an income on which AHV contributions are mandatory. In the case of a bank solution, you simply stop making contributions. The pillar 3a account will continue to be managed for you tax-free. If you have invested your pillar 3a savings in UBS Vitainvest investment funds, you will stand a higher chance of achieving a return while you are living abroad. In the case of an insurance solution, you are required to keep paying the agreed annual premium. You can also arrange to stop paying this premium, but this will most probably give rise to costs and financial penalties. Clarify with your insurance company what your options are for suspending your premiums while you are out of the country.