Retirement provision AHV myths

Many myths surround the AHV (old-age and survivors’ insurance). We debunk the most common misconceptions.

by UBS Insights 16 Sep 2020

Myth 1

After I turn 65, my AHV pension will be automatically paid out: There is no need for me to do anything.

It is true that pension entitlement starts from the month in which a person turns 64 or 65, but the pension still needs to be claimed from the relevant compensation office, ideally around six months in advance. Drawing a pension can be deferred for up to five years if the money is not yet needed due to savings or because you are still working. Deferred pensions can be considerably higher – by up to 31.5 percent. The compensation office must also be notified of any decision to defer.

Myth 2

The AHV does not penalize people for being married.

While unmarried couples are entitled to receive twice the maximum pension, married couples are limited to one and a half times the individual maximum pension. This is known as the marriage penalty. To get around it, divorce at age 65 is sometimes advised. But that solution would be too easy because married couples (and those in a registered partnership) enjoy other advantages, in particular the widow’s pension or the widow’s supplement. In the case of unmarried couples, if one partner dies, the other partner does not receive a widow’s pension.

We're happy to help

It’s a good idea to prepare yourself for retirement by informing yourself about it early on. Contact your client advisor; they will be happy to assist you with their know-how.

Myth 3

People not in gainful employment do not make AHV contributions.

People who are not in gainful employment make AHV contributions based on their wealth and income, except for those whose spouses pay twice the minimum contribution. You are required to take care of the claims and payments yourself; otherwise you risk contribution gaps and lower pensions. Those who register late also risk having to pay interest on late payments. And do not forget: Early retirees who already draw an AHV pension must also continue to pay contributions up to the age of 64 or 65.

Myth 4

If a person entitled to a pension dies, AHV entitlements also expire with them.

The H in AHV stands for Hinterlassenen, (survivors), i.e., the spouses and children of the deceased person. Widows, widowers and children (up to the age of 18 or until completion of education at a maximum age of 25) who meet the statutory requirements are entitled to AHV benefits. The maximum monthly widow’s retirement prior to pension age is 1,912 Swiss francs (as of 2021).