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How well do you actually know your AHV pension?

In module 1, you received an overview of the Swiss pension system with its three pillars. In this module, we will now dive into the details, specifically with the foundation of our pension system: pillar 1 (= state pension provision).

Pillar 1:

  • Pays you a pension in old age and provides support to survivors in the event of death (AHV)
  • Assists in the case of disability (IV)
  • Offers benefits during interruptions in employment such as maternity leave (EO)
  • Closes gaps with supplementary benefits (EL) if your pension income is insufficient to cover the basic cost of living.

In short, pillar 1 is Switzerland’s most important social security mechanism.

What many don’t know: the AHV pension is not the same for everyone. How much you receive depends on how long and how much you have contributed and whether any gaps have occurred. For each year in which you fail to pay AHV contributions, your pension is reduced by 1/44, which amounts to roughly 2.3 percent. It is for precisely this reason that we will now take a closer look at pillar 1 – to help you understand what matters and where potential gaps may emerge.

From A to Z: AHV, IV, EO and EL explained in simple terms

Old-age and survivors’ insurance (AHV): old-age and survivors’ insurance (AHV) forms the cornerstone of pillar 1. It guarantees a basic standard of living in old age and in the event of a family member’s death. The AHV pays:

  • Old-age pensions starting at the reference age (as of 2025: 65 years for men and also for women from 2028). The pension can be taken from the age of 63 (early withdrawal) up to age 70 (deferred withdrawal). Women born between 1961 and 1969 can start drawing their pension as early as age 62. While early withdrawal reduces the pension, deferral increases it.
  • Widow’s, widower’s and orphan’s pensions provided the relevant conditions are met.

Invalidity insurance (IV): if a person can no longer work or can only work to a limited extent owing to illness or accident, invalidity insurance (IV) steps in. Depending on the degree of disability, it pays a pension and supports measures aimed at reintegration (such as retraining).

Supplementary benefits (EL): if the AHV or IV is insufficient to cover basic living expenses, supplementary benefits (EL), which are funded by taxes, provide additional support.

Loss of earnings compensation (EO): loss of earnings compensation (EO) replaces income during interruptions in employment such as maternity and adoption leave or when caring for seriously ill children.

Together, AHV, IV, EO and EL provide financial support throughout all stages of life.

Anna’s glossary: pillar 1 in a nutshell

  • AHV contribution: The AHV contribution is the contribution deducted monthly directly from your earned income and paid into the AHV fund.
  • AHV pension: The AHV pension is the monthly payment that you receive from the AHV when retired or as a widow’s, widower’s or orphan’s pension.
  • Compensation office: The compensation office handles various tasks related to old-age and survivors’ insurance (AHV), invalidity insurance (IV) and other social insurances. There are cantonal compensation offices, association compensation offices and federal compensation offices.
  • Parenting credit: A notional income equal to three times the AHV minimum pension credited for each year you cared for one or more children under the age of 16. Parenting credits reduce contribution gaps and increase the average income used to calculate the AHV pension. 
  • Minimum subsistence level: The minimum subsistence level is the amount that you need as a minimum to cover your essential living expenses.
  • Reference age: The reference age is the legal retirement age, i.e. the age at which you receive your regular AHV pension. It is currently 65 years for both men and women (as of 2025).
  • Pay-as-you-go system: Under the pay-as-you-go system, the AHV contributions of today’s workforce are used to finance the AHV pensions of today’s retirees.

Who contributes to pillar 1 – and why it matters

Everyone living in Switzerland must pay into pillar 1 from the year they start working – but at the earliest from 1 January of the year after reaching the age 17. Those who are not employed must begin making a minimum contribution from the age of 21.

The AHV operates as a pay-as-you-go system: those who work today finance the AHV pensions of today’s retirees. This means that no capital is saved within the AHV system. Instead, contributions are used directly to pay out current pensions. The AHV is therefore dependent on a healthy balance between the number of working people paying in and the number of retirees drawing benefits.

However, today’s contributions are already no longer sufficient: people are living longer and the number of retirees is growing faster than the number of working individuals. In 2025, there will be one retiree for every four working people. Come 2050, this ratio is likely to shrink to just two workers per retiree. As a result, around 25% of the AHV’s required budget has to be covered by taxes and other levies – or by raising the retirement age.

AHV 21 reform: why the system was adjusted

To stabilize the pension system in Switzerland, the AHV 21 reform was introduced. It brought several changes to the AHV as well as new opportunities for how you can utilize pillar 1 in your pension planning.

Key elements of the reform include:

  • Equal reference age: starting in 2028, the retirement age will be 65 for both men and women. The increase in the retirement age for women will take place gradually until then.
  • Compensatory measures for women born between 1961 and 1969: This transitional generation can benefit either from a lifetime pension supplement (depending on income and year of birth) or alternatively from less severely reduced rates for advance withdrawal.
  • Flexible pension drawdown: you can now choose to begin receiving your AHV pension between the ages of 63 and 70. Women of the transitional generation can even claim their pension from the age of 62.
  • Incentives to keep working: those who work beyond the age of 65 can continue to make AHV contributions, allowing them to close pension gaps or increase their pension.
  • Funding: VAT has been increased from 7.7% to 8.1% to provide additional funding for the AHV.

Although the reform helps to balance the system and provides a greater degree of flexibility, further measures will be necessary to safeguard the AHV in the long term.

How much AHV pension will I receive later on?

The amount of your AHV pension depends on two key factors:

  • How long you have paid contributions: if you pay AHV contributions continuously from 1 January of the year after you reach the age of 20 until you reach the reference age (retirement), you will have achieved the full contribution period. At present, this currently equates to 44 contribution years (as of 2025). As mentioned earlier, missing years lead to pension reductions.
  • How much you earned on average: the higher your income, the higher your AHV contributions – and the higher your pension will be. This applies up to the upper income threshold. Any income above this figure will not increase your pension entitlement. At present, you need an average income of CHF 90,720 to receive the maximum AHV pension (as of 2025).

By the way: if you cared for children under the age of 16, you are entitled to a parenting credit. This is a notional income that corresponds to three times the minimum AHV pension per year of care. These credits are added to your average earned income when calculating your pension. In the case of married couples and individuals in registered partnerships, the credits are split equally between both partners. This increases the average earned income and thus also the AHV pension (unless you had already reached the maximum) and prevents a contribution gap in the event that you are unemployed for a certain period of time.

With respect to the amount of the AHV pension, the state sets a legal framework:

For individuals (as of 2025):

  • Minimum pension: CHF 1,260 per month
  • Maximum pension: CHF 2,520 per month

For married couples (combined):

  • Maximum pension: CHF 3,780 per month (this corresponds to 150% of the maximum pension for individuals)

Would you like to know approximately how high your future AHV pension will be? If so, you can use the official AHV pension calculator or request a free pension forecast from your compensation office (recommended starting at age 60 for optimal planning).

Identifying, avoiding and closing contribution gaps

When it comes to your AHV pension, one basic rule applies: the longer and the more you pay in, the higher your pension will be. Conversely, that also means that missing contribution years or low income will lead to reduced pension benefits.

Contribution gaps in pillar 1 can arise, for example, due to:

  • Career breaks, such as a period of study, further training, childcare or other caregiving responsibilities
  • Part-time work or irregular jobs where only small contributions were made
  • Time spent abroad or emigration without voluntary continued AHV coverage
  • Divorces if only some of the marriage years were correctly credited

Some gaps are hard to avoid. However, many gaps can be reduced or even closed at a later point:

  • Make retroactive payments: contributions can be made retroactively for up to five years provided certain conditions are met.
  • Pay as a non-working person: anyone living in Switzerland and not gainfully employed is required to make non-working AHV contributions up to the reference age (as of 2025: 65 years). In married couples where only one person works, this person’s contributions cover both spouses (provided the principles of gainful employment are fulfilled and more than double the minimum amount is paid).
  • Ensure correct splitting in the event of divorce: upon divorce, income earned during the marriage (including any parenting credits) is split equally between the spouses upon request. Submitting the request immediately after the divorce takes legal effect helps avoid delays and potential contribution gaps.
  • Continue working for longer: those who work beyond the reference age can compensate for gaps and improve their pension entitlement.

We would be happy to assess your individual pension situation and outline the options available to you.

To this end, arrange an initial consultation with our experts.

In module 5, we will also show the options you have to optimize your pension planning across all three pillars and at every stage of life.

Start pension planning early – a checklist

Example: Nicole closes gaps in her first pillar in good time

Nicole (42) lives in Zurich and works part-time at an architecture firm. During a check of her individual AHV account, it comes to her attention that entries are missing for the years 2004, 2005 and 2021. She did not make any AHV contributions during her studies in the 2000s or during her sabbatical a few years ago. She also did not make any contributions during her younger years that could have compensated for such gaps.

What does this mean for her retirement provision?

Each missing contribution year reduces the AHV pension by approximately 2.3 percent. In Nicole’s case, this adds up to a total reduction of 6.9%– if she can no longer close the gaps. However, Nicole can still take action. She has the option to pay contributions retroactively for up to five years. This means that while the deadline for her study years in 2004 and 2005 has already passed, she can still close the gap today (2025) for 2021. The amount of the retroactive payment is based on her income at the time or the minimum contribution.

Nicole transfers the outstanding amount for 2021 including default interest to the compensation fund and receives confirmation: she has successfully reduced her pension gap from 6.9 percent to 4.6 percent. She also has the option to work past the reference age further down the line and thus to compensate for the two missing years.

Clients ask – Anna answers

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