AHV 21: These are the most important changes
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AHV 21 reform: The main changes as of January 1, 2024

The Swiss electorate has decided: On September 25, 2022, they said "yes" to the AHV 21 reform, which is expected to enter into effect by January 1, 2024. This is intended to secure financing for the first pillar until 2030. The reform will be financed by the increased reference age for women and by the increase in VAT. Here are the key changes, explained simply.

The restructuring of the Swiss pension system is under way

The AHV 21 reform was approved by the Swiss people on September 25, 2022. After decades of stalemate, this is the first major step toward the restructuring of the pension system. After all, with the AHV 21 reform, the Federal Council is pursuing two important goals:

1. To maintain the level of AHV pensions.
2. To secure the financial equilibrium of the AHV until 2030.

The approval of the proposal is one thing; what the implementation of the reform means specifically for those insured, is another. Here is an overview of the changes and their impact on the population.

Financial performance of the AHV fund with and without the AHV 21 reform

Financial development of the AHV fund

Source: Federal Social Insurance Office, Credit Suisse

65

years is the new reference age for women.

1. Alignment of the reference age for women to 65 years

The reference age for women is being raised to 65 years; it will be gradually increased by three months each year, with the first increase planned in 2025. The reference age of men and women will therefore not be fully aligned until 2028.

The reference age will be increased gradually

The reference age will be increased in stages

From 2028, the reference age for women will be 65 years.

Women who are on the verge of retirement are particularly affected by this transition period. This is why nine cohorts of the transition generation will receive lifelong pension supplements as a compensation measure. All women born between 1961 and 1969 are entitled to these supplements. The pension supplements vary depending on the year of birth.

The basic supplement is:

  • CHF 160 for average annual income below CHF 57,360
  • CHF 100 for average annual income between CHF 57,361 and CHF 71,700
  • CHF 50 for average annual income exceeding CHF 71,701.

It is also worth noting that the lifelong supplement applies to women of the transition generation who do not draw their pension early. Furthermore, the extra payment is not subject to the cap on the retirement pension for married couples and does not result in reductions to supplementary payments. Payments will also be made above the maximum pension.

Compensation measures for women

Year of birth

Reference age Monthly pension supplement
(as a % of the basic supplement)
1961 64.25 years 25%
1962 64.5 years 50%
1963 64.75 years 75%
1964 65 years 100%
1965 65 years 100%
1966 65 years 81%
1967 65 years 63%
1968 65 years 44%
1969 65 years 25%

Federal Social Insurance Office FSIO

2. Flexibility in the choice of retirement date

The choice of when to draw your pension is more flexible. Both men and women can draw their pension from the age of 63 at the earliest or defer it until they are 70 at the latest. Women of the transition generation can draw their pension from the age of 62 and receive lower reduction rates; in contrast, they cannot benefit from the pension supplement. In addition, the reform makes it possible to draw a pension in stages, either by reducing the level of employment and deferring or drawing only part of the pension early, or by taking retirement in monthly instead of annual stages.

3. Incentives to work beyond the reference age

Those who work beyond the reference age currently do not pay AHV contributions on gross salaries of up to CHF 1,400 per month. People earning salaries larger than this amount are obliged to make contributions, but this does not result in them receiving a larger pension, which makes working beyond the reference age less appealing.
After the AHV 21 reform enters into force, this exemption can now be waived voluntarily and AHV contributions paid in after the age of 65 will also count toward your pension. In this way, contribution gaps from earlier in your life can be closed and the contributions made can increase your personal AHV pension further.

Additional financing with the help of VAT

The increase in the reference age means savings for the AHV. The second major pillar of AHV financing is VAT. This additional income for the AHV is generated by an increase in the value added tax of 0.4 percentage points on the normal rate.

Further reforms in the Swiss pension system are essential

The AHV 21 reform is the first step toward the restructuring of the pension system – but this only secures funding until 2030. After that, the AHV risks running a deficit again.

Reform of the second pillar is also under discussion: BVG 21. It is currently being debated in Parliament and provides for the following points:

  • Reduction of the minimum conversion rate to 6%.
  • Introduction of a pension supplement: A supplement payment for the first 15 transitional cohorts is planned if the reform is approved. This payment serves to compensate for the reduced rate of conversion.
  • Reduction in the coordination deduction: The reduction from CHF 25,095 to CHF 12,443 is intended to improve the retirement provision for low-income people.
  • Adjustment of age credits: The aim is to better align the difference in contributions across various age groups.

In addition, two initiatives have been submitted and will be voted on in the next one to two years. One calls for a 13th AHV pension payment, while the other one is targeting a further increase in the retirement age. In addition, two parliamentary proposals aimed at strengthening the third pillar, the "Ettlin Motion" and the "Erich Hess Parliamentary Initiative," are pending.

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