Guide to Social Contributions in Switzerland: Understanding Contributions for Optimal Social Protection
In Switzerland, social contributions refer to the contributions made by employers and employees to finance the social security system. Here are some key points about social contributions in Switzerland:
- Old Age and Survivors Insurance (AVS/AI/APG): The primary social insurance in Switzerland, AVS/AI/APG, ensures a basic income for the elderly and their survivors. AVS/AI/APG contributions are shared between employees and employers, calculated as a percentage of the salary. In 2023, employees contribute 5.3%, and employers contribute 5.3%. AVS is the first pillar of retirement in Switzerland. The retirement age in Switzerland is 65 for men and 64 for women. The objective of Disability Insurance (AI) is to assist in the rehabilitation or reintegration of individuals who, due to illness, accident, or congenital disability, find themselves in a situation of disability. If partial or complete reintegration into the professional world is not feasible, AI grants a (partial) pension. The Loss of Earnings Compensation Scheme (APG) aims to compensate for a fraction of the income reduction experienced by those performing military, civilian, or civil protection service.
- Unemployment Insurance (AC): AC provides temporary financial support to workers who lose their jobs involuntarily. AC contributions are funded by both employees and employers, with a contribution rate of 1.1% for each party in 2023.
- Occupational Pension Plan Contributions (LPP): LPP is a mandatory professional life insurance aimed at ensuring additional income for retirees. LPP contributions vary based on age and salary and are shared between the employee and the employer. For example, the contribution rate is 7% for individuals between 25 and 34 years old; the contribution rate is 10% between 35 and 44 years old; the contribution rate is 15% between 45 and 54 years old, and the contribution rate is 18% between 55 and 64 years old. These rates are borne by both the employee and the employer. The total amount of employer contributions must be at least equal to the sum of the employees’ contributions.
- Maternity Allowance Contributions (AMAT): The Canton of Geneva was the first in Switzerland to introduce maternity allowances, a measure that remained in place even after the implementation of the national maternity allowance. AMAT GE provides not only maternity allowances but also APG benefits to individuals who are active professionally.
- Occupational Accident and Disease Contributions (AAP/AANP): Contributions are established in per mille (‰) of the insured income. They are divided into net contributions related to risks (classification of companies according to risks) and supplements for administrative expenses, accident prevention, and occupational disease prevention.
- Family Allowances: Family allowances are paid to support families with dependent children. Contributions for family allowances vary from one canton to another and are also linked to the salary.
Health Insurance: Health insurance is mandatory in Switzerland. Premiums vary based on various factors, including canton of residence, age, and choice of insurer. Health insurance premiums are paid by individuals and are not fixed percentage contributions. Health insurance is not the responsibility of the employer.
These social contributions play an essential role in financing social programs aimed at ensuring social protection and the well-being of the Swiss population. Contribution rates are periodically reviewed by Swiss authorities. It is recommended to verify the current rates with the relevant authorities or with a fiduciary in Switzerland.
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