Social Insurance in Switzerland

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Switzerland has a specific social insurance system. This protection scheme covers persons who reside in Switzerland and/or work in Switzerland, whether they are employed or self-employed. In this sense, workers can count on the Old Age and Survivors’ Insurance, the Disability Insurance, the Loss of Earnings Allowance, the Occupational Pension Scheme, or the Unemployment Insurance to protect themselves against the risks of accident, maternity, illness, or retirement. It is the employer who is obliged to declare each of his workers’ salaries to the competent compensation fund. Would you like to understand how social insurance works in Switzerland? Which insurances are compulsory? Which type of employee is required to contribute to which allowance? Here is a focus on a very comprehensive protection scheme.

Old Age and Survivors’ Insurance

The AVS is the main pillar of social security in Switzerland. It operates according to the principle of solidarity between generations and employers are obliged to declare all their employees to the Old Age and Survivors’ Insurance. The purpose of the latter is to partially compensate for a loss of income following a work termination: retirement or death.

Who contributes to the AVS/AHV?

Several categories of people are required to contribute to the AVS/AHV:

  • People aged 18 and over who are gainfully employed in Switzerland (foreign workers are therefore also required to contribute to the AVS/AHV).

  • People domiciled in Switzerland who are not gainfully employed (students, disabled persons, spouses, etc...).

  • Pensioners receiving an AVS/AHV pension who wish to continue working in Switzerland. They contribute on the part of their income that exceeds the threshold of CHF 1'400.- per month.

It is essential to specify that the participation percentage is calculated according to salary and age. For people who are not in employment, the AVS/AHV contribution is made up of a fixed amount. This amount paid will ensure that the pension is not reduced in the event of not contributing years when the retirement age arrives.

What type of pension is allocated by the AVS/AHV?

All employees must continue to contribute to the AVS until they retire. To obtain a full pension, they must have contributed without interruption to the Old Age and Survivors’' Insurance between the time they turn 20 and the age of retirement.

The AVS/AHV allocates two types of pensions. Firstly, the old-age pension (retirement pension): allows the insured to retire from working life with material security.

The AVS also allocates a survivor’s pension to widows, widowers, and orphans to help overcome financial problems following the death of an insured person.

The contribution rate for the Old Age and Survivors’ Insurance is set by the Swiss Confederation. It, therefore, does not vary according to the company or cantons in which the worker carries out his or her activity.

The contribution to the AVS/AHV is charged here to the total income: gross salary and allowances. The amount of contributions made will be duly noted for each employee when the employer declares his/her wages to the Compensation Fund.

Invalidity Insurance

Like AVS/AHV, disability insurance (AI/IV) is the first pillar of the Swiss pension system. It is also an insurance policy every employee is obliged to contribute to. It aims to guarantee the livelihood of insured persons who have become disabled: this disability may be of a physical, psychological, or mental nature, or maybe the result of a congenital infirmity, illness, or accident.

In this way, disability insurance offers two types:

  • Rehabilitation measures: their objective is to maintain, restore or improve the insured’s earning capacity. Measures aimed at reintegrating insured persons into the labor market: socio-professional measures (which allow the employee to readapt to the workplace) and occupation measures (which will preserve the structure of a working day) are then brought in place. However, if this type of reintegration is not possible, training and workplaces can be offered to the insured person in a protected environment.

  • Pensions: If the insured person’s gain capacity cannot be restored, maintained, or improved by the above-mentioned rehabilitation measures, then he receives an AI pension. Please note, however, that a less than 50% degree of disability will not grant entitlement to a disability pension.

The Federal Social Insurance Office, FSIO supervises the AI/IV. Reintegration measures are aimed primarily at insured persons whose ability to work is limited for psychological reasons. An important condition for eligibility for these measures is that the employee must have been at least 50% incapacitated for work for at least six months.

Loss of Earnings Allowance

The allowance for loss of earnings (APG/EO) provides a daily allowance to compensate for the loss of earnings of insured persons in active service or during maternity leave and is paid as a regular annuity to maintain the current standard of living and avoid indebtedness.

Who contributes to the loss of earnings allowance?

Every person who is gainfully employed in Switzerland is required to pay this contribution from 1 January of the year following the year in which he or she turns 17 years of age. The obligation to contribute to the allowance ends when the employee ceases to be gainfully employed.

Who can receive the loss of earnings allowance?

The APG/EO can be paid to persons domiciled in Switzerland or abroad, providing they are in one of these situations:

  • People who have served in the Swiss army, civil defense, or the Red Cross: for each day of service, they can therefore benefit from the APG;

  • The person has served in unpaid civil service: for each day of service he or she is entitled to the APG;

  • The person participates in federal or cantonal courses for Youth and Sports executives, or courses for instructors of young shooters: for each day of classes, he can then be covered by the loss of earnings insurance.


How to benefit from the loss of earnings allowance?

To benefit from the loss of earnings allowance, a form must be filled in by persons in the situations mentioned above: they receive this document at their place of employment (called “APG/EO application”) and are required to give it to their employer.

Self-employed persons are required to send this form to the compensation fund to which they are attached. Without the loss of earnings allowance form, no allowance can be paid.

Occupational pension provision

The Occupational Retirement, Survivors' and Invalidity Pension Scheme complements the first pillar of social insurance, the AVS/AHV and AI/IV.

Thanks to the occupational pension plan, income shortfalls due to disability and old age are covered: 60% of the salary can then be safeguarded.

Who contributes to the occupational pension plan?

Every employee who receives more than CHF 19'890.- per year is required to contribute to this pension fund. It is no longer up to the Swiss federation to set the amount of contributions, but to the company: the company can therefore decide to apply the minimum contributions provided for by federal law, or else propose a more advantageous policy. Please note, however, that the employer is required to contribute at least the same amount as employees.


Each employee, between the ages of 17 and 25, contributes to disability and death coverage policies. After the age of 25, they also contribute to retirement.

The supervision of this 2nd pillar is carried out at the cantonal level. If you hire employees and are not yet affiliated to a pension fund registered in the Register of occupational pension schemes, you are required to choose one in agreement with your employees.

You can either join an existing pension scheme or set up your own occupational pension scheme. You may also decide to join the substitute institution.

Accident insurance

Per the Federal Law on Accident Insurance, all employees working in Switzerland are insured against occupational accidents and diseases.

Accident insurance is managed by an independent public-law institution: the Swiss National Accident Insurance Fund. Thanks to this institution, one-third of the companies and administrations active in Switzerland are insured, i.e. half of the employees: the latter are therefore insured against the consequences of occupational accidents and illnesses. Also, employees working at least 8 hours a week for the same employer are insured against non-occupational accidents.

Employees whose employer falls within Suva's area of responsibility are compulsorily insured with Suva. Failing this, employers are free to join a private insurance company or a health insurance fund.

Unemployment insurance

Unemployment insurance is managed by the cantonal unemployment funds and by approved private funds. It protects employees when they lose their jobs. Employers are obliged to arrange unemployment insurance both for themselves and each of their employees.

Under the unemployment insurance scheme, the following are insured: 

  • Employees, up to the legal retirement age

  • Workers subject to the Swiss social insurance system

Unemployment insurance enables workers to receive 70% respectively 80% of their salary in the event of job loss and thereby promotes the reintegration of the unemployed into the labor market. The contribution rate for AC/ALV is 2.2% of annual salary, capped at CHF 148'200.-. The rate is set by the Confederation and applies to a reference salary (the insured earnings).

If the employee’s income is higher than CHF 148'200.-, then a solidarity contribution of 1% is levied on the part of the salary that exceeds this amount.

The costs of unemployment insurance are shared equally between the employer and the employee. Please note, however, that self-employed persons cannot insure themselves against unemployment.

Several requirements must be met to receive unemployment benefits for past salaried activity. The insured party must reside in Switzerland and be totally or partially unemployed. The insured must have been unemployed for at least 2 consecutive days, resulting in a loss of salary, and must be available for employment and actively seeking work.


There are many different types of social insurance in Switzerland. To know what is compulsory as an employer and what is not, you need to study the legal form that you have chosen.

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