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Swiss pension system among ‘world’s best’

Switzerland has one of the best pension systems in the world but it lags behind those in Denmark and three other countries, according to an Australian study.

Published: 13 October 2014 22:25 CEST
Swiss pension system among 'world's best'
Photo: AFP

The Swiss rank fifth in the Melbourne Mercer Global Pension Index for 2014, released on Monday, which compares retirement schemes in 25 countries.

Denmark topped the study with a “first class and robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity”.

Switzerland places behind Australia, the Netherlands and Finland in the ranking.

Like the three countries with a higher ranking, Switzerland has a pension system “that has a sound structure with many good features, but has some areas for improvement that differentiate it from an A-grade system”.

Denmark is the only country given an A grade, while Australia and the Netherlands get a B+, and Finland and Switzerland rate a B.

Sweden, Canada, Chile, the UK and Singapore rank behind Switzerland but also received a B grade in the report that assesses the “adequacy, sustainability and integrity” of retirement income programs in different countries.

The report says that Switzerland could improve its pension system through a number of measures , including by “increasing the state pension age over time”.

The Swiss statutory retirement age is 65 for men and 64 for women.

By comparison, Denmark has raised the retirement age to 67 from 65 for citizens born in 1955 or later, while it will be hiked further for those born after 1962.

Switzerland’s pension system consists of an earnings-related public pension with minimum benefits, a mandatory occupational pension scheme and voluntary plans offered by insurance companies and financial institutions.

The study says the Swiss system could also be improved by reducing “pre-retirement leakage by further limiting access ti funds before retirement”.

The minimum age for early retirement (through an occupational or second pillar pension) in Switzerland is 58.

It is also possible to withdraw a state (AHV) pension one or two years ahead of the official retirement date, although with a financial penalty.

The study says that other improvements could be made by:

– introducing a requirement that part of the retirement benefits must be taken as an income stream

– reversing the preferential tax treatment of lump sum payments in comparison to pension payments

– requiring plan trustees to develop a comprehensive risk management policy

For a look at the full report, click here.
 

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MONEY

Can I get financial help in Switzerland if I’m struggling to pay the bills?

Can foreign residents who are struggling to get by receive the same financial help from the state as the Swiss do, and under what circumstances?

Published: 26 February 2024 13:48 CET
Can I get financial help in Switzerland if I'm struggling to pay the bills?

Say you are a foreign resident in Switzerland and find yourself short of funds, and are unable to pay your monthly bills.

Can you count on your canton’s public coffers to help you out?

Much depends on your status in the country.

If you have a residency permit, have been working in Switzerland and contributing to the social security scheme, then you can receive financial assistance, in form of subsidies, from your local authority.

This is how it works

For instance, if the obligatory health insurance premiums exceed 8 percent of the household income, then you are eligible to receive this help.

However, your canton of residence will look not only at your earnings, but at any other financial assets you hold as well.

So if your income is low but you have plenty of money in the bank in the form of savings or other investments, you will not qualify.

Generally speaking, any resident who is a low earner or has a large number of children — regardless of nationality — could be eligible for subsidised premiums, though criteria, as well as amounts, vary from one canton to another.

READ ALSO : How do I apply for healthcare benefits in Switzerland? 

What about housing?

Low-earners (again, regardless of nationality) are entitled to have their rents subsidised, under certain circumstances — the conditions as well as the income threshold is determined by cantonal authorities.

Generally speaking, in order to claim this help, you must prove that you live in the cheapest available housing in your area. (Needless to say, if you reside in a luxury apartment, you can’t ask for rent subsidy.)

If you don’t fulfill this particular condition, you will be told to move to cheaper accommodations before claiming any benefits.

Exceptions to this rule include situations such as a large number of minor children living in the household, which may make relocation — that is, finding a sizeable apartment at a cheaper price — unrealistic.

The amount of rent reduction will be set by the authorities.

Is any other help available?

If you can’t afford anything in Switzerland which, admittedly, is an extreme and rare situation for anyone working full-time and already receiving either health insurance or housing subsidy (or both), then your only other option is applying for welfare.

This, however, should be the absolute last resort if you want to remain in Switzerland and eventually apply for naturalisation, or even have your work permit renewed.

That’s because being on public assistance is grounds for refusal of citizenship — unless all the money is repaid in full in advance of your application.

READ ALSO: Can I still get Swiss citizenship after claiming social benefits? 

What about disabilities?

This falls under the general social security scheme, so if you are working in Switzerland, then you are eligible to receive these benefits.

The only exception may be people from outside the EU /EFTA — unless your country of origin has concluded a social security agreement with Switzerland.

This link provides additional information about these countries.

If you qualify for disability (and medical records confirm this), you can apply for these benefits at the social security office of your canton.

There are some other things you should keep in mind as well:

Not all foreigners who have a residency permit can apply for financial assistance.

If you came to Switzerland on a temporary permit (L or B), then you don’t have access to any benefits.

And if you ‘bought’ your Swiss residency, you can’t resort to any public help either.

The condition of your stay in Switzerland is that you should be self-sufficient enough to live here without having to work or resort to welfare benefits.

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