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  • OASI is an important part of retirement benefit provision for all

    28.07.2022 | Priska Schnell
    OASI is the basis of our retirement benefit provision. We will be voting on the OASI 21 reform on 25 September 2022. There are good reasons for it. But regardless of the reform, there are also a few important points that even young people should bear in mind regarding their own OASI.
1215174668

OASI is an important part of retirement benefit provision for all

28.07.2022 | Priska Schnell
1215174668
OASI is the basis of our retirement benefit provision. We will be voting on the OASI 21 reform on 25 September 2022. There are good reasons for it. But regardless of the reform, there are also a few important points that even young people should bear in mind regarding their own OASI.

OASI belongs to the first pillar of our three-pillar pension system and is intended to secure your livelihood. On 25 September 2022, people in Switzerland will be voting on the OASI reform (OASI 21). The aim of the reform is to financially stabilize this important area of social security for us all. Anyone who pays OASI contributions without interruption will later receive a full OASI pension. It's good to know while you’re young what you should bear in mind.

Old-age and survivors' insurance (OASI) belongs to the first pillar, occupational benefit schemes (LOB) or pension funds to the second pillar, and voluntary and individual pension provision is known as the “third pillar”. Alongside benefits we or our relatives receive in the event of disability or death, all three pillars together largely determine our available financial resources in old age. OASI is intended primarily to secure individuals’ livelihood and is paid out as a pension from the time the person retires.

OASI 21 – reform of the first pillar is imminent

Everyone living or working in Switzerland is insured under the OASI scheme. The OASI pension of today's pensioners is largely financed by salary deductions from the current working population. They and their employers each pay half of OASI contributions. People who are resident in Switzerland but not gainfully employed are also liable to pay contributions from 1 January after they reach the age of 20 until ordinary retirement age (currently: women 64, men 65). Federal funds are also used, particularly some income from VAT. OASI financing is, however, at risk because life expectancy is continuously increasing, meaning that pensions have to be paid out over a longer period. What's more, the baby boomer generation (1955–1970) is now retiring. As a result, ever-fewer working people are paying into OASI, while a rising number of pensioners are drawing a pension for longer. Without action, OASI expenditure will permanently exceed OASI income. The pay-as-you-go result is increasingly tipping into the red, and there is a lack of money for OASI pensions.

OASI 21 reform objective and measures

On 25 September 2022, people in Switzerland will be voting on the OASI reform. The goal is

  • to secure the financial needs of OASI for the next ten years and
  • to maintain the level of pension benefits.

To achieve this, VAT will be increased by 0.4 percentage points (standard rate). The ordinary retirement age (new: reference age) for women and men in the OASI and occupational benefit schemes will be harmonized to 65 years. The reform also includes further measures such as the possibility for more flexible retirement.  

What will happen if OASI 21 is accepted

If the reform is accepted, it is likely to enter into force on 1 January 2024. Women born between 1961 and 1969 will then belong to the “transitional generation”. They will receive a life-long pension supplement from the OASI, provided they do not draw their pension early. However, if they want to draw their pension early, the reduction rates will be lower than at present.

What to bear in mind regarding OASI, with and without reform

Anyone who has paid their contributions without interruption from the age of 20 up to ordinary retirement age will receive a full OASI retirement pension. If any years of contributions are missing, the pension is reduced. For this reason, it is especially important for students and those who are not gainfully employed to register with the OASI compensation fund as early as possible and to start paying at least the minimum annual contribution. Missing years of contributions can be paid retrospectively, but only up to five years later.

Good to know: what applies now:

  • Minimum OASI/IV/LEC contribution 2022: CHF 503 per year
  • Voluntary OASI payments: Only permitted for actual missing years of contributions and only possible up to five years after the year in question.
  • Minimum / maximum annual OASI pension for a single person in 2022: CHF 14,340 / CHF 28,680 per year (for married couples, maximum 150% = CHF 43,020 per year)
  • Drawing an OASI pension early: One or two years before ordinary retirement age (currently: women 64 / men 65), possible with a pension reduction of 6.8% for each year earlier.
  • Deferring an OASI pension: At least one up to a maximum of five years possible with corresponding pension increase.
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