We are always happy to place a qualified person in a new job in Switzerland. From our experience as recruiters we also know that our candidates have many questions before they move to Switzerland. For example: Where can I register my new address? How can I go about finding a flat?
If you are in this situation we would like to share some information with you regarding pay slips in Switzerland, as this differs to pay slips in other countries. In your job interview with your new employer you will agree on a certain salary. In Switzerland this is always the gross pay and not the same amount which you will receive on your pay slip when you start working. Your take-home pay will be significantly less than the gross pay agreed on with your employer because of various social insurance deductions.
These social insurances are: old age insurance (AHV), unemployment insurance (ALV), your pension fund, in some cases taxes and more. In this blog post we would like to give you more information to each of these insurances, so that you are not surprised when you receive less salary at the end of the month than you expected.
Old Age Insurance System (AHV)
In Switzerland, when you retire you will receive your pension in monthly instalments. How much you receive at the age of 65 depends on how much you have paid in to your pension fund throughout your working life. In all the years that you have been working, a percentage of 4.2% (your employer usually pays in the same amount) is deducted from your gross salary so that you will receive a pension when you retire. Your pension depends on how many years you have worked for and how much you have earned. The more you have earned, the higher your pension will be. However, the monthly old age insurance contributions cannot exceed 2350 Swiss Francs. The old age insurance also covers you for invalidity and the state will cover you for a minimum income should such a situation occur.
More information about the Swiss Old Age Insurance System (OASI)
Unemployment Insurance (ALV)
The unemployment system in Switzerland is unique. You have the right to receive unemployment benefits if you have worked in Switzerland for more than 12 months, and paid in to the unemployment insurance during this time (these payments are mandatory and automatically deducted from your monthly salary). In the event of you being laid off or quitting your job, you will receive 70-80% of your income for two years in Switzerland. Please note that each case is assessed individually!
Information for foreign nationals who are unemployed in Switzerland
The Pension Fund
For employees who work in Switzerland the pension fund complements the old age insurance system contributions (which are covered by the state). The fund mainly for your pension, but also in case of events such as invalidity or death.
Your pension fund is calculated according to your insured salary. This will be your gross salary minus a coordination deduction. So only a certain part of your salary is covered. The coordination deduction is to ensure that your salary which is already covered by the old age insurance is not covered again.
Your employer also contributes to your pension fund. In most cases the company will double the amount that is deducted from your payslip. The older the employee is, the higher the payments into the pension fund are because usually the salary is higher the older you are. You will receive your pension fund when you retire. There are special rules and regulations if you leave the country before you retire:
More information about retirement provisions
Tax at Source
Your tax is deducted directly from your salary if you are not Swiss or you have a C permit and you work in Switzerland. Special regulations apply to foreigners who live in Switzerland and have a residence permit (permit C) as well as cross-border commuters.
More information about Tax at Source
Conclusion
In Switzerland you are in good hands as far as retirement provisions and risk coverage are concerned. In principle the old age insurance (AHV) ensures you so that whatever happens you will have a minimum income. The unemployment insurance enables you to lead your life according to the same standards even if you were to become unemployed. In addition to this, your income is insured for your retirement and in the event of invalidity or death.
And the best thing is that all of this simply happens without you having to do anything, as these insurances are deducted directly from your salary. So, you can look forward to your new position and your move to Switzerland!
The Coopers Team is here to help
Of course, you can contact our team any time if you have questions about the deductions from your salary or you would like to know more about the Swiss pension fund and risk insurances.
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We hope that you have learnt a little more about the Swiss social insurances and the Swiss salary system. If you have friends, who may also be interested in this topic, feel free to share this post on Facebook, LinkedIn or XING.
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