Complex as it may seem at first glance, the structure of the pension scheme in Switzerland is not all that complicated. Swiss News spoke to pension specialists at various international Swiss insurance companies to present a simple overview.
To begin with, the social security system comprises four categories of insurance:
* Family allowances
* Unemployment insurance
* Monetary protection in case of illness and accidents
* Old-age, survivors' and invalid pension--the three-pillar system.
As the names suggest, these insurances offer protection in the form of family allowances according to the number and age of dependent children you have and other family-related criteria.
The unemployment insurance provides opportunities for vocational enhancement by partly funding training courses, job counseling and a partial salary for a specified time.
Insurances also offer part payment of costs incurred in case of illness and accidents.
The retirement, survivor' and disability pension plan system in Switzerland is based on the 'Three Pillar' concept that has been enshrined in the Swiss Federal Constitution.
Offering a quick explanation, the experts say that the first pillar or the state pension provision aims to secure a minimum standard of living. This consists of the Federal Old Age and Survivors' Insurance/ Disability Insurance (AHV/IV), which is a compulsory state pension provision. In addition to this, the first pillar also offers supplementary benefits (EL), which are sufficient to cover the basic needs of a person.
There is also the Income Replacement Scheme (EO), which pays the maternity allowance and also compensates individuals serving in the Swiss Army or women's military functions, the Red Cross and civil defence.
The first pillar or the AHV/IV financing is also known as the 'pay-as-you-go' system as employee and employer contributions continuously finance the retirement, survivors' and disability benefits.
In 1950, the country could count on six employed persons to provide tot each pensioner. But with increasing numbers of pensioners, there will be fewer than three workers to provide for each pensioner by 2040, a major cause of concern among health planners.
The second pillar or occupational benefits insurance constitutes the mandatory element of pension provision. All those living or working in Switzerland must take out this insurance.
The Swiss Federal Law on Occupational Retirement, Survivors and Disability Pension...