The first pillar. The state pension system – OASI/DI in a nutshell.
What is the first pillar?
The first pillar, commonly referred to as “OASI” is the state scheme for providing old-age, survivors’ and disability insurance (OASI/DI). It is the foundation on which the Swiss pension system builds and is intended to provide benefits that cover a person’s basic standard of living. These benefits are made available in the shape of retirement, survivors’ and disability pensions. The maximum benefits are limited, however, and depend, for example, on the number of years of contributions you have paid.
The benefits provided by pension funds (second pillar) and through private provision (third pillar) supplement the basic benefits offered by OASI/DI.
Who is insured in the first pillar?
OASI is a mandatory form of insurance. It covers all gainfully employed persons in Switzerland (including cross-border commuters, for instance) and all persons who reside in Switzerland (e.g. children and those who are not gainfully employed, like students, the disabled, pensioners, housewives and house-husbands).
In certain circumstances, Swiss citizens living abroad can also insure themselves voluntarily with OASI in order to avoid shortfalls in contributions. This is subject to special conditions, however.
How long are you insured in the first pillar?
In principle, for your whole life. Children below the age of 18 are insured (for children’s and orphan’s pensions) but they do not have to pay any contributions. The obligation to pay contributions starts at age 18 for those in gainful employment. If you are not gainfully employed, contributions start at age 20.
Retirement benefits are generally paid out when you reach ordinary retirement age (as of 2024: the uniform reference age of 65 for men and women). This is also when the obligation to pay contributions usually ceases. If you continue working beyond ordinary retirement age, you may have to continue paying contributions.
How does old-age and survivors’ insurance (OASI) work?
OASI works on a pay-as-you-go basis: this means the pension payments of any given year should be covered by the income of the same year. That income comprises, on the one hand, the contributions paid by the gainfully employed and their employers and, on the other, a portion of the VAT revenue. Surplus income in one year is transferred to the OASI compensation fund, which can then be used to make up any shortfalls in income in other years. The fund is designed to ensure the continuity of pension payments.
However, the demographic trend – i.e. an ageing population – means additional funds are needed to finance OASI. The Federal Act on Tax Reform and Additional Funding for OASI, which voters approved on 19 May 2019, and the Reform to Stabilize OASI, which was accepted on 25 September 2022, are intended to improve the scheme’s financial situation.
Who has to pay OASI contributions?
Anyone living or working in Switzerland. Contributions of the gainfully employed are deducted directly from their salaries. Those who are not gainfully employed must pay at least the minimum contribution. The minimum contribution is not payable if a person’s spouse pays at least double the minimum contribution.
How do shortfalls in OASI arise?
The amount of the OASI retirement pension depends on your number of eligible years of contributions and on your qualifying annual average income. Shortfalls usually arise through missing years of contributions, e.g. when no minimum contributions are paid during a longer break in employment or trip abroad, but also during the years spent bringing up children. You can make up these missing years of contributions retroactively, but only for the previous five years.
When is the OASI pension paid out?
The OASI pension is normally paid out when you reach ordinary retirement age (as of 2024: the uniform reference age of 65 for men and women). But the pension is not paid out automatically. You have to contact your local OASI compensation office three to four months in advance to apply for it. The office then calculates the definitive pension amount, so that the first pension payment can be made on time.
If you would like to start drawing your pension before ordinary retirement age, you also have to apply to the OASI compensation office well in advance. But remember that the pension is reduced if you begin drawing it early. It is also possible to postpone drawing your OASI pension, in which case your pension will be higher.
How high is the OASI pension?
The OASI pension is limited by law and there are fixed minimum and maximum amounts. The maximum pension can never be more than double the minimum pension. Pensions for spouses are capped. That means married couples can receive at most 150% of the maximum single pension.
The actual amount of the pension is determined on the basis of the number of “eligible years of contributions” (scale 44) and the “qualifying annual average income”.
How can I calculate my own OASI pension?
It is difficult to calculate your OASI pension yourself. There are too many factors to take into account: like the actual number of years of contributions, all the changes in your salary, changes in your marital status, children, etc. That is why your relevant OASI compensation office calculates your definitive OASI shortly before you retire.
However, it makes sense to request a statement of your individual account from your OASI compensation office every four to five years, especially if you change jobs frequently. The statement allows you to check the OASI contributions paid and to pinpoint, and compensate for, any missing years of contributions.
How does disability insurance (DI) work?
The Swiss disability insurance scheme (DI) is part of the the country’s social insurance system and, like OASI, belongs to the system’s mandatory first pillar. The cantonal and local DI offices are responsible for managing the system.
If you become disabled, you will primarily receive assistance from the DI scheme in the form of appropriate integration measures. The aim is to improve your capacity to earn so that you can remain in the workforce. A subordinate goal of the DI scheme is to pay disabled people benefits to cover their basic standard of living. The main aim is always to achieve a disabled person’s best-possible reintegration into the workforce rather than to pay them a disability pension. That is why the local DI offices cooperate closely with the persons concerned and reassess their situation at regular intervals.
The disability benefits provided by the pension funds (second pillar) and those insured on a voluntary private basis (third pillar) supplement the basic benefits of the DI scheme. These disability benefits from different sources are closely coordinated within the three-pillar system and take account of the decisions made by the DI offices.
Who is entitled to an DI pension?
As is the case with OASI, everyone working or residing in Switzerland is automatically insured in the mandatory DI scheme.
Claims for benefits must be submitted the relevant DI office. The latter assesses each case individually and determines the nature and scope of the benefits.
Under the DI scheme, you are considered to be disabled if, due to a physical, psychological or mental impairment, you are incapable of working altogether or unable to work in your previous field of activity (e.g. in the household). Minors are considered to be disabled if their health impairment means they will later be able to work in a limited capacity only.
What benefits does the DI scheme provide for?
In accordance with the principle “reintegration instead of a pension”, the DI scheme offers a variety of benefits that may be awarded in individual cases. These include:
- Proactive healthcare measures (early intervention), e.g. in the workplace
- Integration measures, e.g. to help the insured person return to work
- Medical integration measures for disabled teenagers
- Support with retraining necessitated by a disability
- Aids required to enhance independence (e.g. a wheelchair)
- Disability pensions, depending on the degree of disability
- Attendance allowances for insured persons whose impairments mean they need constant assistance from third parties (either in their own home or in a nursing home)
- Assistance contributions for recipients of attendance allowances to help them continue living at home
What are supplementary benefits (EL)?
The benefits paid by the OASI and DI schemes are designed to cover your basic needs. But it can be a problem if you do not have any additional income or assets to cover the minimum cost of living. This is where supplementary benefits (EL) come into play. As part of the Swiss social insurance system, they offer a certain amount of financial relief on top of OASI and DI benefits.
Supplementary benefits are financed through tax revenue and are organized by the cantons. The latter generally task the cantonal OASI compensation offices with the operational management of these benefits. Applications for supplementary benefits must be lodged with these offices.
Who is entitled to supplementary benefits?
All Swiss citizens residing in Switzerland are entitled to receive supplementary benefits. Special time limits and conditions apply to non-Swiss citizens.
You are entitled to receive supplementary benefits if your income or pension is insufficient to cover the minimum cost of living. The competent offices compare the income and expenses recognized in each individual case in order to calculate the amount of any supplementary benefits.
What others wanted to know
Our customer advisors can provide answers to selected FAQs. Just tell us what you want to know. We will be happy to help you.
Prisca B. (57), Wohlen
How can I make up shortfalls in OASI contributions?
Shortfalls usually arise through missing years of contributions, e.g. when no minimum contributions are paid during a longer break in employment or trip abroad, but also during the years spent bringing up children. You can make up these missing years of contributions retroactively, but only for the previous five years.
That is why it makes sense to request an individual account statement from your OASI compensation office every four to five years, especially if you change jobs frequently. The statement allows you to check the OASI contributions paid and to make up for any missing years of contributions in good time.
If you have missed this deadline, you can take out voluntary private insurance to close the gap – preferably based on an analysis of your pension situation. The advantage of this is that you can identify any shortfalls in your pension fund benefits at the same time.
Our pension check can reveal the first signs of a potential pension shortfall. Try it out now.
Roland N. (63), Biel
How does early retirement affect the OASI pension?
The OASI pension is permanently reduced: by 6.8% (as at 2023) if you draw the pension one year earlier. The reduction doubles if you start drawing the pension two years ahead of ordinary retirement age. It is important to note that, even if you retire early, you will need to keep paying OASI contributions until you reach ordinary retirement age. Only then does the obligation to pay contributions cease.
Prisca B. (57), Wohlen
How can I make up shortfalls in OASI contributions?
Shortfalls usually arise through missing years of contributions, e.g. when no minimum contributions are paid during a longer break in employment or trip abroad, but also during the years spent bringing up children. You can make up these missing years of contributions retroactively, but only for the previous five years.
That is why it makes sense to request an individual account statement from your OASI compensation office every four to five years, especially if you change jobs frequently. The statement allows you to check the OASI contributions paid and to make up for any missing years of contributions in good time.
If you have missed this deadline, you can take out voluntary private insurance to close the gap – preferably based on an analysis of your pension situation. The advantage of this is that you can identify any shortfalls in your pension fund benefits at the same time.
Our pension check can reveal the first signs of a potential pension shortfall. Try it out now.
Roland N. (63), Biel
How does early retirement affect the OASI pension?
The OASI pension is permanently reduced: by 6.8% (as at 2023) if you draw the pension one year earlier. The reduction doubles if you start drawing the pension two years ahead of ordinary retirement age. It is important to note that, even if you retire early, you will need to keep paying OASI contributions until you reach ordinary retirement age. Only then does the obligation to pay contributions cease.
