The OASI is a universal and mandatory insurance that encompasses all individuals residing or working in Switzerland. Therefore, it is important to understand how it operates.
The Old Age and Survivors Insurance, abbreviated as OASI, constitutes the cornerstone of social security in Switzerland. Its primary objective is to safeguard the income of individuals in old age and their survivors when earned income ceases due to aging or deaths. This is achieved by providing old-age pensions, enabling the insured to financially secure their retirement, and survivor pensions to alleviate financial hardships in difficult times.
The roots of the OASI trace back to 1925 when the Swiss people approved a constitutional amendment to establish this insurance. On January 1, 1948, the OASI was finally enacted, and the first pensions were disbursed.
The OASI primarily relies on the principle of intergenerational solidarity. Contributions from the currently employed population fund the pensions for current recipients, with the expectation that future generations will do the same. This concept is also referred to as the generational contract.
However, solidarity within the OASI goes further. Those with higher incomes contribute more than necessary for their own pensions, while individuals with lower incomes receive more benefits than covered by their contributions. This allows for a certain income redistribution between the affluent and the needy.
Education and care credits also promote solidarity by assisting childless individuals in supporting mothers and fathers, and supporting those without caregiving responsibilities to care for dependent relatives. Spousal splitting promotes solidarity between spouses regarding OASI contributions.
Financing of the OASI
The OASI is financed through the pay-as-you-go system, meaning that the contributions paid in a given period are distributed to the eligible pensioners in the same period. Unlike occupational pension schemes or the third pillar, this financing method does not involve saving over several years. Instead, the OASI annually spends what it receives.
The OASI is a universal and mandatory social insurance covering all individuals in Switzerland, whether they reside or work there. Mandatory coverage under the OASI includes:
Women and men employed in Switzerland, including cross-border workers and guest workers.
Individuals living in Switzerland, including children and other non-employed individuals such as students, people with disabilities, retirees, housewifes and househusbands.
There are special regulations for employees living abroad and working for an employer based in Switzerland, as well as for their non-employed spouses accompanying them. Students going abroad to study can maintain their insurance under certain conditions.
Citizens of Switzerland, the EU, or the EFTA living outside the EU or EFTA can voluntarily insure themselves with the OASI to avoid future pension reductions due to contribution gaps. Information on this can be obtained from Swiss embassies and consulates.
For citizens of the EU or EFTA and other countries with which Switzerland has concluded social security agreements, there are partially specific provisions.
Contributions are mandatory for all insured persons under the OASI, except for children. While children are insured and entitled to child and orphan pensions, they are not required to contribute.
Married individuals without their own income are also subject to contributions if the employed spouse pays at least double the minimum contribution to the OASI. The same applies to insured individuals working in their spouse's business without payment. Employee contributions are deducted by the employer with each salary payment and transferred to the compensation fund along with the employer's contribution. Self-employed individuals pay their contributions directly to the compensation fund. Contributions are calculated based on income according to the assessment for direct federal tax. The compensation fund determines whether someone is considered self-employed for OASI purposes.
Employed individuals contribute from January 1 after their 17th birthday until the cessation of their employment. Special rules apply to individuals of retirement age. Non-employed individuals contribute from January 1 after their 20th birthday until reaching ordinary retirement age.
For employed retirees, there is an exemption threshold on which no contributions are levied. The annual incomes, based on which contributions to the OASI are made, serve as the basis for later pension calculations. The compensation funds maintain an Individual Account (IA) for each contributing person to track contribution payments.
Benefits of the OASI
The entitlement to an old-age pension begins on the first day of the month following the attainment of ordinary retirement age and continues until the death of the pensioner. The ordinary retirement age is 64 years for women (as of 2023) and 65 years for men. From 2024, the new retirement age for women will come into effect.
Child pensions for old-age pensions are provided for sons and daughters up to the age of 18 or until the completion of their education, but no later than the age of 25. There is no entitlement to child pensions during the advance receipt period of the pension.
If someone takes their old-age pension one or two years before the ordinary retirement age, the pension is reduced for the entire duration of the pension receipt. On the other hand, those who defer their pension by one to a maximum of five years receive an increased pension. The exact amount of the reduction or surcharge is calculated according to actuarial principles. For married couples, it is possible for one spouse to claim their pension early while the other delays it.
Important
To ensure that their contribution period is continuous or whether the deducted contributions have been properly transmitted to the compensation fund, individuals can request an account statement from the compensation fund. This is generally for personal control and transparency regarding one's own contributions and pension entitlements and should be done approximately every 10 years on average.
For those wishing to apply for their old-age pension, it is recommended to do so about 3 to 4 months before reaching retirement age. Processing may take some time as the compensation fund needs to obtain the necessary documents and calculate the pension amount.
Conclusion
In summary, the Old Age and Survivors Insurance (OASI) in Switzerland is an indispensable pillar of social security. It not only ensures financial support in old age but also fosters social cohesion and solidarity between generations.
The OASI demonstrates that social solidarity and support remain crucial. It ensures that individuals in old age and their survivors do not fall into financial distress. Through the OASI, the idea of social justice and collective action is translated into reality.
In a time when social security and societal cohesion are being tested in many countries, the Swiss OASI serves as a shining example of how a society takes responsibility for its members. The OASI is a fundamental component of a just and cooperative society, showcasing how social security can function in practice.
Quelle: Informationsstelle AHV / IV
