Social insurance
The Swiss social insurance system is based on three coordinated pillars: state-sponsored, employer-sponsored and personal plans. Personal responsibility is a key factor in this system. As a result, the overall tax and contribution burden remains modest by international standards.
The three pillars of Swiss social security:
Pillar 1: This first level meets the basic needs of the insured or beneficiary through the government-sponsored old age and survivors’ pension (OASI), as well as long-term disability insurance or incapacity benefit (DI). Both are compulsory and are funded jointly through contributions (percentage of salary) by the employer and the employee.
Pillar 2: The occupational pension plan (BVG), which supplements the first pillar, makes it possible for retired persons to maintain their accustomed standard of living after retirement. All persons working in Switzerland must be insured. The plans are funded through contributions (percentage of salary) by the employer and the employee.
Pillar 3: Personal voluntary retirement plans of employees or self-employed individuals cover additional personal needs, mainly through bank and insurance savings. Contributions to individual retirement plans enjoy preferential treatment under tax laws to some extent.
These three basic pillars of social insurance are supplemented by unemployment insurance, the compensation system for loss of income due to military service or civil protection, maternity benefits and family allowances, which are governed by cantonal law.
Overview of compulsory contributions