Blog, Pensions: 27.10.26AVS 2026: how the 1st pillar works, what you pay in and what you will receive

The AVS (old-age and survivors’ insurance) is the compulsory social insurance that pays a pension at retirement and protects relatives in case of death. Together with the AI (disability insurance), it forms the 1st pillar of the Swiss system.

Before going into detail, here are the figures to remember. The 2027 amounts were set by the Federal Council on 2 October 2026 and will apply from 1 January 2027.

Sources: leaflets from the AHV/IV Information Centre and the Federal Council press release on pension adjustments.

The 1st pillar is the base level of the Swiss pension system: compulsory for everyone, it covers basic living needs. The 2nd pillar (occupational pensions) and the 3rd pillar (private pension provision) then help maintain one’s standard of living.

AVS, AI, APG, AC, PC: who covers what

These abbreviations all appear on a payslip or in letters from the funds. They refer to different insurance schemes, often managed by the same compensation funds.

The AVS therefore covers three situations: old age, death and, together with the AI, disability. It is basic insurance, designed to guarantee a minimum income, not to maintain one’s standard of living on its own.

In practice, the AVS pays:

• An old-age pension, from the reference age (65, with a transition period for women).
• Survivors’ pensions: widow’s or widower’s pension, orphan’s pension.
• Supplementary pensions, for example a child’s pension when the pensioner still has dependent children.

The legal framework is the Federal Act on Old-Age and Survivors’ Insurance (AHVG/LAVS), in force since 1948. Its principle is simple: everyone who lives in Switzerland or works there is insured.

A pay-as-you-go system: workers fund retirees

Pay-as-you-go means that the contributions collected in a given year pay that same year’s pensions. Unlike the 2nd pillar, where each member builds up their own capital, there is no personal savings account in the AVS. Workers acquire entitlements, recorded year after year in their individual account, which will determine their own pension.

Two consequences: your pension does not depend on financial markets, since it is calculated using a statutory formula; on the other hand, the balance of the system depends on demographics. This is why reforms such as AVS 21 and votes on financing take place.

Every insured person contributes, from 1 January following their 17th birthday if they work, and from 1 January following their 20th birthday if they have no gainful employment. The obligation lasts until the reference age. The amount depends on your status: employee, self-employed or without gainful employment.

The AVS number and the compensation fund

Every insured person receives a 13-digit AVS number starting with 756. It appears on the health insurance card and serves as a unique identifier for all social insurance schemes, throughout life.

Contributions are collected by a compensation fund: a cantonal fund (in Geneva, the Geneva cantonal compensation fund) or an industry fund. An employee is covered by their employer’s fund, while a self-employed or non-employed person registers themselves. All contributions, whatever the fund, are credited to the same individual account.

Employees: 5.3% for you, 5.3% for the employer

The AVS/AI/APG contribution rate is 10.6% of gross salary, split equally between employee and employer.

On your payslip, these contributions often appear on a single “AVS/AI/APG” line. The employer deducts them every month and pays them to the compensation fund together with its own share. Unemployment insurance (AC) comes on top: 2.2% of salary, also split equally, up to an annual salary of CHF 148,200. Above that, no AC contribution is due.

Example: Marc’s payslip, CHF 7,000 gross per month. Here are the 1st pillar and unemployment insurance lines, on the employee side and the employer side.

Marc sees CHF 448 deducted from his gross salary for these two lines. What he sees less is that his employer pays the same amount on its side. For the company, a salary of CHF 7,000 therefore costs at least CHF 7,448 a month, before the 2nd pillar, accident insurance and family allowances.

Self-employed: the sliding scale up to 10%

A self-employed person contributes alone, with no employer to share the burden. The full AVS/AI/APG rate is 10% of income (AVS 8.1%, AI 1.4%, APG 0.5%), from an annual income of CHF 60,500.

Below that, a sliding scale applies:

• Income between CHF 10,100 and CHF 60,500: progressive rate from 5.371% to 9.321%.
• Income below CHF 10,100: minimum contribution of CHF 530 per year (CHF 541 from 2027).

The self-employed person pays instalments, usually quarterly, calculated on the income declared to their compensation fund. The fund then adjusts them based on the income assessed by the tax administration. A large gap between declared and actual income can therefore lead, two or three years later, to a significant back-payment of contributions. It is up to the self-employed person to register with their fund as soon as the activity starts; they are not required to join the LPP, which makes their private pension provision all the more important.

Without gainful employment: contributing on your assets

Students, people at home, early retirees, partial AI pensioners: even without a salary, AVS contributions are due. The amount depends on assets and on income received as pensions (for example an LPP early retirement pension).

• Minimum contribution: CHF 530 per year (CHF 541 from 2027).
• Maximum contribution: CHF 26,500 per year, for people whose assets, plus twenty times their annual pension income, reach CHF 8,950,000 or more.

A married person whose working spouse pays at least twice the minimum contribution is in principle considered to have contributed. For others, forgetting this contribution is one of the most frequent causes of gaps.

Example: Inès, 23, a student without a job. She receives a non-employed contribution invoice from her compensation fund. If she does not pay it, the year will be empty in her individual account. Five years later, this gap can no longer be filled, and her pension will be reduced for life.

What the employer has to do every year

For the employer, the AVS is more than a line on the payslip. It is a series of obligations, with deadlines:

1. Join a compensation fund from the first employee, and register every new employee.
2. Deduct contributions from every salary, including the 13th month salary, bonuses and most benefits in kind.
3. Pay instalments to the fund, usually monthly or quarterly, together with its own share.
4. Submit the annual salary statement at the start of the following year. The fund then calculates the balance due and records the income in each employee’s individual account.

A mistake at this stage (an employee not registered, a salary incorrectly declared) creates a gap for the employee and a back-payment of contributions, with interest, for the company. These steps are part of payroll management, whether it is handled in-house or outsourced.

The AVS pension depends on two factors: the number of contribution years and the average annual income over the whole career. A full career without gaps gives entitlement to a full pension; average income then determines where you fall between the minimum and the maximum pension.

Contribution period: 44 years for a full pension

A full career means 44 years of contributions, from 1 January following your 20th birthday until the end of the year before you reach the reference age. Contribution years between 18 and 20, known as youth years, can be used to fill certain later gaps.

If your contribution period is incomplete, you receive a partial pension: each missing year reduces the pension by at least 1/44.

The relevant average annual income

The fund adds up the income recorded in your individual account, revalues it, and divides it by the number of contribution years. Where applicable, education credits (years during which you raised children under 16) and care credits (caring for a relative) are added to this average income.

The higher this average income, the closer the pension gets to the maximum. But the range is deliberately narrow: the maximum pension is only twice the minimum pension. This is one of the solidarity features of the AVS. High earners contribute on their entire salary, with no cap, while their pension remains capped.

Minimum pension, maximum pension

These amounts are generally adjusted every two years by the Federal Council, based on the mixed index, which combines wage and price developments. The adjustment on 1 January 2027 represents an increase of 1.59%.

The cap for married couples

For a married couple where both spouses receive a pension, the total of the two pensions is capped at 150% of the maximum pension, i.e. CHF 3,780 per month in 2026. This cap also applies to registered partners.

Example: Paul and Nadia, married, both retired. Their pensions calculated separately amount to CHF 2,300 and CHF 2,100 per month, a total of CHF 4,400. As this exceeds CHF 3,780, both pensions are reduced proportionally so that the couple receives CHF 3,780 in total. Two cohabiting partners in the same situation would not be capped, but they are not entitled to survivors’ pensions either.

Not to be confused with splitting: during the marriage, the income of both spouses is shared equally for the calculation of their respective pensions. Splitting allocates entitlements; the cap limits the total amount paid.

Three profiles to understand it

The examples below are fictitious and simplified. They illustrate the logic of the calculation, not a guaranteed amount: only your compensation fund can calculate your pension.

• Léa, 34, a full-time commercial employee since age 21. If she contributes without interruption until the reference age, she will have a full 44-year career. Her pension will fall between the minimum and the maximum, depending on her average income over her whole career.
• Karim, 45, arrived in Switzerland at 31. He will be missing about ten years of Swiss contributions. His pension will be a partial pension, reduced by about 10/44. Based on the 2026 maximum pension, the reduction could reach almost CHF 575 per month. Depending on his country of origin, social security agreements may give him a pension from that country for those years.
• Sofia, 52, working at 60% for fifteen years to raise her children. Her contribution period can remain complete, but her average income is lower. Education credits, recorded for the years she raised children under 16, raise this average income and therefore her pension.

The 13th pension payment is an additional payment, equal to one twelfth of the annual old-age pension, made every year in December. It was approved in a popular vote in March 2024 and comes into effect in 2026.

The key rules, according to the Federal Social Insurance Office:

• First payment: December 2026, together with the regular December pension.
• Amount: one twelfth of the annual old-age pension, rounded to the franc, in practice one extra monthly payment.
• Beneficiaries: old-age pensions only. AI pensions, survivors’ pensions and child’s pensions are not concerned.
• No action required: the compensation fund pays the 13th pension automatically.

Example: Monique, retired, receives an old-age pension of CHF 2,000 per month. Her annual pension rises from CHF 24,000 to CHF 26,000. In December 2026, she receives CHF 4,000 instead of CHF 2,000. A person receiving the maximum pension gets an extra CHF 2,520 in December 2026.

The long-term financing of this 13th pension payment is the subject of a popular vote on 29 November 2026, on a VAT increase. The result of this vote does not affect the December 2026 payment.

The reference age is the age at which the AVS pension is paid without reduction or supplement. It is 65 for men and, since the AVS 21 reform, it is gradually rising from 64 to 65 for women.

AVS 21: the reference age for women in transition

The AVS 21 reform came into force on 1 January 2024. It raises the reference age for women in three-month steps, depending on year of birth:

The pension supplement for the transition generation

Women born between 1961 and 1969 benefit from compensation measures. If they do not draw their pension early, they receive a lifelong pension supplement of between CHF 12.50 and CHF 160 per month, depending on their year of birth and income. Those who prefer to retire early can do so from age 62, with more favourable reduction rates than under the ordinary scheme.

Example: Anne, born in 1963. Her reference age is 64 and 9 months. If she waits until that age, she receives a lifelong pension supplement; if she retires early, she gives it up but suffers a smaller reduction than later generations.

Retiring earlier, later or gradually

Since AVS 21, retirement is flexible. You can draw your AVS pension between 63 and 70, in full or in part.

• Drawing early: the pension can be paid from 63 (from 62 for women of the transition generation). It is reduced for life, and no child’s pension is paid during the early retirement period.
• Deferring: you can postpone the start of the pension by one to five years, so up to age 70. The pension is then increased for life.
• Combining: you can draw only part of the pension, between 20% and 80%, and defer or draw the rest early. This is useful to accompany a gradual reduction in working hours.

Continuing to work after the reference age remains possible. Contributions paid after that age can, under certain conditions, improve an incomplete pension.

An AVS gap is a year in which you should have contributed but no sufficient contribution was recorded in your individual account. It reduces the pension by at least 1/44 per missing year, for life.

The most frequent causes

• Studies after age 20 without paying the non-employed contribution.
• A stay abroad (studies, expatriation) without AVS affiliation or a social security agreement that allows the periods to be counted.
• A sabbatical or extended unpaid leave without contributions.
• A move to self-employment without proper registration with the compensation fund.
• A period at home without a spouse contributing enough.

What a gap really costs

Example: Julien spent two years abroad, from 22 to 24, without contributing. His pension is reduced by at least 2/44. Based on the 2026 maximum pension, that is around CHF 115 per month, almost CHF 1,375 per year, throughout his retirement. With five missing years, the reduction would reach almost CHF 290 per month.

Making up a gap: the five-year rule

Missing contributions can be paid retroactively for five years. Beyond that, the fund’s right to claim them is time-barred and the gap in principle becomes permanent. Two factors can soften its effect: youth years (contributions paid between 18 and 20) and, in some cases, contributions paid after the reference age.

Ordering your individual account statement

The individual account lists all the income recorded in your name: it is what will be used to calculate your pension. You can request a statement free of charge, online or from your fund. The statement lists, year by year, the income recorded and the fund concerned. An empty year or unusually low income should alert you.

The statement is particularly useful:

• about every five years, to stay within the period for making up contributions;
• after a stay abroad or a return to Switzerland;
• after moving from employee to self-employed status, or the reverse;
• at least ten years before retirement, to plan ahead.

We explain the process in our article AVS account statement: what to check. You can also ask your fund for an advance calculation of your future pension.

A cross-border worker employed in Switzerland is insured under the Swiss AVS like a resident employee, with the same contribution rates, and their years of work in Switzerland give entitlement to an AVS pension. Thanks to the agreements between Switzerland and the EU/EFTA, periods of contribution in the different countries are added together to establish entitlement, and each country then pays the pension corresponding to its own periods.

Leaving Switzerland does not cancel acquired rights: the years of contribution remain recorded in your individual account, and the pension can be paid abroad. The coordination rules of the destination country then determine whether gaps may arise.

The AVS pension is not paid automatically. You must apply to the compensation fund that collected your last contributions, using the official form.

The application is generally submitted several months before the reference age, or before the chosen early retirement date, to give the fund time to reconstruct the career and calculate the pension. The application is also the time to check the individual account one last time, report the years spent abroad and claim education or care credits.

A married couple submits two applications, one per spouse, when each reaches their own reference age.

An owner-manager working in their own company limited by shares (SA) or limited liability company (Sàrl) is, for AVS purposes, an employee of their company. They contribute on the salary they pay themselves, exactly like their employees, and the company pays the employer share.

Dividends, however, are not salary: they are not subject to AVS contributions and therefore create no pension entitlement. This has two consequences:

• Only salary feeds the individual account. A lower salary means fewer contributions, but also a lower average income recorded in the individual account, and therefore a potentially lower pension. The 2nd pillar, also calculated on salary, follows the same logic.
• The compensation fund looks at the overall picture. A very low salary combined with high dividends can be partly reclassified as salary, with back-payment of contributions.

The AVS pension is fully taxable as income, for direct federal tax and for cantonal and communal taxes. It is added to the pensioner’s other income: LPP pension, investment income, rental income, any salary.

Three points to keep in mind:

• The 13th pension payment is also taxable. It increases taxable income in the year it is paid.
• Supplementary benefits (PC), however, are not taxable. They are added to the pensions of people whose income does not cover basic needs.
• Contributions paid during working life are deductible, since tax is levied on salary net of social contributions. For a self-employed person, personal contributions are also deductible.

When planning retirement, think in terms of income after tax, AVS, LPP and 3rd pillar combined.

The AVS fulfils exactly the role the Constitution assigns to it: covering basic living needs appropriately. It pays no capital, cannot be passed on to heirs and, even at its maximum, replaces only part of earned income.

That is why the Swiss system rests on three levels. For the overall picture, our article The 3 pillars of the Swiss pension system shows how they fit together. The next two levels each have their own guide:

• LPP: the complete guide to the 2nd pillar, which supplements the AVS for employees and, together with it, aims to maintain around 60% of final income for an average salary;
• 3rd pillar: the complete guide to pillars 3a and 3b, tax-incentivised private pension provision.

At Synergix, two separate services can support Swiss SME owners on these topics. Payroll outsourcing covers companies’ day-to-day operations, including the calculation and payment of AVS/AI/APG contributions. Alongside this, for any individual tax question (the impact of the AVS pension and the 13th pension payment on taxable income, the choice between early and deferred retirement, coordination with an LPP or 3a withdrawal), a specialist from our tax team answers on request. Contact us to discuss it.