The Swiss AHV: how the first pillar works for foreign entrepreneurs and their families

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The Swiss old-age and survivors' insurance, known by its German abbreviation AHV, is the core of the first pillar of the Swiss pension system and applies to almost everyone who lives or works in Switzerland, whatever their nationality. Foreign entrepreneurs encounter it as employers, as insured persons drawing a salary from their own company and as heads of relocating families. This article explains how the system is structured and financed, who is insured, how pensions are calculated and which recent reforms matter.

The three-pillar system in brief

Swiss retirement provision rests on three pillars. The first pillar consists of the state old-age and survivors' insurance (AHV) and the disability insurance (IV), supplemented by supplementary benefits. The second pillar comprises occupational pensions under the BVG, which are compulsory for employees above an entry threshold. The third pillar is private provision, divided into tax-privileged pillar 3a savings and freely structured pillar 3b provision. See also Insurance and pensions in Switzerland.

What AHV, IV and EO are and how they are financed

The AHV pays old-age and survivors' pensions under the Federal Act on Old-Age and Survivors' Insurance (OASIA; German: AHVG), while the IV pays benefits in the event of disability. A third scheme, the income compensation scheme (EO; German: Erwerbsersatzordnung), replaces part of the earnings lost in certain situations such as military service or maternity. Contributions to all three are collected together by the compensation offices (Ausgleichskassen).

The AHV works on a pay-as-you-go basis: the contributions of today's working population finance today's pensions. Its revenue comes chiefly from contributions levied on salaries and on the income of the self-employed, supplemented by a share of value added tax and by a contribution from the federal budget.

Who is insured

Compulsory insurance attaches to two connecting factors: everyone domiciled in Switzerland and everyone working in Switzerland is insured (Art. 1a para. 1 lit. a and b OASIA). Nationality plays no role. Exemptions exist for persons enjoying diplomatic immunities and for cases in which affiliation would cause an unreasonable double burden (Art. 1a para. 2 lit. a and b OASIA). Self-employed persons and employees of employers without a Swiss establishment are also exempt if their work in Switzerland does not exceed three consecutive months per calendar year (Art. 1a para. 2 lit. c OASIA in conjunction with Art. 2 of the Ordinance on Old-Age and Survivors' Insurance, OASIO; German: AHVV). Where several states are involved, social security agreements often determine which legislation applies; see Social security agreements and secondments: the AHV in cross-border situations.

When contributions start and end

Persons who are gainfully active pay contributions from 1 January following their 17th birthday (Art. 3 para. 2 lit. a OASIA), and they continue to do so for as long as they work, even beyond the reference age (Art. 3 para. 1 OASIA). Persons without gainful activity contribute from 1 January following their 20th birthday until the end of the month in which they reach the reference age (Art. 3 para. 1bis OASIA). A non-working spouse is deemed to have paid contributions if the working spouse pays at least twice the minimum contribution, currently CHF 1,060 (Art. 3 para. 3 OASIA).

Reference age

Following the AHV 21 reform, which entered into force on 1 January 2024, the reference age is 65 for both men and women (Art. 21 para. 1 OASIA), and the pension begins on the first day of the month after it is reached (Art. 21 para. 2 OASIA). For women the increase is being phased in: women born in or before 1960 retain a reference age of 64 rising by three months for each cohort from 1961 to 1963, and women born in 1964 or later reach it at 65. Women born between 1961 and 1969 who do not draw their pension early receive a lifelong pension supplement (Art. 34bis OASIA). Early and deferred retirement are explained in The AHV old-age pension in 2026: amounts, the 13th pension, early and deferred retirement.

How the pension is calculated in principle

Entitlement to an old-age pension requires at least one full contribution year (Art. 29 para. 1 OASIA). The amount depends on two factors. The first is the number of contribution years: a full pension requires the complete contribution years of the person's cohort, typically 44 years (Art. 29ter OASIA), and each missing year reduces the pension by at least 1/44. Persons who arrive in Switzerland as adults will therefore often receive only a partial pension. The second factor is the average annual income.

For married couples, incomes earned by spouses during the years of marriage are split between them (Art. 29quinquies OASIA), and credits for raising children (Art. 29sexies OASIA) and for caring for relatives (Art. 29septies OASIA) are added to the relevant income. Pensions are subject to a statutory minimum and maximum, and the pensions of a married couple are capped at 150 % of the maximum pension (Art. 35 OASIA). These amounts are adjusted periodically.

The individual account

Each insured person has an individual account kept by the compensation office, on which the contribution years and the income subject to contributions are recorded, and each person is identified by an AHV number. Since these records determine the later pension, it is worth checking from time to time that the account is complete. Pensions are not paid automatically; an application must be filed with the compensation office in good time.

Why the AHV matters for foreign entrepreneurs

An entrepreneur who establishes a Swiss company and employs staff becomes an employer with a Swiss establishment and must join a compensation office, deduct the employee share from every salary and remit both shares (Arts. 12 and 14 para. 1 OASIA); see AHV contributions on salaries in 2026: what employers and employees pay. Where contributions remain unpaid, board members and managers may be held personally liable (Art. 52 para. 2 OASIA), as explained in Unpaid AHV contributions: the personal liability of directors and managers.

The entrepreneur's own salary from the company is subject to contributions like any other, while those working on their own account are assessed as self-employed. Family members who relocate without working, and wealthy individuals without gainful activity, pay as non-employed persons on the basis of their wealth and pension income; see AHV for the self-employed and for persons without gainful activity. Anyone planning to leave Switzerland should consider early whether a pension can be paid abroad or contributions refunded, which depends on nationality and any applicable agreement (Art. 18 paras. 2 and 3 OASIA); see Leaving Switzerland: AHV pensions abroad, refunds of contributions and voluntary insurance.

Recent reforms

AHV 21 also introduced flexible retirement and an increase in VAT. In the popular vote of 3 March 2024 the electorate approved a 13th old-age pension (Art. 34ter OASIA), first paid in December 2026. To finance it, Parliament adopted on 19 June 2026 an increase in VAT from 2028 at the earliest, without any increase in salary contributions; as a constitutional amendment it is subject to a popular and cantonal vote scheduled for 29 November 2026, the result of which is still pending. The Federal Council's "AHV 2030" package was in consultation from 20 May to 11 September 2026; its proposals, which are not yet law, include raising the AHV contribution rate for the self-employed, increasing the allowance for working pensioners and treating dividends above a 15 % return on invested capital as salary for contribution purposes.

Practical checklist

• Clarify for each family member whether Swiss insurance applies or whether an agreement allocates them to another country.
• Register the Swiss company with a compensation office before the first salary is paid.
• Ensure that non-working family members are covered, either as non-employed contributors or through the working spouse's contributions.
• Keep track of contribution years and request an extract of the individual account where periods may be missing.
• Assess before departure whether a pension abroad, a refund or voluntary insurance is available.

How Ressos Legal helps

I advise entrepreneurs, company owners and their families from abroad on their position under the Swiss AHV, from employer registration to the status of relocating family members and departure from Switzerland, working alongside their home-country advisers where appropriate. Contact me for an initial discussion.

Sources: Federal Act on Old-Age and Survivors' Insurance (SR 831.10) and Ordinance (SR 831.101), as of 1 January 2026; information leaflets of the AHV/IV Information Centre (ahv-iv.ch), as of 1 January 2026; Federal Social Insurance Office (bsv.admin.ch). Figures as of October 2026.

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.