What is the allowance?
In Switzerland, every employed, non-employed, and self-employed person is liable to OASI contributions. If a person has reached retirement age but is still working, they won’t have to pay OASI contributions for an income lower than 16,800 CHF/per annum. This is called allowance. If the income is higher, the amount above 16,800 CHF/per annum is subject to OASI deductions.
Example: Working pensioner claiming allowance
If a working pensioner earns 30,000 CHF/per annum, they pay contributions for 13,2000 CHF (30,000 CHF minus 16,8000 CHF) rather than the whole income of 30,000 CHF.
According to the OASI (AHV 21) reform, effective from 1 January 2024, it is now possible to decline the allowance so that the OASI deduction starts with the first Swiss franc earned.
Example: Working pensioner declining allowance
If a working pensioner earns 30,000 CHF/per annum and declines the allowance, they pay OASI for their entire income of 30,000 CHF.
By declining the allowance, additional OASI contributions will be paid with the advantage of supplementing one's retirement pay (not exceeding the legal maximum amount of 2,450 CHF). Especially those with gaps in their contribution will profit from this. Between the ages of 65 and 70, people can apply for a one-time recalculation of their retirement pay at the compensation office. The retirement pay upgrade is valid for contributions paid from 2024 onwards only.
Please note: The allowance is not equivalent to an exemption from payment of premiums on marginal wages (2,300 CHF). Exemptions do not affect pensioners, therefore there is no right to claim it.
When will the allowance be applied?
The allowance will be applied the following month after reaching the regular retirement age. The amount of 16,8000 CHF will be proportionately reduced in the first year.
Example: Claiming the allowance in the first year
It is John Q. Public's 65th birthday in August. From September on, the allowance of 5,600 CHF (16,800 CHF / 12 months * 4 months) will be applied. There is no allowance on the income between January and August, as the full income is liable to contributions.
The reference age of 65 years applies to all men, irrespective of the year of birth.
The reference age of 64 years applies to all women born before 1960. The reference age is raised gradually from 64 to 65 years for women born between 1961 and 1963. For women born in 1964 or later, the reference age is 65 years (see table).
Month of Birth |
Reference Age |
Start of pension claim = Start of allowance claim
|
Until December 1960 | 64 years
| Month after 64th birthday |
January to December 1961
| 64 years + 3 months
| May 2025 to April 2026 (= 4th month after 64th birthday)
|
January to December 1962
| 64 years + 6 months
| August 2026 to July 2027 (= 7th month after 64th birthday)
|
January to December 1963
| 64 years + 9 months | November 2027 to October 2028 (= 10th month after 64th birthday)
|
From January 1964
| 65 years
| Month after 65th birthday
|
You can calculate the beginning of your pension on the homepage of the Swiss Federal Council (Bundesrat). You only need to enter your date of birth (Stabilization of OASI (OASI 21) --> individual calculation --> new reference age)
The OASI has provided a video for demonstration: Stabilization of OASI (OASI 21)
The allowance is only considered for months during which a person has worked (pro rata temporis). Partial months are treated as full months (no day-by-day cuts).
Example: Allowances applied from non-working to working periods
John Q. Public is 68 years old, a pensioner, and not working. To increase his income, he starts working on 1 November 2024. The deduction on the allowance is only valid for the months in which he actually works, from November to December. So, he can claim tax exemption on 2,800 CHF (16,800 CHF / 12 months * 2 months).
If a person liable to contribution has contracts with several employers, or is both employed and self-employed, the allowance will be applied for every single occupation separately.
Until when do I have to report that I would like to decline the allowance, and to whom?
Your employer assumes by default that the allowance will be applied. If you would like to decline it, you must actively inform them of your decision. If you decide to decline it, the OASI will be deducted from your full income. If this is the case, it will not be possible to make changes for the rest of the current year. You will only be able to amend your decision for the following year. In case you miss the deadline, the deduction of the OASI on the full income will continue.
Example: Giving notice of declining or claiming the allowance
We will take John Q. Public from the previous example (Claiming allowance in the first year) – it is now the year 2024.
Version 1: If John Q. Public agrees to the deduction of the allowance on the wage payment for September 2024, his employer has to credit the allowance on wages from September to December 2024. If John Q. Public agrees to the deduction of the allowance on the wage payment for January 2025, his employer has to credit the allowance on wages within the whole year of 2025.
Version 2: If John Q. Public informs his employer after his wage payment for September 2024 that he would like to decline the allowance, the employer must deduct contributions from all wages paid during the whole year of 2024. In January 2025, his employer must continue deducting contributions from all wages unless John Q. Public wishes to decline the allowance for the following year.
At Coople, the following notification periods must be met:
Issue
|
Notification Period
|
Example
|
You have just started working with Coople and you are already retired.
| Before the first payroll
|
|
You are currently working with Coople and you are about to retire. | Before the payroll for the subsequent month when the retirement age has been reached
|
|
You are currently working with Coople as a pensioner and would like to decline the allowance for the following year. | Before the January payroll |
|
What is the notification procedure at Coople?
If you want to decline or re-claim the allowance, please send us an email to payroll.ch@coople.com. Please use either “Declining of OASI allowance“ or “Claiming of OASI allowance“ as the subject line so that your message can be processed by the responsible team as quickly as possible.
This article relates to the letter of the Municipality referring to the liability to contribution for gainfully employed persons after having reached the reference age in the OASI, IV (invalidity insurance) and EO (loss of earnings compensation scheme): https://sozialversicherungen.admin.ch/de/d/6425/download