AHV/IV minimum pensions increasing: What you as an employer should know now

Melanie Imper Manager, Employment Solutions, PwC Switzerland 04 Nov 2020

In its meeting on 14 October 2020, the Federal Council approved an adjustment of pensions under the Federal Act on Old-Age and Survivors' Insurance (AHV) and Disability Insurance (IV) in line with current price and wage trends – with far-reaching consequences.

The resolution of the Federal Council will bring about changes in contributions, supplementary benefits and compulsory occupational pensions. From 1 January 2021, the new minimum pension will amount to 1195 CHF per month, which is 10 CHF higher than the previous minimum pension. The maximum pension will also increase. For supplementary benefits, the amount intended to cover general human necessities will increase for both single people as well as married couples and children. Generally speaking, AHV/IV pensions are reviewed every two years to determine whether they need to be adjusted. The recommendation of the Swiss Federal AHV/IV Commission is a key factor in this process. The calculation is based on the arithmetic mean of the price and wage index (hybrid index).

Pensions will increase

Pensions will increase as follows:

  • Minimum AHV/IV pension: 1195 CHF (previously: 1185 CHF) per month
  • Maximum pension (for full contribution period): 2390 CHF (previously: 2370 CHF) per month

The pension increase has an impact on claims whose threshold is tied to the amount of the AHV/IV pension. In order for employees to receive the full family allowance, the wage must equal at least half of the annual AHV/IV pension, or the new amount of 7170 CHF. Children whose gross wage exceeds the new maximum annual retirement pension of 28’680 CHF will no longer be entitled to an education allowance. Pursuant to the Swiss Federal Act on Measures to Combat Illegal Employment (Bundesgesetz über Massnahmen zur Bekämpfung von Schwarzarbeit), employers may settle wages under the simplified process provided the total wages of all employees do not exceed twice the maximum annual AHV/IV pension – now 57’360 CHF. As part of these adjustments, various limits for recipients of supplementary benefits will also change.

Most of the additional costs of around 441 million CHF that arise from these increases will be attributed to AHV (390 million CHF). Of that, 79 million CHF will be borne by the Federal government. 51 million CHF will be borne by Disability Insurance. In addition, there is 1.4 million CHF in costs from the adjustment of supplementary benefits. This will be borne by the Federal government and the cantons (0.8 million CHF).

Minimum contributions follow suit

Owing to the increase in minimum pensions, the minimum contributions for AHV, IV and the loss of earnings compensation scheme (EO) must also be adjusted for self-employed individuals, non-gainfully employed persons and for voluntary AHV/IV:

  • Self-employed/non-gainfully employed individuals: 503 CHF (previously: 496 CHF) per year, due to the increase in the minimum contribution for AHV to 413 CHF and for EO to 24 CHF
  • Voluntary AHV/IV: 958 CHF (previously:  950 CHF) per year, due to the increase in the minimum contribution for AHV to 826 CHF
Occupational pension contributions affected

The threshold amounts for compulsory occupational pensions will also be adjusted. This affects the entry threshold and the coordination deduction and is therefore relevant for employers. The maximum allowable tax deduction for tied private pension institutions (pillar 3a) will also be increased.


Current amount (in CHF)

Amount from 1 January 2021 (in CHF)

BVG entry threshold



Coordination deduction



Max. tax deduction (pillar 3a) for persons with pillar 2



Max. tax deduction (pillar 3a) for persons without pillar 2



Survivors’ and disability pensions (except those that were formed in 2008, 2011 and 2012) will also be increased by 0.3% on 1 January 2021 due to the increase in the consumer price index.

Appearances are deceiving

At first glance, the increase in AHV/IV pensions may not seem to have a major impact on employers. However, this is where a closer look is necessary. The threshold values for various claims are linked to the adjusted values and must not be overlooked. In particular the entry threshold and coordination deduction for occupational pensions have a direct impact on payroll accounting.


Contact us

Melanie Imper

Melanie Imper

Manager, Employment Solutions, PwC Switzerland

Tel: +41 58 792 28 32