Old-Age and Survivors' Insurance (AHV)
The AHV is the first pillar of the Swiss pension system, a mandatory universal insurance designed to cover basic living costs in old age and upon the death of a breadwinner.
Concept
Old-Age and Survivors’ Insurance (Alters- und Hinterlassenenversicherung, AHV) forms the first pillar of the Swiss pension system and is designed as a mandatory universal insurance covering virtually the entire population resident or gainfully employed in Switzerland. It aims to secure basic living needs in old age (old-age pension) and upon the death of a spouse or parent (survivors’ pension for widows, widowers, and children), and is financed on a pay-as-you-go basis: current contributions from the working population directly fund current pensions.
Financing and Benefits
The AHV is financed through payroll contributions from employees and employers, contributions from the self-employed and non-working individuals, and contributions from public funds. The amount of the old-age pension depends on the contribution period and average qualifying income; contribution gaps lead to a permanent reduction in the pension. The AHV is complemented by disability insurance (IV) and the loss of earnings compensation scheme (EO), which are built on the same administrative structure (compensation offices).
Relevance for Advisory Practice
Since the AHV pension alone is typically insufficient to maintain an accustomed standard of living, its function within holistic financial planning is primarily to secure basic subsistence, while occupational pension provision (second pillar, BVG) and private pension provision (third pillar) are intended to maintain living standards and cover individual needs respectively. For insurance intermediaries, understanding the AHV framework is essential, as many personal insurance products (e.g. loss-of-income insurance) must be coordinated with AHV benefits.