AHV
AHV: 4 technical terms explained – definition, synonyms and legal basis.
Contribution Gap (Beitragslücke)
Synonyms: Beitragslücke
A contribution gap exists when a person has paid no, or insufficient, AHV contributions in a given calendar year, resulting in a permanent reduction of their old-age pension.
Concept
A contribution gap arises when a person resident or gainfully employed in Switzerland has not paid sufficient AHV contributions for a calendar year despite being subject to a contribution obligation — for example due to a period abroad without voluntary insurance, prolonged unemployment without registering as a non-working person, or an administrative oversight.
Effect on the Pension
Since the amount of the ordinary AHV old-age pension depends on a complete contribution period (currently 44 to 45 years), each missing contribution year leads to a permanent, proportional reduction of the pension by a fraction of the full pension, regardless of the life stage in which the gap arose.
Relevance for Advisory Practice
Under certain conditions and within a statutory deadline (generally five years), contribution gaps can be closed retroactively through voluntary contribution payments; regularly reviewing one’s individual account statement with the compensation office and identifying contribution gaps early are therefore an important part of pension advisory work.
Care Credit (Betreuungsgutschrift)
Synonyms: Betreuungsgutschrift
The care credit is a notional additional income credited when calculating AHV pensions for individuals who care for close relatives with a recognised degree of helplessness.
Concept
The care credit is a notional additional income, analogous to the child-raising credit, credited when calculating an individual’s AHV pension where that person cares for close relatives (parents, grandparents, siblings, spouse) who require regular care due to a moderate or severe degree of helplessness and live in the same household or in its immediate vicinity.
Eligibility Requirements
Entitlement to the care credit exists only if the person being cared for receives a helplessness allowance of at least a moderate degree, and the care requires a certain geographic proximity; the credit must be actively claimed by the caregiver with the competent compensation office.
Relevance for Advisory Practice
Given demographic ageing and the growing importance of informal care by relatives, the care credit is a growing advisory topic, as many caregivers are unaware of their entitlement to this credit and consequently do not claim it.
Income Splitting (AHV)
Synonyms: Einkommenssplitting, Splitting
Income splitting is the equal division of both spouses' AHV-qualifying income earned during the years of marriage when calculating pensions, regardless of who actually earned the income.
Concept
Income splitting is a mechanism used in calculating AHV pensions, whereby the earned income of both spouses accumulated during the years of marriage is added together and credited equally to each spouse’s individual account. Splitting is applied regardless of which spouse actually earned the income, and is carried out at the latest when both spouses reach retirement age or in the event of divorce.
Purpose
Splitting is intended to provide adequate AHV protection for individuals who partially or fully forwent their own gainful employment during the marriage (e.g. due to raising children or managing the household), by crediting them with a portion of the income earned by the working spouse for their own pension calculation.
Relevance for Advisory Practice
Income splitting is an important factor when advising married couples, particularly with regard to divorce or joint retirement, in calculating individual AHV pensions, and complements other instruments serving the same purpose, such as child-raising and care credits.
Child-Raising Credit (Erziehungsgutschrift)
Synonyms: Erziehungsgutschrift
The child-raising credit is a notional additional income credited to parents for years with children under 16 when calculating their AHV pension, offsetting disadvantages caused by child-raising duties.
Concept
The child-raising credit is a notional additional income credited for each calendar year in which a parent has parental custody of a child under 16, added to actual earned income when calculating the individual AHV pension. Its purpose is to offset, in pension terms, the reduced or interrupted employment often caused by raising children.
Allocation Between Married Couples
For married parents, the child-raising credit is divided equally between both spouses during the years of marriage; for unmarried parents, the credit is allocated to the parent exercising parental custody, or proportionally in the case of joint custody.
Relevance for Advisory Practice
Alongside income splitting and the care credit, the child-raising credit is a key AHV instrument protecting individuals with family-related career interruptions from an excessive pension reduction; correctly claiming it requires active registration with the competent compensation office.