Salary, income tax, pension scheme

Social security in Switzerland

Switzerland has a solid and effective social insurance network, providing all its citizens who live and work here ample cover against risks whose financial consequences they may find hard to face on their own.

The Swiss social security system is organised in five sections:

  • Old-age, Survivors and Invalidity Insurance (the three-pillar system)
  • First Pillar (compulsory): it guarantees benefits to pensioners, the disabled, and survivors
  • Second Pillar (compulsory only for citizens on a regular and fixed income in Switzerland): occupational benefit plan
  • Third Pillar (optional): savings scheme on a fixed deposit account, subject to tax relief (available exclusively to Swiss residents)
  • Insurance against the consequences of a disease or accident.
  • Compensation for loss of earnings to citizens discharging military or community service duties, or mothers on maternity leave
  • Unemployment insurance
  • Family allowances

The insurance cover provided by these insurance plans consists in the payment of benefits such as annuities, compensation for loss of earnings or family allowances, or in the reimbursement of expenses caused by disease or accident.

The benefits paid out by the various insurance branches are funded primarily on the basis of social security contributions deducted from salary. In the case of health insurance policies, on the other hand, each policy holder pays his/her own premium.

For further information:www.bsv.admin.ch/themen/ueberblick/00003/index.html?lang=it and
http://www.bundespublikationen.admin.ch/uploads/tx_ttproducts/datasheet/420.001.i_Aufenthalt.pdf

Social contributions and tax levied at source

Social contributions

  • AVS/AI/IPG (Old-Age and Survivors Insurance): 5.05%
  • AD (Unemployment Insurance): 1%

Acronyms

  • AVS: Old-Age and Survivors Insurance (entitles the insured to pension benefits on reaching 65 years of age)
  • AI: Invalidity insurance (benefits paid in the event of disability)
  • IPG: Compensation for loss of earnings (daily allowance paid to those who discharge their duty in the Swiss Army or Community Service and to mothers on maternity leave)
  • AD: Unemployment insurance (entitles the insured to receive benefits and/or an annuity in the event of unemployment)

Tax levied at source

According to Swiss fiscal law, all foreign staff in paid employment with USI are taxed at source.

  • Tax rate: set by the Inland Revenue Office of Canton Ticino taking into account the employee's salary and personal situation.
  • By March of the following year, the Personnel Office issues the employee with a certificate indicating the amount of tax levied for the fiscal year gone by.
  • All deductions (social contributions and income tax collected at source) are to be considered as permanent and therefore non refundable