There is no choice whether to pay into the OASI or not. The OASI as the 1st pillar in the Swiss pension system is mandatory.
And yet it is an interesting question whether the OASI brings something to someone or not? In this article we would like to investigate this question by comparing the OASI contributions and the OASI pensions.
Calculation of the «return» from the OASI
When calculating average income, we assume an average of CHF 10’000 in education and care credits, CHF 8’000 for children and CHF 2’000 for caring family members. No OASI contributions have to be paid on these credits. However, they lead to a higher pension.
In addition, we calculate throughout with the valid contribution rates. Currently, 8.7 % of the gross salary is paid to the OASI (employer and employee together). We have also considered the minimum annual OASI contribution of at least CHF 503 (for a salary of less than CHF 4’747 per year).
The minimum pension is CHF 1’195 and the maximum pension is CHF 2’390. We assume 20 years as the average pension payment period. Life expectancy is higher for both men and women, so we are on the «safe» side with the 20 years.
This leads to the following pension payments over 20 years:
- for a minimum pension: CHF 286’800
- for a maximum pension: CHF 573’600
For the sake of simplicity, we will not make an interest calculation.
Return from the OASI starting from CHF 155’000 income negative
The result of the calculation is as follows:
- Average incomes from CHF 0 to CHF 86’040 benefit from OASI throughout. The return (pensions minus payments) is between CHF 250’000 and CHF 290’000 (figures have been rounded).
- From CHF 86,040 average income, the benefit of the OASI for the individual decreases steadily. The reason is relatively simple. Even with increasing income, individuals no longer receive a higher pension.
- From an income of around CHF 155’000, people pay more OASI contributions than they get back in the form of a pension.
- With an average income of CHF 1 million, the amount paid into the OASI is six times higher than the amount received as a pension.
Other pensions, which are listed in the last chapter, were not taken into account. Of course, these additional pensions also have a benefit, but this is difficult to quantify.
Other sources of OASI funding
- Value added tax
- Taxes on tobacco and alcohol
- Casino taxes
- General federal contribution
The additional contributions to the OASI account for around 25 % of the OASI’s revenue.
Other pension claims from the OASI
The OASI not only pays an old-age pension, but also other pensions.
People who have reached the regular retirement age and still have children under the age of 18 (in education up to the age of 25) receive a child’s pension of 40 % of the old-age pension.
Children up to the age of 18 (in education up to the age of 25) receive an orphan’s pension if their father or mother has died. It amounts to 40 % of the old-age pension. If both parents have died, the orphan’s pension is 60 % of the old-age pension.
Widow’s and widower’s pension and helplessness allowance
There are also widow’s and widower’s pensions, as well as compensation for helpless persons.
You can find more information on OASI benefits here.