Retirement: the Swiss model, an example?

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Pension reform occupies the minds of many French people. In the political sphere opinions differ but the majority is keen on its reform and plans to pass it before the summer. But beyond the borders of France, other pension systems exist and some specialists argue that they could be a good alternative to the one in force in France.

This is particularly the case for the Swiss model. In this country, the legal retirement age is 64 for women and 65 for men. For comparison, this limit is currently set at 62 years in France. But it could well rise to 65 in the coming months if the reform is adopted.

The Swiss pension system is organized into three pillars. The first is the Old Age and Survivors Insurance (AVS), known as the public pension scheme.

It is the equivalent of the French Social Security, that is to say the CNAV or the Retirement Insurance. The AVS concerns employees as well as the self-employed.

“At the legal age, contributions give rise to the payment of an old-age pension (ordinary pension) as soon as there has been 1 year of contributions paid. Other pensions exist: annuity in advance, pension for children of under 25 (if training).”, explains Jean-François Chauffeté, founder and director of Expertise Optimization Retraite.

In Switzerland, the minimum amount of a retirement pension is 1,195 CHF (approximately 1,208 euros) and the maximum is 2,390 CHF (approximately 2,416 euros). In France, the solidarity allowance for the elderly amounts to a minimum of 953 euros and a maximum of 1,850 euros.

In the event of the death of his spouse, a survivor’s pension is paid to the living spouse, under certain conditions. France is also offering similar assistance. However, Switzerland also pays a pension to a child who has lost one or both parents, up to the age of 25 if he is studying, which is not the case in France, explains the expert. .

In addition to Old Age and Survivors’ Insurance, the Swiss pension system is also based on a second pillar, occupational pensions known as “occupational retirement”.

This occupational pension is “private and completes the first pillar at the time of retirement”, explains Jean-François Chauffeté. In France, it could be compared with the complementary executive and non-executive Agirc-Arrco. “In France it is said that these pensions are private but in fact no it is like a public system because it is very supervised and compulsory”, he underlines.

Unlike the French system which is organized on a pay-as-you-go basis, the Swiss system is based on the principle of capitalization. “The contributions are shared between the employer and the employee and are paid to a provident institution according to the field of activity of the company”, develops the founder of EOR.

This contribution is compulsory for all employees whose income is greater than 21,510 CHF (approximately 21,730 euros) per year and is capped at 86,040 CHF (approximately 86,930 euros). As far as the self-employed are concerned, there is no obligation, however they can contribute if they wish.

Contrary to France, contributions increase according to age: “The closer you are to retirement, the more you pay” he specifies, 7% at the beginning then 18% at the end.

A third pillar also completes the first two, private pensions.

The third pillar complements the first two. It is divided into 3 branches. The first is linked individual pensions. In this case, “the contributions are paid into a bank or an insurance company”, explains the expert. This concerns all employees, self-employed people who do not contribute to the second pillar, people residing abroad and working in Switzerland or who continue to work after the legal retirement age.

The second branch of this pillar is free individual pension provision, i.e. investments, life insurance or even a savings account, specifies Jean-François Chauffeté. The last branch is the equivalent of the French retirement savings plan (PER), after the reform of October 1, 2019.

“We see that the systems have some similarities in terms of their inspiration, but where the so-called public social security pension system in Switzerland provides a compulsory basis, it quickly gives way to compulsory and supervised private contributions”, deciphers the founder of EOR.

He thus considers that the Swiss model is “a more liberal and more empowering system individually but also collectively, in particular for the trade unions because it does not allow others to pay for their retirement, as is the case in France”.

Thus, according to him, such a system could not be adapted in France because it would not be compatible with the ideal of “French solidarity” which inhabits part of the population.