As an employee in Switzerland, you will be engaged in a mix of social security elements. Some of these will be standard  nationwide, others obligatory but varying in price, and those that have been chosen directly by the employer. These will most probably have been discussed in solidarity with company employees. In this post we take a look at what employees typically encounter, along with the related terminologies.


PILLAR ONE  | State social security system

The first line most likely visible on your payslip, and which is the same value nationwide, is often known as the “first pillar”.  This is part of the three-pillar pension system in Switzerland. The first pillar is obligatory for all citizens, and we will briefly look at the second, and third pillars later. The main purpose of the first pillar is to provide a basic income on retirement. This is linked to the level, and years of contributions.

The cost of the first pillar is actually made up of old age retirement contributions as well as invalidity insurance and income replacement. Income replacement is a vague term, which includes such benefits as:

  • maternity
  • salary during military service
  • the new paternity benefit
  • and more recently, it also covered salaries during Covid-19 when employees were not able to work, but were not unemployed either.

Expect to see AHV/IV/EO or AVS/AI/APG or AVS/AI/PG on your payslip depending on where your employer is located (abbreviations in German, French, Italian). Contributions are paid 50% by the employee and 50% by the employer. Voluntary contributions are sometimes possible by a private individual in order to fill contribution gaps.

Unemployment Insurance

The second element you are likely to see on your pay slip is  unemployment insurance which also has a fixed nationwide value. You will probably see this on the payslip as ALV or AC.

If you become unemployed, then you will be able to claim unemployment benefits if you have been engaged for 12- months in the last 24 months, with some exceptions. As a general rule of thumb, the following apply:

  • you will gain about 80% of your previous salaries, up to a maximum insured amount of 148’200 if you have children and 70% if you do not.
  • You must be resident in Switzerland.
  • You may become unemployed in another state but the contributions you have made in Switzerland may still assist you in accessing domestic benefits.


Child Benefit

Beyond these two elements, social security will vary for your employer and sometimes for the employee. This depends on which Swiss social security compensation office your employer is affiliated with.

The office usually associated with the employer is the local cantonal office. The first one that is obligatory for the employer is the “child benefit” pot.

  • This is a cost incurred by the employer.
  • The lowest child benefit is CHF 200 per month, but it can be considerably higher depending on various factors:
    • the provider may increase this amount from certain ages of the children
    • this depends whether they are in higher education, or the number of children and even birth benefits may be available
    • this is a decision of the provider, to set its own costs and benefits as long as it covers the state defined minimum.



Administrative charges

Another obligatory element of the social security system that the employee does not see is on the payslip is the administration cost.  Again this varies depending on social security compensation office, and is often linked to company turnover. The employer pays this contribution.


Specific contributions for the employee

After this, there are contributions which have been set up by the employer’s social security provider, but are obligatory to all employees affiliated with this compensation office.

It is most common to be affiliated to a cantonal provider depending on where your employer is based. These providers can have their own additional contributions, which may be carried entirely by the employer or sometimes partially by the employee as well.

This may include such things as:

  • maternity extensions
  • reintegration to work schemes
  • apprenticeship supports
  • crèche subsidiaries

These are likely to have been voted for on a local basis, often offering an insight into the social leanings of where your employer is based. The above elements are also managed through via the compensation office through the employer.


There are other elements beyond the social security structure, that are  usually considered as part of the system.  These element link together with the social security cogs – even if they theoretically sit outside of the bureaucratic machinery.


Accident insurance

The first of these is accident insurance, an obligatory insurance provided by the employer.

The employer has the right to choose which accident insurance to work with. unlessthe employer has no choice, depending on the industry they work in.

The employer provides professional and non-professional accident insurance. The costs will vary depending on the insurer and industry. It covers medical costs incurred, linked to an accident, as well as salary linked to absenteeism from work due to an accident. 

The employer has to cover the professional accident insurance but is it usual for non-professional coverage to be deducted from the gross salary. On your payslip you may see it as NBU, AANP or LAINF NP. Benefits can last up to 720 days.

Sickpay insurance

The second of these, is sickness insurance which is not obligatory for the employer, unless a collective bargaining agreement dictates otherwise.

Sick pay insurance is very common and the cost may be carried by the employer. It is however often split 50/50 between employer and employee. The employer may choose a sickness insurance provider as well as a waiting period.

A waiting period is the length of time the employer will pay the employee’s salary before the insurance takes over paying the salary at 80%. The waiting period and industry may generate large variations in costs of premiums for this product.

The insurance can pay the salary for up to 720 days and links in with pillar one and pillar two insurances.. You might see this on your payslip as KTG, APG or ACIG. The employer has obligations to pay an absent sick employee by law even if there is no sickpay insurance. The employer’s obligation is linked to the length of time served in the company, but a sick pay insurance will last much longer than an employer’s obligation.

PILLAR TWO – Employer pension plan

The 2nd (occupational) pillar of the Swiss pension system, is intended to complement the Pillar-one, to enable the employee to receive a reasonable pension in retirement.

This is another obligatory pension fund to be provided by the employer if your contract is three months or longer. This may be visible on the payslip as BVG or LPP.

  • It is an employer pension scheme, which is where most of the retirement contributions are made.
  • These plans also cover invalidity and death.
  • They are provided by external companies managing pension funds and some companies are large enough to have built their own schemes
  • They are set up by the employer with their chosen provider and are often built in solidarity with employees.

As an employee, you may have options within the plan(s) provided by the employer, but cannot construct your own. On the whole, contributions increase with age linked to the employer’s plan, but they may also be a singular percentage of a salary.

The employer must pay 50% or more of the employee’s total contribution. It is this area of the salary that has the most variety and competition within it. This is often built in a beneficial way as a tool to attract and retain staff.

Employees may be able to make voluntary contributions to their employer’s pension pot as a private individual. Despite being outside of the state system, accident, sickness and pillar two are all regulated by the state in such a way that they do link together.

Collective bargaining agreement contributions

A further element that you as an employee, might see on your payslip, is a contribution to a union or a collective bargaining agreement to which your employer may have voluntarily signed up for or is obliged to do so.

This element is usually to defend the rights of employees in “your” industry, such as working time, holidays, minimum salaries etc., and may include subsidies for sickness insurance and further education funds.

As an employee it is your right to be able to ask your employer what potential benefits you might be entitled to from one of these contributions to solidarity agreements.



Health Insurance

Finally it is worth mentioning what is not included in salaries, but that can be linked to the social security system. Firstly health insurance.

Sickness insurance may pay your salary when you are absent from work as a result of illness, but health insurance covers the medical costs incurred.

This insurance is a private matter and an obligation for all citizens with very  few exceptions. The costs vary widely depending on provider, level of coverage, location and how much you are prepared to pay towards the costs you have incurred per year. The minimum being CHF 300 per year, up to CHF 2’500 per year. Sometimes an employer may make a financial contribution in your salary towards this obligatory insurance.


Another common product sometimes seen as linked to the social system is the third pillar.

We looked briefly already at the 1st and 2nd pillar, but some people take out a voluntary “third pillar” to their pension fund. This is often if an individual considers their employer’s pension fund unsatisfactory for their needs. Up to a value of CHF 7’056 (new level in 2023) per year is tax free. This can be higher as a self-employed person. It is set up by the individual with their bank and insurance provider of choice.


And there we have it – a brief introduction to the social security elements in the Swiss system. The ones that are obligatory, obligatory but vary in cost, obligatory but only in some places, obligatory, but not part of the salary and voluntary as well as the invisible employer costs.

Swissroll GmbH was founded over 20 years ago. During this time our team of experts has worked with hundreds of companies and literally thousands of contractors. Beyond our core function of payroll management, we offer advice to contractors coming to work in Switzerland for the first time. This includes advice on social security. Swissroll: “More than just payroll specialists”

Contact us now on: