Your first real pay slip is often a small shock, when the gross salary you agreed to doesn't match what actually lands in your account. This page explains, step by step, what gets deducted and what's behind the three pillars of the Swiss pension system.
*Only if you hold a foreign residence permit without a C permit, otherwise tax is billed separately via your tax return.
Click on a pillar to see what it means, and whether it's mandatory or voluntary. AHV stands in the middle: it's the most important pillar and mandatory for everyone.
Above a certain annual salary (the entry threshold) you automatically pay into your employer's occupational pension fund (BVG), part comes from you, part from your employer.
Unlike AHV, this money is saved up personally for you (a funded system) and later paid out with interest, either as a lump sum or as a pension.
Goal: together with AHV, to reach about 60 % of your last salary in retirement. While you earn little or work part-time, you're often not yet insured under BVG, or only partially.
AHV (Switzerland's old-age and survivors' insurance, its state pension scheme) is mandatory for everyone who works or lives in Switzerland. It's meant to secure a basic standard of living in old age, but usually covers only part of your previous living costs.
It's financed on a pay-as-you-go basis: today's working generation directly funds the pensions of today's retirees, your contribution now doesn't build up your own personal account, it pays for current pensions.
IV (disability insurance) and EO (income compensation, e.g. for military service or maternity) run through the same contributions and protect you in other life situations.
The 3rd pillar is voluntary, private pension provision, it tops up AHV and the pension fund when those aren't enough to maintain your usual standard of living.
Säule 3a (pillar 3a): tax-advantaged, but locked in until shortly before retirement. What you pay in can be deducted from your taxable income.
Säule 3b (pillar 3b): free saving and investing with no tax break, but available at any time. More on this under Taxes and Investing.
For most people starting out, around 10–15 % of gross salary goes to social insurance before tax is even considered. Use the salary calculator to see an approximation for your own salary.
Besides the three pillars, a few more terms show up on your salary certificate or when things go wrong. Click on a card for the explanation.
Unemployment insurance (ALV) pays you part of your previous salary if you lose your job through no fault of your own, while you look for a new one. Among other things, you need a minimum contribution period to qualify.
If you can't show a contribution period right after your apprenticeship or school, your entitlement may be limited, it's worth checking this early if it becomes relevant.
You register with the RAV (regional employment office) as soon as you're unemployed or about to be, the earlier the better for your ALV entitlements.
The RAV also helps with your job search and can arrange further training or interim work.
Non-occupational accident insurance (NBU) covers accidents outside work (e.g. sport, leisure). If you're employed for a certain weekly workload (usually from 8h/week), it's automatically insured through your employer and deducted from your salary.
With a lower workload you're often not automatically covered, in that case your health insurer covers accidents too, usually for an extra premium.
Quellensteuer (withholding tax) applies if you hold a foreign residence permit without settlement status (no C permit). The tax is then deducted directly from your salary by your employer and forwarded to the tax office.
More on the standard tax return (for everyone else) under Taxes.