Gaps in AHV contributions lead to painful pension cuts. However, many people are not aware of this and only notice it when they retire. A statement of account, and a possible closing of gaps, are therefore highly recommended.
Anyone who wants to draw an AHV pension must pay the contributions - regardless of whether he or she is employed. Decisive for the pension are the contribution years and the income. Employed persons are liable to pay contributions from January 1 after their 17th birthday, non-employed persons from 21 years of age. In order to receive a full AHV pension upon retirement, contributions must be paid without any gaps; for women and men, this has been 44 years since the harmonization of the retirement age. For people who do not work, the contributions are considered to have been paid if the husband or wife - this also applies to registered partnerships - has paid into the AHV together with the employer at least twice the minimum of today's 514.- francs per year. And to receive the maximum pension of 2'450.- francs per month, the average annual income must be at least 88,200 francs, as the experts from the Swiss brokerage center summarize.
Many people have gaps in contributions
Many people discover that they have contribution gaps when they retire, become disabled or die and the amount of their AHV or IV pension is calculated. As a result, more than 10 % of new Swiss pension recipients do not receive an unreduced pension. Gaps quickly lead to significant pension reductions, as for each missing year, the pension for women and men is reduced by 1/44th or 2.3 %. If there is a gap of two years, the maximum pension is reduced by 111.- francs; if there are five missing contribution years, the maximum pension is reduced by 278.- francs per month. If someone even has a contribution gap of eight years, the maximum pension drops from 2'450.- to 2'004.- francs.
How can gaps be avoided?
Gaps in contributions can arise for various reasons. Longer stays abroad, frequently changing employers, giving up work, studying, accident or illness and drawing daily allowances, but also divorce and retirement of the spouse are potential risks. It also happens that the employer does not transfer the contributions to the compensation office. «The first step to find out if there are gaps in contributions is to look at the individual account statement», advise the insurance brokers. An account statement can be ordered from the relevant compensation office (in the canton of Zurich, for example, at this link). It provides information about the contribution years and all contributions paid in.
What is to be done in case of missing contribution years?
«If missing contribution years are identified, it must be clarified immediately whether the gaps can be closed», the brokers further advise. Although the «youth years» up to age 21 are not considered for the regular pension calculation, they can be used to close gaps. Likewise, contribution payments from the year of retirement - long, depending on the month of birth - are used to close gaps. A supplementary payment can be made for a maximum of the last five years and provided the person was insured in Switzerland during this time. This must be made after the gap has been established, as this is no longer possible later.
Gaps can also be compensated with the 2nd and 3rd pillars
If the employer is responsible for missing contribution periods, the contributions will be reimbursed by the fund if it can be proven that employee contributions were paid for this period. «If subsequent payments are not possible, the financial gaps should be closed by the insured themselves in other ways, for example by buying into a pension fund or by saving in pillar 3a », say the brokers.
Regular account statements are worthwhile
«It is even better to proactively avoid gaps in contributions», recommend the brokers. In addition, those who do not live in Switzerland can also join the AHV from abroad under certain conditions and subject to registration deadlines. In the event of a divorce and when a partner retires, non-employed persons must join a compensation fund themselves. In the case of early retirement, the AHV contributions for non-employed persons must also be paid to fulfill the obligation to pay contributions. During studies, care must be taken to pay the minimum contributions on time.