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The first part of the OASI reform comes into force on January 1, 2024. In addition to the VAT increase, the «retirement age» will be renamed the «reference age» in all branches of social security and more flexibility will be created regarding retirement and additional incentives to work after reaching the reference age. This will enable early withdrawal or deferral of retirement funds. In addition, people who have reached the reference age and continue to be gainfully employed can choose whether they want to continue to consider the de minimus threshold on salary or not. If certain conditions are met, contributions made after reaching the reference age can be considered when calculating the retirement benefits.
Changes to de-minimus threshold
Previously, people who had already reached the reference age were not required to pay OASI contributions on a salary of less than CHF 1,400 per month or CHF 16,800 per year - the so-called non-contributory amount. Even if these people had paid contributions on income above the exempt amount, the contributions would not lead to an increase in their pension benefits. As per 2024 this rule will change: Going forward, there will be an option to opt-in or -out of the de-minimus rule and, under certain conditions, the contribution period can be taken into account when calculating the pension benefits.
The employees concerned are required by law to inform their employer, at the latest when the first salary is paid after reaching the reference age, whether contributions should continue to be levied on the total annual salary or under consideration of the de-minimus rule. To avoid corrections, early discussions with the affected employees are recommended. If no change is communicated by the employee, contributions can continue to be levied on the total annual salary in the following contribution year.
Even though the effective increase in the reference age for women will not be implemented until 2025, employers should still consider some important points.
Early withdrawal or deferral of AHV pension
Previously, the pension had to be claimed in advance for a full year or alternatively deferred. In addition, there is now the option of flexible partial retirement between the ages of 63 and 70 – resp. for women of the transition generation (born between 1961 and 1969) as of the age of 62. A minimum of 20% and a maximum of 80% of the pension can be drawn in advance or deferred. In addition, the pension can also be drawn in advance for individual months instead of for whole years. At least one year applies to the deferral, after which it can also be made for individual months. This means that employment can be continued on a pro rata basis. If employees decide to take partial retirement, this will also have consequences for payroll processing as the reduction in workload needs to be taken into account.
Further changes
The increase in the reference age for women and the flexible retirement age are harmonized in the first and second pillars. As a result, pension funds must also offer the option of early withdrawal in at least three stages (maximum three stages when withdrawing the capital) or deferral. This may lead to adjustments in the existing pension fund regulations, which employers must consider and seek to make the necessary adjustments in a timely manner.
Apart from the increase in contributions due to the increase in the reference age for women, the OASI reform has no significant impact on other branches of social insurance that could give rise to employer obligations.
Employers should always check their internal regulations, employee handbooks and directives to determine whether there is still a need for action.
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