Swiss employment benefits explained: Social security, pensions and healthcare

Starting your new job in Switzerland is a momentous occasion, but are you sure you really know what your employers are covering for you? Swiss Employer of Record explains how social security, pensions and health insurance works in Switzerland.

You might think that signing your new Swiss job contract means that all the paperwork is done, but it can be hard to know how signing on the dotted line impacts your social security, pension and health insurance. For expats, getting to grips with how employment benefits work is essential, as Switzerland has a structured system that differs from many other countries.

Social security, pensions and healthcare are key parts of the Swiss employment framework, which all help to ensure financial stability and access to medical care. However, expats often find the system complex, especially when it comes to work permits, pension contributions and mandatory health insurance.

Let's break down the key employment benefits in Switzerland and highlight what you need to know.

Social security in Switzerland

Switzerland’s social security system is designed to provide financial protection in cases of unemployment, disability, and old age. The system is based on three pillars:

First pillar: State pension and social security (AHV/AVS)

This is a mandatory contribution that provides basic coverage for retirement, disability and survivors’ benefits. Both employees and employers contribute via a percentage of the employee's salary, and self-employed individuals must pay contributions themselves.

Second pillar: Occupational pension scheme (BVG/LPP)

Employees earning above a certain threshold are automatically enrolled in an employer-sponsored pension scheme. Contributions from both employer and employee are invested, providing additional retirement income.

Third pillar: Private pension savings

This is a voluntary scheme that allows individuals to save for retirement with tax benefits. Many expats use this option to supplement their pension, as the first and second pillars may not provide the same level of coverage as in their home countries.

Additional cover

In addition to pensions, Swiss social security includes coverage for unemployment benefits, disability insurance, maternity leave, and accident insurance.

Challenges for expats

Many expats come from countries where pension and social security contributions are handled entirely by the government or the employer. In Switzerland, the multi-pillar system requires individuals to be actively aware of their contributions and options. Those on short-term contracts or working for a foreign employer may need to take additional steps to ensure they are covered.

Swiss healthcare: Private but mandatory

Unlike many European countries with a national health service, Switzerland has a private but mandatory healthcare system. Every resident must take out private health insurance from an approved provider, which covers basic medical care, hospital stays, and emergency treatment.

Here are the main things to be aware of regarding Swiss healthcare:

• Health insurance is mandatory: You must take out private health insurance within three months of arriving in Switzerland.
• Individuals are responsible for payments: Unlike in some countries where healthcare is tax-funded or employer-provided, Swiss residents must arrange and pay for their own insurance.
• Premiums vary: Costs depend on age, location, and provider, with average monthly premiums ranging between 300 Swiss francs and 500 Swiss francs per person.

Challenges for expats

Expats often expect healthcare to be included in their employment package, as is common in countries such as Germany or the US. In Switzerland, employers do not cover health insurance costs, and individuals must choose their own provider, which can be difficult for newcomers unfamiliar with the system. Additionally, failing to register within three months can result in automatic enrolment in a more expensive plan.

How you can ensure you receive full benefits

Expats who work for a non-Swiss company, freelance, or move to Switzerland without an employer to handle social security and healthcare arrangements can find it difficult to secure the right coverage. There are companies out there who can provide a straightforward solution, ensuring full compliance with local regulations and access to all employee benefits.

Through these companies, they can be sure that:

• Are legally employed under a Swiss employment contract
• Are registered for social security, ensuring they receive pension, unemployment, and disability benefits.
• Have their payroll processed correctly, with all necessary deductions handled.
• Gain access to occupational pension schemes and workplace accident insurance.
• Avoid administrative hurdles, as all employment-related paperwork is managed for them.

This allows expats to work in Switzerland with financial security and peace of mind.

If you need help ensuring you or your Swiss-located staff are fully covered, contact Swiss Record of Employer today. Their experts can take all the admin off your hands and make sure you or your staff are fully compliant.