HR and Global mobility update

Social security

Main impacts of the AHV 21 reform: What you need to know

The Swiss Old Age and Survivors' Insurance (OASI) system is undergoing fundamental changes as a result of the OASI 21 reform. This reform, which will be implemented in stages from January 2024, aims to ensure the financial stability of the OASI.

The most important facts at a glance

• Reference age of 65 for all

The retirement age is now called the reference age. For women, it will be gradually increased until it reaches the single reference age of 65 in 2028. This increase will affect women born between 1961 and 1969. Financial compensation measures are in place to ease the transition.

• Flexibility in retirement planning

In the future, employees will be able to retire flexibly between the ages of 63 and 70, with the option of a partial pension. This option offers greater flexibility in the use of retirement benefits.

• Longer contribution periods for women

As a result of the higher reference age, women pay into the pension fund for a longer period, which can improve their pension assets and thus their financial situation in retirement.

• Incentives to work beyond the reference age

The AHV21 reform creates incentives to continue working beyond the reference age, as contributions made after the age of 65 can be used to close any gaps in contributions and thus increase pensions.

• Financing the reform

The AHV 21 reform is financed by an increase in VAT. The standard rate increased by 0.4% on 1 January 2024 to 8.1%.

What does this mean in practice for employers?

• Employers must implement the following measures:
• Revise the pension fund regulations
• Adjust employment contracts 
• Update salary systems based on the 65 reference age

More money for pensioners and families as of 2025

At its meeting on 28 August, the Federal Council approved the following increases with effect from 1 January 2025:

• Increase of OASI/DI pensions by 2.9% on 1 January 2025. This corresponds to an increase of CHF 70 to CHF 2,520 per month for the maximum OASI/DI pension and an increase of CHF 35 to CHF 1,260 per month for the minimum OASI/DI pension.
• The minimum child allowance will rise from CHF 200 to CHF 215 per month. Currently, only seven cantons (ZH, GL, SO, BL, AG, TG and TI) pay the minimum rate.
• The minimum monthly amount set by the Confederation for education allowances will increase from CHF 250 to CHF 268. This minimum amount is currently paid by six cantons (ZH, GL, SO, BL, AG and TI). 

The Federal Council has also decided on the following changes: 

• Occupational pension provision: 
  o The coordination deduction will be increased from CHF 25,725 to CHF 26,460
  o The entry threshold will rise from CHF 22,050 to CHF 22,680
• Tax relief on restricted pension plans (Pillar 3a):
  o The maximum allowable tax deduction will increase from CHF 7,056 to CHF 7,258 per year for persons already contributing to a 2nd pillar pension fund
  o For those without a 2nd pillar, the amount will be set at CHF 36,288 per year (previously CHF 35,280)
• Exempt amounts on earned income: 
  o For single persons, the exempt yearly amount increases from CHF 1,000 to CHF 1,300
  o For married couples and persons with children, the exempt amount is now CHF 1,950 (currently CHF 1,500) per year

New social security agreement signed between Switzerland and Argentina

A new social security agreement was signed between Switzerland and Argentina on 27 May2024. This agreement aims to coordinate the old-age, survivors' and disability insurance schemes of the two countries and, in particular, to regulate the payment of pensions abroad.

Like other existing Swiss agreements, it is based on international standards and largely promotes equal treatment of insured persons. A key objective is to facilitate access to benefits and to facilitate the secondment of personnel between the two countries, thereby promoting economic exchange. The agreement also provides a legal basis to prevent abuse.

The agreement must now be ratified by the parliaments of both countries.

Switzerland has already concluded similar agreements in South America with Chile, Uruguay and Brazil. 

Payroll 

Social security key figures 2025

Social security contributions for employers and employees in the first pillar remain unchanged for 2025:

However, the following key figures change as follows:

Labour law

A new framework law allows the transfer of data between Switzerland and the United States without the need for additional guarantees in the sense of Art. 16 para. 1 of the Data Protection Act.

On 14 August, the Federal Council announced an important change in the transfer of personal data between Switzerland and the United States. With the implementation of the Swiss-U.S. Privacy Framework, certified U.S. companies now provide a level of data protection that is considered adequate by Switzerland. This means that personal data can be transferred from Switzerland to certified U.S. companies without the need for additional guarantees pursuant to Art. 16 para. 1 of the Data Protection Act. These new options will apply from 15 September 2024.

This new regulation is in line with a similar framework that will apply between the European Union and the United States from July 2023. Thanks to this harmonization, Swiss companies and individuals will benefit from the same security conditions for their transatlantic data flows.

The framework imposes strict obligations on certified US companies regarding data processing, including the obligation to use the data only for the purposes for which they were collected. Disclosure to non-certified third parties is prohibited. If the data is accessed by US authorities, a number of safeguards and an appeals process have been put in place to ensure the highest level of protection.

The list of countries, territories, certain sectors within a country and international organisation where an adequate level of data protection is ensured can be found in Annex 1 of the Data Protection Regulation.

Our recommendations

It is therefore advisable to check whether a US company is certified before exchanging data with it. If so, , the transferor does not need to provide any additional guarantees. However, if the company is not certified, guarantees, including contractual guarantees, must be provided.

Immigration

New Entry/Exit System (EES) for third-country nationals entering the Schengen area from November 2024

The new European Union Entry/Exit System (EES) will be launched on 10 November 2024. This system automates border controls in the Schengen countries, including Switzerland, and is designed to identify and monitor the maximum stay of 90 days within a 180-day period for travelers from non-EU/EFTA countries. This electronic registration applies to all third-country nationals, both those who require a visa to enter the Schengen area and those who can enter the Schengen area without a visa (ETIAS travel authorization is required).

Important changes

• Automated border controls for travelers entering or leaving Schengen member states (Ireland and Cyprus do not belong to the Schengen area and continue to carry out manual border controls)
• Storage of biometric data (fingerprints, photos) when the system is first used, valid for three years
• The system collects personal data and allows travelers to request access to their data, correct inaccurate data or have unlawfully processed data deleted.

The EES does not apply to EU citizens, holders of residence permits or long-term visas.

Our recommendations

Companies should ensure that they closely monitor the travel activities of their employees in the Schengen area to avoid violating visa requirements. This is particularly important if employees exceed the maximum length of stay on business or holiday trips. Violations can significantly affect future travel opportunities and have tax and social security implications.

ETIAS (European Travel Information and Authorisation System) to be implemented by May 2025

As mentioned in our previous HR & GMS update, the plan was to introduce ETIAS (European Travel Information and Authorization System) for short stays in European countries from 2024. Due to delays at the European level, the system is now expected to go live in May 2025 at the earliest. Switzerland is following the EU timetable.

The ETIAS travel authorisation is a prerequisite for visa-exempt third-country nationals travelling to one of 30 European countries:

The ETIAS allows travelers to visit these countries as often as they wish, provided they do not stay for more than 90 days in any 180-day period.

Please note: The ETIAS does not guarantee that you will be allowed to enter the country. Upon entry, you will be checked to ensure that you meet the entry requirements.

Protected status S for Ukrainians extended until 2026 - Work permit 

The Federal Council has decided to maintain protection status S for asylum seekers from Ukraine until at least 4 March 2026. A sustainable stabilisation of the situation in Ukraine is currently not foreseeable, which is why temporary protection remains necessary. Around 66,000 people currently benefit from protection status S.

In addition, integration measures, particularly in the labour market, will continue until 2026. The federal government supports the cantons with CHF 3,000 per person per year. Integration facilitates solutions to the shortage of skilled labour by promoting language skills and recognising qualifications. Companies can take advantage of this opportunity to demonstrate social responsibility while attracting qualified workers.

Please note: In order to employ a person with protection status S, companies must submit an application for a work permit to the cantonal labour market authority of the canton of assignment. 

Introduction of Electronic Travel Authorisation (ETA) for travel to Great Britain and Northern Ireland from April 2025

Since November 2023, the United Kingdom has been introducing the electronic travel authorisation ETA in phases in order to fully digitalise borders by 2025. However, the UK's ETA goes further than the European Union's Entry/Exit System (EES) for third-country nationals and the Electronic Travel Information System (ETIAS) for visa-exempt third-country nationals.

From 2 April 2025, European and Swiss citizens will also need an Electronic Travel Authorisation (ETA) in addition to their passport to enter the UK and Northern Ireland.

Applications can be submitted from 5 March 2025, either online or via an app. The processing time is usually three days. The ETA is then valid for two years for multiple entries to England, Scotland, Wales and Northern Ireland.

Our recommendations

• Inform employees about the new ETA obligation at an early stage and encourage them to apply for it in good time
• Integrate the ETA process into existing systems to ensure smooth business travel
• Regularly review and update visa and travel rules