On 12 October 2022, Switzerland’s Federal Council announced an increase in state pensions from 1 January 2023 by 2.5%.
The minimum pension with rise from CHF 1,195 to CHF 1,225 per month, while the maximum amount will rise from CHF 2,390 to CHF 2,450 (US$ 2,450). The amount paid in state pension in Switzerland is related to the level of contribution, which relates to salary level and the number years.
Swiss state pensions are adjusted every two years unless annual inflation exceeds 4%. The level of the increase is based on a blend of consumer inflation and wage increases. This year inflation is expected to be 3% and wage increases 2%.
The CHF 1.4 billion cost of the increase will be born mainly by Switzerland’s employees and employers. An extra CHF 1.2 billion will be funded by the state pension fund supported by payroll taxes. The remaining CHF 0.2 billion will be covered by the federal government.
Switzerland has a pension system made up of three layers. The first is state pensions. The second is compulsory work related savings and the third is an optional third pillar of tax advantaged savings. The second and third elements (pillars) supplement the first.