Swiss Social Security: AHV/AVS Contributions Explained for Employers

If you are a foreign founder or an overseas employer about to run payroll for a Swiss entity, the question you actually need answered is simple: which contributions apply, who pays which share, and what does a Swiss hire cost on top of gross salary. The one-line answer is that the core state contribution, AHV/IV/EO, is 10.6% of gross split 50/50 with no upper limit, and on top of it sit unemployment insurance (ALV), occupational pension (BVG), accident cover (UVG) and family allowances (FAK).

This guide sets out each scheme, the 2026 rates, the employer and employee split, the all-in employer cost, and the step-by-step registration path for a newly formed company. All figures are the 2026 position under the federal social-insurance acts and ordinances; the thresholds linked to the AHV pension were last adjusted on 1 January 2025 and apply unchanged in 2026. If you are still at the planning stage, starting a business in Switzerland covers incorporation and the steps before your first hire.

Swiss social protection is organised into a three-pillar system (Drei-Saeulen-System). For an employer the value of the framework is that it tells you which of your payroll lines is compulsory and who organises it. Read from the employer's compliance and cost angle rather than the retiree's, the three pillars are:

• Pillar 1, state insurance (AHV / IV / EO): the compulsory pay-as-you-go scheme that guarantees a basic subsistence income. AHV covers old age and survivors, IV covers disability, EO compensates loss of earnings during service and for maternity and paternity leave. It is mandatory, shared 50/50, and has no salary ceiling.
• Pillar 2, occupational pension (BVG): funded, employer-organised pension saving that, together with the first pillar, aims to maintain the employee's accustomed standard of living. It is mandatory above an entry salary and is detailed in our guide to the Swiss pension system (BVG).
• Pillar 3, private and voluntary (3a / 3b): tax-favoured private saving. Pillar 3a is tied, with an annual maximum of CHF 7,258 for employees with a pension fund in 2026 (BVV 3 art. 7), and 3b is flexible. This is not an employer payroll obligation; it sits here only so you see where it fits.

Everything that follows decomposes the employer's actual payroll duties: the first pillar, plus unemployment, accident and family-allowance cover, and the second-pillar pension above the entry salary.

The first pillar bundles three insurances that are collected together as a single deduction. As of 2026 the combined AHV/IV/EO contribution is 10.6% of gross salary, split in half so each side pays 5.3%. Within that total, AHV is 8.7%, IV 1.4% and EO 0.5% (IVG art. 3; EOV art. 36).

What AHV, IV and EO each cover

• AHV / AVS (Alters- und Hinterlassenenversicherung): old-age and survivors' insurance, the state pension.
• IV / AI (Invalidenversicherung): disability insurance.
• EO / APG (Erwerbsersatzordnung): income compensation during military or civil service, and for maternity and paternity leave.

No salary ceiling: why AHV applies to your whole payroll

Unlike most countries, and unlike ALV and UVG, the first-pillar contribution has no upper limit. It is levied on the entire salary, so a senior hire on a high package owes the same 10.6% on every franc as an entry-level employee. Foreign employers who assume a contribution cap, as exists in many home jurisdictions, routinely under-budget the cost of senior staff. There is no cap to find: AHV/IV/EO is uncapped by design.

Accident insurance (UVG / LAA, Unfallversicherung) is compulsory for all employees and is split by the type of risk it covers. There is no single statutory percentage: the rate depends on the insurer and the industry risk class, and insured salary is capped at the same CHF 148,200 as ALV.

Who pays BU and NBU

Occupational accident cover (BU / AAP), for accidents and illnesses arising from the job, is paid by the employer in full. Non-occupational accident cover (NBU / AANP), for accidents in private life, is generally deducted from the employee, though an employer may choose to cover it as a benefit. The contract should state which side bears the NBU premium so there is no dispute later.

When non-occupational cover becomes mandatory

Non-occupational cover becomes mandatory once an employee works at least eight hours per week for the same employer (UVV art. 13). Below that threshold, the worker is covered against non-occupational accidents through their compulsory health insurance instead.

Family allowances (Familienzulagen, FAK) provide child and education allowances to employees with children, and they are funded by an employer contribution to a family compensation fund. In Valais employees also contribute 0.13% of salary.

2026 family-allowance minimums

In 2026 the federal minimum allowances are CHF 215 per month per child and CHF 268 per month for the education or training allowance. Cantons may pay more: Zug pays CHF 330 per child, Vaud CHF 322 and Geneva CHF 311.

Cantonal FAK rates vary

The FAK contribution rate is set at cantonal level. At the cantonal family compensation funds the 2026 employer rate runs from 1.025% of payroll in Zurich to 2.75% in Jura, with Zug at 1.35%, Bern 1.5%, Geneva 2.22% and Vaud 2.37%. An employer with staff in more than one canton therefore pays different FAK rates for different workers, and private family compensation funds set their own rates.

Optional daily-sickness benefit insurance (KTG)

Daily-sickness benefit insurance (KTG / IJM) is voluntary but widely carried, because it lets an employer insure continued salary during illness rather than bearing it directly. Where taken, the premium is commonly shared with the employee. It is not a statutory contribution, but most employers carry it, so it belongs on the payroll planning list.

Registration is a defined sequence that a foreign-owned entity completes right after incorporating. If you have not yet set up the company, company formation comes first; social-security registration follows immediately.

1. Register with the cantonal compensation office (Ausgleichskasse) before your first hire. This is the mandatory first action. The compensation office, cantonal or run by a trade association, administers AHV/IV/EO, collects contributions and issues or confirms each employee's AHV number.
2. Affiliate a BVG pension fund. Mandatory once an employee earns more than CHF 22,680 a year. The employer organises the fund and pays at least half the contributions.
3. Take out UVG accident cover. Compulsory for all staff. The BU (employer-paid) and NBU (usually employee-paid) split is set up with the chosen accident insurer.
4. Affiliate the cantonal family-allowance fund (FAK). Usually handled via the compensation office; the contribution is employer-funded.
5. Then, on an ongoing basis, deduct, match, remit and reconcile. Withhold the employee share at source, add the employer share, pay monthly advance instalments, and reconcile against an annual wage statement. Late registration brings administrative fines plus back-payment with interest, so the sequence is worth completing before the first salary run.

Getting this right at the outset is exactly where our accounting services and our guide to hiring employees in Switzerland are designed to help, from registration through to the monthly reconciliation.

The 50/50 split is a feature of employed work. A self-employed person carries the contribution alone, with no employer to share it.

Why a self-employed founder pays differently

For the self-employed, AHV/IV/EO is charged at 10.0% (AHV 8.1%, IV 1.4%, EO 0.5%) on income from CHF 60,500 a year, on a degressive scale down to 5.371% between CHF 10,100 and CHF 60,500, with a minimum annual contribution of CHF 530 in 2026 (AHVG art. 8; AHVV art. 21). There is no ALV at all, so a self-employed founder is not insured against unemployment, and BVG and UVG are optional rather than compulsory. Critically, the compensation office decides self-employed status on the substance of the relationship, not on the label in a contract, and can reclassify a contractor who is in reality an employee, which triggers retroactive employer contributions. Settle the status question before work begins.