Losing your job just before retirement in Switzerland
What if I lose my job just before retirement? Comparis explains what steps you should take if you lose your job, and what it means for your pension.
01.01.2024
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1. Were you fairly dismissed?
What notice periods apply for dismissal?
Your employment contract stipulates the notice period for dismissal. If your contract contains no notice period, the following notice periods apply when you are dismissed as of the end of the month:
During your probationary period: seven days.
In your first year: one month.
From your second to ninth year: two months.
From your tenth year onwards: three months.
A dismissal is only valid once you receive a termination letter. The date of the postmark is irrelevant. However, if you receive notice of your dismissal by post but aren’t home, the notice of dismissal is still valid as of the next working day following the unsuccessful delivery.
What is wrongful dismissal?
Dismissing an employee just because of their age is considered wrongful termination (OR, Art. 336). If you think you have been wrongfully dismissed, you can sue for compensation. The maximum compensation you can receive for wrongful termination is six months’ wages. When taking legal action, there are two important actions and deadlines to remember:
You must raise an objection against your dismissal. Your employer must receive this by your last working day at the latest. Send it by registered post and make it clear that you want to continue working for the company.
You have 180 days from the day your employment relationship ends to file a lawsuit with the court. You must be able to prove that your dismissal was wrongful.
Increased duty of care for older employees
Generally speaking, employers have an increased duty of care for older employees. This typically includes all employees aged 58 years or over. This means:
Your employer must inform you about your dismissal in good time.
Your employer must work with you to find solutions for continued employment.
Older employees and long-time employees often receive severance pay when they lose their jobs. The idea is to provide some financial security when the employment relationship ends.
Not everyone gets severance pay, though. In Switzerland, it’s only intended for those over 50 who have worked at the company for more than 20 years – at least in theory. Are you eligible? If so, you are entitled to two to eight months’ worth of salary, depending on your age and years of service.
The bad news: in practice, you often don’t receive any severance payment at all. Your employer can technically deduct occupational pension contributions from your compensation. In most cases, these contributions are higher than the severance you would receive.
If you are under a collective employment agreement, you may receive:
Financial compensation for the termination.
Benefits from the social plan.
It’s a good idea to check your agreement thoroughly.
2. Dismissals from ages 55 and 61: what applies to unemployment benefits?
If you’ve been dismissed, you may be entitled to a daily allowance from your unemployment insurance. You normally receive 70% or 80% of your previous salary. Register with your Regional Employment Centre, where you can find all the information you need.
Note: it’s important to look for a new position while still in your notice period. Document your efforts in writing, or you risk your daily unemployment allowance being cut.
How long you receive a daily allowance depends on:
Your age.
How long you made unemployment insurance contributions for when you were employed.
If you lose your job when aged 55 or over, you have 520 days’ worth of daily allowances for a maximum of two years.
If you lose your job four years before you retire, you are entitled to an additional 120 days of unemployment allowance. In other words, you’ll receive payments for a maximum of 640 days. You can also extend the payout period by a maximum of two years (Unemployment Insurance Act, Art. 27) (only available in German, French, Italian).
When registering with the Regional Employment Centre, you are entitled to daily allowances from your unemployment insurance. After 29 months at the latest, this claim will expire and you will no longer receive any money. Your entitlement to benefits is now classed as “expired”.
3. How do I qualify for a bridging pension?
Bridging pensions are intended for people who have lost their job shortly before retirement. They consist of:
An annuity.
Reimbursement of medical and disability-related expenses.
The annuity is capped at 45,225 francs for singles and 67,838 francs for married couples.
Bridging pension requirements
You must be 60 years old or older when your claim to unemployment benefits expires.
You must have been insured under OASI for at least 20 years, of which at least five years were after your 50th birthday. Your earned income must have amounted to at least 75% of the full-rate OASI pension.
You have no more than 50,000 francs (single people) or 100,000 francs (married couples) in assets. Owner-occupied properties do not count towards your assets.
There are also other conditions. Contact the relevant office in your canton for registration forms. More information: guidance from the Federal Social Insurance Office.
4. Early retirement after dismissal: what does this mean for my pension?
If you lose your job shortly before statutory retirement age, you’ll need to reorganize various aspects of your pension in a short space of time. Making sure everything is correct is a complex task. It’s a good idea to seek independent advice to deal with this difficult situation.
In Switzerland, early retirement is possible from the age of 63. Women born between 1961 and 1969 can receive an old-age pension from the age of 62. Withdrawing early, however, leads to lower pension payouts. How much your pension is reduced depends on your income.
Good to know: you still have to pay OASI contributions until you reach the state retirement age.
You have several options after dismissal:
Transfer your occupational pension assets to vested benefits accounts: are you taking up a new position? If not, you’ll need to transfer the money from your occupational pension fund to a vested benefits account.
Transfer funds to the Substitute Occupational Benefit Institution: the Substitute Occupational Benefit Institution is an alternative to a vested benefits account. It allows you to continue making contributions to your occupational pension even if you are not employed. You can withdraw your money at a later time in the form of an annuity. You need to pay in within three months of leaving your previous occupational pension fund.
Stay with your original occupational pension provider: are you 58 years of age or older? If so, you can stay with your original occupational pension provider. With this option, you pay in the employer’s contributions in addition to your own.
Withdraw your occupational pension as a lump-sum payout or annuity: the earliest possible retirement age for occupational pensions is 58 years. You can choose between receiving an annuity or a lump sum, or a combination of the two. If you withdraw your pension early, your unemployment benefit is reduced.
This article was first published on 10.12.2019
