# What is AHV/IV/EO (Swiss Social Insurance)?

Country: Switzerland

AHV (Alters- und Hinterlassenenversicherung), IV (Invalidenversicherung), and EO (Erwerbsersatzordnung) are the three main Swiss federal social insurances. Together, they provide old-age/survivors pensions, disability insurance, and income replacement during military service or maternity leave. The combined contribution rate for employed persons is 10.6% employer + 10.6% employee = 21.2% of gross salary. Self-employed persons pay the full amount themselves at a slightly lower combined rate.

## Current rate (2025)

Employed: 10.6% employer + 10.6% employee (total 21.2%). Self-employed: tiered from 5.371% on first CHF 56,900 of profit up to 10.0% on higher income. No upper salary cap for AHV contributions.

## Example

A GmbH pays its owner-director a salary of CHF 150,000. The company contributes CHF 15,900 employer AHV/IV/EO and deducts CHF 15,900 from the director's salary, a total CHF 31,800 in AHV/IV/EO contributions on this salary alone.

## How AHV/IV/EO (Swiss Social Insurance) works in Switzerland

The AHV/IV/EO system is the backbone of Swiss social security and forms the first pillar (Säule 1) of Switzerland's three-pillar pension system.\n\n**The three pillars**\n- Pillar 1 (AHV/IV/EO): mandatory state pension, funded by contributions from all working residents\n- Pillar 2 (BVG/Pensionskasse): mandatory occupational pension for employees earning above CHF 22,050. Employers must provide a Pensionskasse and contribute at least 50% of premiums.\n- Pillar 3 (private savings): voluntary, tax-advantaged savings (3a and 3b). Annual 3a contribution limit: CHF 7,056 for employed persons, CHF 35,280 for self-employed without Pensionskasse.\n\n**AHV contribution details**\nAHV contributions have no upper salary cap, unlike many European countries. A director earning CHF 1,000,000 pays AHV on the full amount. Contributions are calculated on gross salary including bonus, but excluding expense reimbursements at actual cost.\n\n**IV contributions**\nIV (disability) is built into the same contribution rate: 0.7% each for employee and employer, included within the quoted 10.6% rate.\n\n**EO contributions**\nEO (income replacement) is 0.25% each for employee and employer, also included within the 10.6% rate.\n\n**Owner-directors (Gesellschafter-Geschäftsführer)**\nFor owner-directors of a GmbH or AG who are subject to AHV: if they receive both salary and dividends, AHV is calculated only on salary (wage income), not on dividend income. This is a key feature of the salary-dividend planning approach. The AHV authority (SVA / AHV-Ausgleichskasse) may scrutinise very low salaries to ensure they are not being artificially depressed to shift income to dividend (which is AHV-free).\n\n**ALV (unemployment insurance)**\nIn addition to AHV/IV/EO, employers and employees each contribute 1.1% for ALV (unemployment insurance / Arbeitslosenversicherung) on the first CHF 148,200 of salary. Above CHF 148,200, an additional 0.5% solidarity contribution applies with no corresponding benefit. Owner-directors holding more than 50% of a company are generally excluded from ALV.\n\n**Family allowances (FAK)**\nEmployers pay family allowances (Familienzulagen) at rates set by each canton, typically 0.5–3.5% of payroll. These fund the cantonal family allowance payments to employees with children.

Source: https://www.ahv-iv.ch/de/Sozialversicherungen/Alters-und-Hinterlassenenversicherung-AHV

## Related terms

- [Quellensteuer](https://accounts-os.com/ch/glossary/quellensteuer-ch)
- [GmbH (Gesellschaft mit beschränkter Haftung)](https://accounts-os.com/ch/glossary/gmbh-ch)
- [Gewinnausschüttung (Profit Distribution)](https://accounts-os.com/ch/glossary/gewinnausschuettung-ch)