What happens really if you ignore AHV payments as early retiree

Assume you want to early retire in CH, but because you are a foreigner the AHV obligation is really a bad deal for you (you can not catchup with payments compared to a Swiss person).

I am aware that there is a Beitragspflicht if you’re not working.

But also, the AHV might not find you and I think you’re only liable for up to 5 years of AHV payments.

Assume you think AHV is a “bad deal” anyways and you try to ignore AHV for 15-20 years – what are the realistic bad consequences? Assuming nobody notices, it might be that you have to pay back the final five years before retirement? Will the AHV one day reach out because they will notice?

This only worked if you didnt register yourself in Switzerland. Meaning you were an illegal imigrant. On one hand, you might be made to leave the country. At the same time and if this was deemed done for fraudulent purposes; you might not only face re-payment obligations (which might in such case go beyond 5 years) but you might as well be in a criminal offence territory. Still feel like beeing an anti-social twerk?

Either life here and play withing the system; or go but never come back.

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Maybe you got it all wrong and it is not such a “bad deal”? Not knowing your situation I would personally pretty much worry not to have any gaps in my AHV payments and at least pay the minimum contributions on a voluntary basis (a few 100 francs a year). Gaps can be filled only 5 years retroactively.

If you early retire; the contributions are based on your wealth as well as prospect future pension (if I remember correctly). The amounts range from CHF 482 to CHF 24‘100.

One additional year gives you between 1/44 of the minimal pension if 1185 per month to 1/44 of 2370 per month; depending on your total contributions.

Worst case was if you had minimal insured salary to date (ak a minimum pension of 1185) and that you at the same time had massive wealth so that you had to pay 24‘100 per annum.

So a payment of 24‘100 gives you a lifelong pension of 1/44th of 12 times 1185; CHF 323 p.a.

Clearly… in such situation, AHV is a bad deal. But in most cases, its not such a bad deal actually. Most people with wealth are closer to the 2370 per Month and only a few reach payments of 24‘100 for early retirement years.

And even if its abad deal… well thats our system with all its pro‘s and cons. Consider it a tax you pay so that you don‘t see homeless, old people in the streets.

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If you find the person with 8’450’000 Fr net worth who was not earning enough to get more than the minimum pension, please let us all know as we have some questions.

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Hehe agree with you. That just stresses the point how unlikely it is to lose money there… you may only truly lose money if you already got both your 44 years complete as well as your max pension.

I read somwhere but I wasn’t able to find it again last time, that you actually gain the right to a better pension If you pay a lot on your wealth. They add like a fictive salary.

Haha, yes, I figured that.

But there is no need to go to extremes… There are some interesting actuarial calculations to do with respect to the AHV… Male life expectancy at 65 is ~20 more years, so in a 0% inflation world and assuming contributions at the upper bound, the total value of the pension per year paid in will be 2370 * 12 * 20 / 44=568800 / 44 = 12927Fr…

So, given that someone with an avearge or above average salary could very probably end up with such an amount in few years (or immediately) if he or she invested 8.7% of salary in the stock market, it does indeed look like it is “not a good deal” for many. However, this completely misses the point of the first pillar - it seeks to provide a floor income for retirees. You probably don’t want to live in most countries that don’t have such a scheme as it means many work until they die.

Obviously, with life expectancy slowly increasing (and pension age staying the same), these types of pension systems are in danger of collapsing if not reformed.

You have a very stubborn view. We all know what are the risks and consequences of not playing by the rules. Doesn’t mean we can’t openly discuss and criticize these rules. You bash him for even thinking and asking about not paying AHV. Rules change, and what is illegal today might be ok tomorrow, plus there is often the gray area in between.

That would be very interesting! First time I am hearing this though, any chance you can send me more info?

Maybe a bit rude but I think that sometimes we steer a little bit too much into being selfish here…
Finally, we live in a golden bubble compared to other surrounding countries (in Europe as well)
Social security is part of the system, luckily for us we are on the right side of the fence…

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One more aspect to my original question – does anyone know what will practically happen if I ignore the AHV obligation? From what I read it’s not a legal offense, and the worst is a payback of the last 5 years. So I’d like to know what the real world consequences would be.

I found the law in 5 minutes, yeah !

art.29 quinquies al.2 LAVS/AHVG

Die Beiträge von nichterwerbstätigen Personen werden mit 100 vervielfacht, durch den doppelten Beitragsansatz gemäss Artikel 5 Absatz 1 geteilt und als Erwerbseinkommen angerechnet.

Les cotisations des personnes sans activité lucrative sont multipliées par 100, puis divisées par le double du taux de cotisation prévu à l’art. 5, al. 1; elles sont comptées comme revenu d’une activité lucrative.

art. 5 al. 1

Une cotisation de 4.35 % […]

I am not sure if you must do X * 100 / 8.7 or X * 100 * 0.087. The sentence in french literraly means X*100 / 0.087 …

As it’s related to the whole topic. How much AHV does one have to pay each year with 2-3 million in assets? Basically my planned scenario when I’m around 55.

482 - 25k is kind of worrying me! Taxes on dividends and wealth taxes are already dragging the portfolio enough.

Between ~0.2 and ~0.3% of your wealth depending if you are closer to 2 or 3 millions. Plus you add up to 5% of that ammount as admin fees (for example Vaud use 2.5%)

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If your wealth tax and AHV is too much for you, you can buy real estate mutual funds that own directly its buildings. If I am correct, they literraly use the same wealth as for the wealth tax, so it works for both.

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And how does it account for your future AHV pension? I mean 0.25% for 2.5 million is 6.3k/year. Is this translated into a salary of 120k and thus leading to the maximum with 65?

All the federal laws are easily available on : https://www.admin.ch/gov/de/start/bundesrecht.html

The relevant one:
AHVG (DE)
LAVS (FR)
LAVS (IT)

Art. 87 - offences.

I’m quite a bit appalled by this “I know it’s illegal but I still want to do it, what’s the worst that can happen” being discussed very openly on a public forum. I feel we have a lot of naivety in us and that could bear consequences for us, but also for the forum. I’m no specialist but I’d not be surprised if encouraging illegal behavior was frowned upon by the law…

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I think it is either a salary of 54k or 72k. As stated before I am not sure how to read it. It is not even close to be the worst written law I read.

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