Early Retirement: What It Costs

In short: Early retirement costs money on four fronts at once. The AHV pension is permanently reduced when drawn early, by 6.8 percent per year of early withdrawal. At the same time, until the reference age, you owe your own AHV contributions as a non-employed person, between CHF 530 and CHF 26,500 a year. The pension fund payout is smaller because contribution years and interest are missing. And the years until the ordinary AHV pension starts need to be bridged, either through the pension fund’s regulations or from your own assets.

Anyone considering early retirement usually starts by adding up their assets and the pension fund payout they already expect. The four cost items in between often do not show up in that first back-of-the-envelope calculation, because they arise in different places: at the AHV, at the pension fund, and in your own wallet.

The key facts at a glance

• AHV early withdrawal possible from age 63, at most two years before the reference age (AHVG Art. 40, as of 1 January 2026).
• AHV pension reduction: 6.8 percent per year of early withdrawal, 13.6 percent for two years, for life (AHVG Art. 40a).
• AHV contributions as a non-employed person: CHF 530 to CHF 26,500 a year, depending on assets and pension income (AHVV Art. 28, fact sheet 2.03, as of 2026).
• Example: assets of CHF 1,000,000 produce an AHV/IV/EO contribution (old-age, disability and loss-of-income insurance) of CHF 2,014 a year, plus the compensation office’s administrative cost contribution (source: SVA Zurich online calculator, as of 2026).
• Pension funds may set a regulatory retirement age from age 58 (BVV2 Art. 1i).

How much does early withdrawal reduce the AHV pension?

By 6.8 percent per full year of early withdrawal, permanently. Anyone who stops two years before the reference age loses 13.6 percent of the AHV pension, for life, not just until the ordinary reference age is reached (AHVG Art. 40 and 40a). Since the AHV 21 reform, the pension can also be drawn month by month and partially, between 20 and 80 percent of the entitlement.

The exact mechanics, meaning from which month which reduction rate applies and how it differs by birth cohort, are covered in detail in the article on the retirement age in Switzerland. What matters most here is this: the reduction is not reversed once the reference age is reached. It applies to every single pension payment for the rest of your life.

What does the AHV contribution obligation as a non-employed person cost?

Between CHF 530 and CHF 26,500 a year, depending on assets and pension income. Anyone who stops working before the reference age remains liable for AHV contributions until that point, as a non-employed person. The contribution is not calculated from your former salary, but from assets and pension income (AHVV Art. 28).

The basis for calculation is net assets plus twenty times the annual pension income. The minimum contribution is CHF 530 a year, the maximum CHF 26,500, reached from relevant assets of CHF 8,950,000 (fact sheet 2.03 of the AHV/IV Information Office, as of 2026). On top of that comes an administrative cost contribution from the relevant compensation office, which varies from office to office.

An example to show the order of magnitude: for relevant assets of CHF 1,000,000 with no additional pension income, the online calculator of SVA Zurich produces an AHV/IV/EO contribution of CHF 2,014 a year, plus that office’s administrative cost contribution of 5 percent of that amount. For married couples, joint assets are split evenly between both partners. Anyone who keeps a small paid job after leaving the workforce can have the AHV contributions withheld from that wage credited against the non-employed-person assessment.

How this contribution obligation works in detail and what counts as relevant assets are explained in the glossary entry on AHV contributions for non-employed persons.

How does early retirement affect the pension fund?

Twofold: through a smaller retirement account and through a lower conversion rate. Anyone who stops working earlier accumulates fewer contribution years, and the compound interest on the retirement account is missing for those years. On top of that, the pension fund applies its own regulatory conversion rate to an early retirement, one that is lower than the rate at the ordinary reference age, because the pension is statistically paid out over a longer period.

Both effects are set by regulation and vary from fund to fund. What matters is the pension certificate that every pension fund issues annually, which shows the retirement account and the possible benefits on early retirement. A regulatory early retirement is possible at the earliest from age 58 (BVV2 Art. 1i). Whether and how a voluntary buy-in into the pension fund before early retirement pays off is covered in the BVG guide.

Who bridges the years until the ordinary AHV pension starts?

Either the pension fund, if its regulations provide for a bridging pension, or your own assets. There is no statutory right to a bridging pension. Some pension fund regulations provide for a time-limited supplementary pension that runs until the AHV reference age is reached and replaces the AHV pension that has not yet started; in some cases the employer shares the cost, in others it is financed from your own retirement account, which further reduces the later lifelong pension.

If the regulations do not provide for a bridging pension, the time until the AHV pension starts has to be financed from your remaining assets, on top of the ongoing AHV contributions as a non-employed person. The details and the exact financing logic are covered in the glossary entry on the bridging pension.

What does a lump-sum withdrawal mean for taxes?

That depends on the withdrawal method and your place of residence, regardless of whether retirement is ordinary or early. If pension fund or Pillar 3a capital is drawn in whole or in part as a lump sum rather than as a pension, a one-off capital withdrawal tax applies, assessed separately from your other income. How the choice between a lump sum and a pension plays out in general is explained under Lump Sum or Pension; how much the tax burden varies by municipality of residence is covered under Capital Withdrawal Tax: Why Where You Live Decides.

Worked example: what two years earlier can cost

An illustrative example, not an individual calculation: a single person with CHF 1,000,000 in freely available assets outside their pension provision retires at 63 instead of 65, two years before the reference age.

• AHV pension: a reduction of 13.6 percent, for life. With a full AHV pension between CHF 1,260 and CHF 2,520 a month (source: AHV fact sheet 3.01, as of 1 January 2026), that comes to roughly CHF 170 to CHF 343 less a month, depending on the contribution period, permanently.
• AHV contributions as a non-employed person: at CHF 1,000,000 in relevant assets, roughly CHF 2,014 in AHV/IV/EO contribution a year plus the compensation office’s administrative cost contribution (source: SVA Zurich online calculator, as of 2026), so around CHF 4,000 to CHF 4,200 for two years, depending on the office.
• Pension fund: two missing contribution years plus interest on the retirement account, plus a lower regulatory conversion rate for the retirement pension. The exact amount is shown in your personal pension certificate, not in a generic calculation.
• Bridging: either a regulatory bridging pension from the pension fund, or roughly two years of living costs from your own assets.

How much these four items add up to in an individual case depends on assets, the contribution period so far, and the pension fund’s regulations. If capital is withdrawn as a lump sum, the capital withdrawal tax comes on top, and its amount in turn depends on your place of residence.

Frequently asked questions about early retirement

From what age is early retirement possible?

The AHV pension can be drawn up to two years early, from age 63 at the earliest, in full or in part, even month by month (AHVG Art. 40). The pension fund may set a lower retirement age in its regulations, at the earliest from age 58 by law (BVV2 Art. 1i). Whether an actual exit is possible with your own employer at that point depends on the applicable pension fund regulations.

How much does the AHV pension drop with two years of early withdrawal?

By 13.6 percent, for life. The reduction is 6.8 percent per full year of early withdrawal and is not reversed once the reference age is reached (AHVG Art. 40 and 40a, as of 1 January 2026). The exact calculation by month and birth cohort is covered in the article on the retirement age in Switzerland.

Do I have to pay AHV contributions during early retirement?

Yes, as a non-employed person, until you reach the ordinary reference age. The contribution ranges between CHF 530 and CHF 26,500 a year and depends on net assets plus twenty times the annual pension income (AHVV Art. 28, fact sheet 2.03, as of 2026).

Who bridges the years until the ordinary AHV pension starts?

Either a bridging pension set out in the pension fund’s regulations, if the rules provide for one, or your own assets. There is no statutory right to a bridging pension; it is up to the individual pension fund.

Does early retirement also affect the pension fund payout?

Yes, in two ways. Contribution years and the corresponding compound interest on the retirement assets are missing, and the pension fund applies its own, lower regulatory conversion rate to an early withdrawal, because the pension is paid out over a longer period.

As of September 2026. Sources: AHV-IV fact sheet 2.03 “Non-employed contributions to Old-Age and Survivors’ Insurance (OASI), Disability Insurance (DI) and Income Compensation Insurance (IC)”, AHV-IV fact sheet 3.01 “OASI Old-age Pensions and Helplessness Allowances”, AHV-IV fact sheet 3.04 “Flexible retirement” (all as of 1 January 2026), AHVG (SR 831.10) Art. 40 and 40a, AHVV (SR 831.101) Art. 28, BVV2 (SR 831.441.1) Art. 1i, SVA Zurich online contribution calculator (accessed 15 September 2026).