Income security more important than salary size

Income security more important than salary size

Employees are paying increasing attention to the social benefits offered by their employer. This is good because these can vary a lot, and in many cases they provide additional insurance.

A couple with two children: one of them works, the other takes care of the children or is studying. But what happens if the main breadwinner can no longer work due to illness? Where will the family's income come from – and how much will there be? Questions like these are increasingly entering public consciousness – particularly since the discussions about the changes in the first and second pillars.

In addition, a University of Oxford survey, commissioned by Zurich, also showed this (see box). Six in ten Swiss employees are prepared to take a reduced salary in return for good social benefits.

Income security in an emergency

The first and second pillars admittedly offer benefits in times of need, but usually there are financial losses: particularly for children, students, housewives and owners of sole-proprietor companies, disability can have severe financial consequences.

Since they are not salaried employees, they do not receive any benefits from the pension fund in the event of a lengthy illness. If they become disabled, they are dependent on minimum benefits from the first pillar.

BVG minimum – salary can be reduced by half

In many cases, insurance for loss of income is also worthwhile for employees. If someone becomes unable to work because of illness, the size of their pension depends heavily on their employer and is often much lower than for disability resulting from an accident.

Anyone who becomes ill and can no longer work may in some circumstances receive just 50 percent of their salary.

Anyone who has an accident and becomes disabled can generally expect to receive a pension amounting to 80 to 90 percent of their previous income. In contrast, anyone who becomes ill and can no longer work may in some circumstances receive just 50 percent of their former salary. These are the minimum benefits that the Swiss Federal Occupational Retirement, Survivor's and Disability Act (BVG) provides for.

Employers can influence benefits

The benefits from the second pillar are not, however, set in stone. The BVG enables the employees’ salaries to be insured up to a certain percentage, for example 60 percent. This means the employees receive approximately the same benefits in the case of illness as they would for a pension resulting from an accident. Incidentally, the same applies for benefits in the event of death. The legal BVG minimum means a heavy loss of income, but the employer can voluntarily add to it with an increased pension or a lump-sum death benefit. A lump-sum payment may, for example, be very important for families with a residential property.

With good social benefits, companies can attract good talent and retain employees in the long term.

The improvement in income security for employees makes sense for two reasons. In Switzerland, for 90 percent of people their disability is due to illness, while accident victims account for just 10 percent. In addition, with good social benefits, companies can attract good talent and retain employees in the long term.

What about your social benefits?

Nowadays there are so many lifestyles and working models that it is difficult to keep track. Even in the traditional scenario – married, children, father goes to work and mother stays at home – the topic of pension provision is complex. This is why it is hardly surprising that the self-employed, couples without a marriage certificate, part-time employees and people in education no longer understand their pension situation. Many bury their heads in the sand, saying things like: "I just assume nothing will happen to me."


Unfortunately, this wish will not come true for everyone. Humans are vulnerable. Mentally and physically. We want you to recognize and be aware of your financial risks and how you can influence them. For this reason, we have summarized the most important information about pension provision for you in an eBook. Zurich hopes that you enjoy reading it.

Download now

"Closing the Income Protection Gap" – a report by the University of Oxford

How can people worldwide be better insured against the consequences of illness-related disability? The University of Oxford has been investigating this question on behalf of Zurich for three years.

The "Closing the Income Protection Gap" report primarily focuses on prevention and recommends that employers encourage employees to adopt a healthy lifestyle, for example with fitness rooms. It advises offering coaching for employees with mental problems.

In addition, the study indicates that illness-related disability can have serious financial consequences, for children, students and housewives in particular. This is because they are not connected to a pension fund and, in the event of disability, rely on minimal benefits from the first pillar.