Part 2: What if loss of earning capacity becomes disability?

What does a disability pension look like? And why does Pillar 2 matter?

Alongside a temporary loss of earning capacity, which we discussed in part 1, an accident or illness can also result in permanent disability. If this is the case, then you, as the affected person, are entitled to a disability pension from Pillar 1.

Pillar 1

You should register with the Federal Disability Insurance (IV) no more than six months after losing your earning capacity so you can claim a disability pension. Often, your employer or their insurance will arrange this. After this is done, your level of disability will be medically clarified. A level of at least 40% is required to receive a partial pension. This is known as a quarter pension. You will be guaranteed a full pension from a degree of disability of 70%. You can find more details on the disability insurance website.

In some instances, it may take as much as 12 months (but no more than 24 months) in order for it to become clear that a person has become permanently disabled. If an illness is the reason behind this, it can lead to a massive drop in income. State benefits are paid out from IV for a disability with a degree of disability of at least 40%, irrespective of the cause.


Income protection insurance

The simple solution to a significant loss of income due to illness or accident.

Pillar 2 – what do you need to bear in mind?

Pillar 2 also comes into play if a person is disabled, but the benefits that are actually available depend on the cause of the disability.


Disability as a result of an accident

In this case, the accident insurance (UVG) daily allowance, which previously accounted for 80% of a daily wage, is converted into a pension. The combined benefits from IV and UVG may make up a maximum of 90% of the insured salary (up to the maximum insurable AHV salary of CHF 148,200). Depending on the pension fund’s plan rules, additional pensions may also be included.


Disability as a result of illness

Benefits from a pension plan vary depending on the type of plan. They will either be calculated as a percentage of the the AHV salary (defined benefit plan) or depend on potential retirement assets (defined contribution class). You can find out about this in your pension fund’s plan rules.


Practical example

In part 1, we read that Patrick (34, married, one child) had an abdominal tumour and needed to rely on his employer’s pension system to work and provide him with good cover. He never read his pension certificate carefully and so did not realise that he should have also actively taken out private cover in order to be able to maintain his standard of living if he fell ill.


Generali tip

Your pension certificate is a very important document. It shows exactly how your employer covers you – and your family – for different risks. You receive the certificate from your pension fund once a year. If you want to have your pension situation analysed by an advisor, you should bring this document and the pension fund’s plan rules with you to your appointment.


Find out more

Part 1: Loss of earning capacity as a result of illness or accident

General information about a loss of earning capacity caused by accident or illness can be found in our article.

Part 3: Loss of earning capacity and loss of earnings

How well are self-employed people protected in the event of an accident or illness?

Suitable insurance products