Occupational pension provision is compulsory for all employees with a minimum wage. It is funded by employers and employees and aims to achieve, with the resources from the first pillar, the standard of living of the insured prior to retirement.
In addition to the first pillar, which is often insufficient, comes the 2nd pillar: occupational benefits (LPP/BVG). By accumulating the first two pillars, those insured should be able to maintain their previous standard of living, with the aim of achieving about 60% of their last salary.
What is the 2nd Pillar (LPP) and its benefits?
Occupational benefits plans are a savings process on an individual account throughout the years of insurance.
Two options are available to the insured when the latter retires:
1. The accumulated capital is converted to a monthly retirement pension. This pension will be paid until the death of the insured.
2. The accumulated capital can be paid as a capital.
Also, there are possibitlies to withdraw the capital before retirement. According to the actual legislation, you can take out your 2nd pillar funds in case you would like to buy a house, become freelancer or leave the country. You can contact us
to get more information about the best options for you.
Who contributes to the LPP/BVG and how?
The LPP/BVG is mandatory for employees already subject to the AVS/AHV and who receive at least CHF 21'150 annual income (2015). If these conditions are met, and if the person is under the age of 25, the insured contributes only to cover risks, death and disability. The contributions for the retirement pension start only from the age of 25. Savings cease once retirement age is reached.
Some people are not subject to the obligation to be insured. The is the case of people with independent status and those who, within the meaning of AI, have an inability to gain of at least 70%. However, they can subscribe to an optional insurance. Find more information on this here