Ask for an offer

Contact us

The Swiss Pension System

As a general rule, anyone who is gainfully employed in Switzerland is subject to the Swiss pension system. However, there are exceptions to this rule.
Individuals who are subject to the Swiss social security system pay contributions and as such are entitled to benefits. Under certain conditions, some are also entitled to have their contributions reimbursed.

What benefits does the Swiss social security system offer?

Switzerland has a close-knit network of different types of social insurance, which offer individuals working or living here, and their family members, broad protection against risks, the financial consequences of which could not be covered without insurance.
These different types of insurance are in the form of pensions, unemployment benefits or family allowances, or through the reimbursement of costs incurred as the result of sickness or an accident.

The social security system in Switzerland is based on three pillars:
Public Welfare, Occupational Benefits and Private Pension Provision
One of the least known is the third pillar, yet with a considerable number of advantages.

1st Pillar

State Pension Regime
(old age, survivors’ and invalidity)
Compulsory for everyone

2nd Pillar

Occupational benefits
Compulsory for working individuals

3rd Pillar

Private pension
On a voluntary basis

According to the Federal Constitution, the first pillar must ensure the vital minimum to live. It consists of Old Age and Survivors Insurance (AVS/AHV) and Disability Insurance (AI/IV).

What is the first pillar (AHV) and its benefits?

The main pillar of the Swiss social security consists of old-age insurance and survivors, or more commonly known as AVS.It serves to cover the basic needs of a person insured in case of retirement or death.

The retirement pension is intended to compensate, at least partially, the loss of labor income when a person retires. Insured individuals are entitled to pension when they reach retirement age (at present, 64 for women and 65 for men).
Survivor benefits, meanwhile, aim to prevent excessive financial difficulties following the death of a parent or spouse. Entitled to it are widows, widowers and orphans.

AVS/AHV is supplemented by disability insurance (AI/IV) and additional benefits. The AI is paid to insured individuals when they require regular and substantial help to carry out ordinary acts of life.

When the AVS pension is not enough to cover the basic needs of the insured, the latter is entitled to additional benefits.

Who pays AVS and how?

The main source of funding comes from the insured individuals and their employers. A small percentage is levied on the value added tax (VAT) and taxes on gambling houses.

All insured AVS individuals are required to pay contributions. As stated previously, the AVS is mandatory for anyone working and / or residing in Switzerland. Therefore, these people contribute, with the exception of children who are insured and entitled to benefits without having to contribute.

However, the beginning of the contribution varies according to the employment status of the insured. If the latter is gainfully employed, it is required to pay contributions from the 1st of January following the year of the 17th anniversary.

If the insured person is not employed, it is required to pay AVS/AHV contributions only from the 1st of January following the year of the 20th anniversary until retirement age.

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

The 3 rdPillar

(Third Pillar, Troisième Pillier, Terzo Pillastro, Dritte Säule)

The individual insurance constitutes the 3rd pillar. The two first pillars are often insufficient to ensure good retirement. Thus, in addition to improving your retirement, you can protect your family with a safe and guaranteed contract. In adapting the 3rd pillar according to your needs, your loved ones will be protected in case of disability or death, financial and/or real estate problems. (see setting police collateral). .

The 3rd pillar A (Third Pillar A)

Everyone in Switzerland, including foreign workers, can sign a third pillar insurance.
The contract of the third pillar is linked with the retirement age: 64 for women and 65 for men.
However, it is possible to withdraw the funds from the 3rd pillar after a minimum of three years contract and if you meet one of the following conditions:

- You leave Switzerland permanently
- You become independent
- You buy your principal residence
- You withdraw the funds 5 years before retirement

The beneficiaries of the contract are referred to a legal clause in a specific order:

1. The spouse (married or cohabiting for more than 5 years)
2. Children
3. Other heirs

The maximum possible payment on a third pillar plan is CHF 6'768 per calendar year for an employee (2016) and 20% of the net operating revenues for independent workers, with a maximum amount of CHF 33'840 per calendar year.
At the end of the contract, a tax of around 5% to 7% will be levied on the principal and the interests.

The 3rd pillar B (Third Pillar B)

This type of third pillar is open to all: whether you work in Switzerland or you are a border commuter, you can take a 3rd pillar B. By living in Switzerland, you benefit from attractive tax deductions.
The contract is free and secured by the insured. It is possible to withdraw the funds when having a minimum of three years’ contract. No specific pattern is needed to justify the release of the policy.

The policyholder, the insured and the premium payer can be different people. This allows combining the role of each person to get a contract and adapt it to their needs.

Several people can have a single third pillar contract. In addition, the beneficiary clause remains completely free: you mention the recipient (s) you want, allowing you to prioritize certain heirs, for example.

There is no limit on payment of such contracts, so you have the freedom to choose the amount you wish to deposit. A tax deduction is allowed for contributions according to different canton regulations. If the first pillar and the second pillar are insufficient once retirement age is reached, it is essential to supplement your income with the third pillar.

You can do a 3rd pillar plan with a bank or an insurance institution. Here you will find some key facts about the types of the 3rd pillar.


The third pillar A

The tax deduction on the third pillar A is governed by federal law and it is applicable throughout Switzerland.

According to the Tax Administration guidelines, "the contributions or payments for the third pillar (restricted pension plan) are deductible up to:

- CHF 6'768.- if you are employed (contribute to the second pillar);

CHF 33'840.- but a maximum of 20% of the determining income (gross salary or net income less fee AVS AI AC AANP Amat APG) if you do not meet the conditions of membership of a second pillar.
Depending on the canton, this deduction is also valid for the foreign workers.
Depending on the canton, this deduction is also valid for the border.

The third pillar B

The tax deduction is governed by cantonal laws and thus varies depending on the canton.

For example, in Geneva in 2015 and always according to the tax administration's guidelines:

- For single, widowed, divorced and legally separated individuals, the maximum amount of tax deduction for a free 3rd pillar is CHF 2'200 per calendar year.
- For spouses / registered partners living in the same household, the maximum amount of tax deduction for a free 3rd pillar is CHF 3'300 per calendar year.
- You could also claim an additional tax deduction of CHF 900 per child per calendar year.


It is possible to include additional services to your basic pension contract. You will find the most common here.

Release of premiums in case of disability
You can guarantee the capital provided in case of illness, accident and disability.
If you are the victim of one of these cases, and you cannot pay your insurance premium, the company will take over the premium after a waiting period to be agreed.

Doubling of capital in the event of accidental death.
This option allows the beneficiaries of your pension agreement to receive the double of the insured sum in case if you die as a result of an accident.

Frequently Asked Questions

Whether you take the 3rd pillar A or B, there is no minimum amount to be paid. You choose the amount of your payment based on your budget.
The maximum amount that is deductible from the 3rd pillar A is CHF 6'768 per year for an employee. For a freelancer, the maximum amount is CHF 33'840 per year (or 20% of net operating income).
For a free 3rd pillar 3b, the maximum deductible amount is different in each canton. For example, for a single person living in the canton of Geneva, it amounts to CHF 2,200 per year CHF 3,300 per year for a couple. You can deduct another 900 CHF for each of your children.
You must look at the terms of your contract and the type of products you have purchased. Some life insurance products guarantee capital in case of life or death, and ensure you return your money at the end of the contract. Investments linked to riskier values can give you better returns, but with an increased risk .
Yes. At any time , you can reduce the premium of your policy.
This reduction will affect the guaranteed capital in case of life or death, so we advise you to choose the amount you think is more in line with your budget from the start of the contract.