3-pillar system: the Swiss retirement system
The pension system in Switzerland is based on three pillars: the state pension (pillar 1), the occupational pension (pillar 2) and the private pension (pillar 3).
The 3-pillar system in Switzerland explained simply
The Swiss pension system is based on 3 pillars. It is designed to provide financial protection to cover the events of retirement, disability and death. The three pillars consist of:
state pension: The first pillar of the Swiss pension scheme is the AHV (old age and survivors' insurance). The AHV serves to secure a livelihood and is mandatory.
occupational pensions: The second pillar is the occupational pensions and is called the BVG or pension fund. It is usually compulsory for employed persons. The occupational pension supplements the Oasi and is intended to enable an adequate standard of living.
private pensions: The third pillar is voluntary and is intended to ensure the usual standard of living in old age. If you take out a pillar 3 pension in the form of a life insurance policy, you can also be insured against risks such as death and incapacity to work.
Pillar 1: state pension
Die AHV dient zur Existenzsicherung im Rentenalter und ist obligatorisch. If your pension income is not sufficient to secure your existence, you will receive supplementary benefits (EL/PC).
The financing of the AHV is based on solidarity between the generations. With the so-called pay-as-you-go procedure, the working people finance the pensions of the retired population. In addition, higher earners support less wealthy people. Because those who earn better pay higher contributions than those with lower wages.
The survivor's insurance is intended to cushion financial difficulties in the event of the death of a partner or parent.
Pillar 2: occupational pension
The occupational old-age, survivors' and invalidity pension provision (BVG) and the Accident Insurance Act make up the 2nd pillar. Die BVG ist für Erwerbstätige in der Regel obligatorisch. There are exceptions, for example, for self-employed persons or persons with low wages.
Together with the 1st pillar (AHV/IV), the benefits of the occupational pension scheme are intended to enable the beneficiary to maintain his/her previous lifestyle in old age or in the event of death or invalidity. Unlike with the AHV, you only save for yourself at BVG. The pension fund invests the collected capital.
Pillar 3: private pension
The 3rd pillar consists of the restricted pension plan (pillar 3a) and the unrestricted pension plan (pillar 3b). The third pillar is optional. Mit privaten Ersparnissen in der 3. Säule können Sie:
Closing pension gaps:
to finance the purchase of a home
Unlike pillar 3a, pillar 3b does not provide tax benefits. On the other hand, it is more flexible and you can withdraw money without having to adhere to certain conditions. Unlike in the case of pillar 3a, there is also no maximum amount for deposits.
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More information on the pension system
The Swiss pension system is always evolving thanks to various reforms and initiatives. Read here about the latest developments in the field of pensions in Switzerland.
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The way you approach the subject of pensions depends on what phase of life you're in. Comparis explains what you should be aware of, whether you're just starting to work, contemplating early retirement or somewhere in between.
