Private pensions

3-pillar system

Old-age provision in Switzerland is based on the so-called 3-pillar system:

1st pillar – State pension
This includes old-age and survivors’ insurance (AHV), invalidity insurance (IV) and any supplementary benefits (EL). The purpose of the 1st pillar is to cover basic living expenses adequately. It is mandatory for the entire population.

2nd pillar – Occupational pension
The occupational old-age, survivors' and invalidity pension provision (BVG) and the Accident Insurance Act make up the 2nd pillar. It is mandatory for all employed individuals. Together with the 1st pillar (AHV/IV), the benefits of the occupational pension provision are intended to enable the beneficiary to maintain his/her previous lifestyle in old age or in the event of death or invalidity.

3rd pillar – Private pension
The third pillar complements the first and second pillar. Private savings or the purchase of residential property are ways to bridge potential gaps in one's pension provision. The 3rd pillar is optional. There are two different types of 3rd pillar plans:

Unlike pillar 3a, pillar 3b does not entail any tax privileges. On the other hand, it is more flexible and not limited to a specific group of persons.