Pension provision in Switzerland is structured on the basis of the 3-pillar principle, which is enshrined in the constitution. This includes the state pension (AHV/IV = 1st pillar), the occupational pension (company pension scheme/BVG = 2nd pillar) and private pension provision (3rd pillar).

The first pillar

The constitution stipulates that the first pillar of our pension system should serve to safeguard people's livelihood. It comprises old-age and surviving dependants' insurance (AHV) and disability insurance (IV). If these benefits fail to cover people's living requirements, supplementary benefits will be paid. In addition, people who suffer from serious health problems can claim disability allowances. The AHV/IV is a general state pension scheme. It insures people who are residents of or work in Switzerland (e.g. foreign workers, cross-border commuters).

The second pillar

The second pillar is the occupational or company pension. It is compulsory for employees from a certain income threshold. Premiums are split between employees and employers. The occupational pension is processed through the workplace or using the services of professional associations. Its aim is to safeguard the income that the person uses in addition to the first pillar. Self-employed people can insure themselves voluntarily in an occupational pension scheme.

The third column

Since, due to an increased life expectancy and sinking birth rates, the first and second columns rarely meet their original objective, i.e. to safeguard the income that the person is used to, the third pillar comes into the equation. Private pension provision is voluntary but it is highly recommended in order to leave yourself with sufficient room for manoeuvre in your finances in old age. Banks and insurance companies offer tied and free pension solutions (pillar 3a and pillar 3b). Inquire about the different possibilities.

Further Information

Federal Office for Social Security