Retirement provision in Switzerland. The three-pillar principle explained simply.
Retirement provision in Switzerland is based on three pillars. Together, they form the solid basis for comprehensive old-age security. The three pillars also offer financial security in the event of death and disability. Watch the video to find out how the three-pillar principle is structured and how it works.
Maintain your standard of living thanks to the three-pillar principle
The three-pillar pension system in Switzerland is among the world's most progressive. It is based on the three pillars: state pension provision (AHV), employee benefits insurance (BVG), and private pension provision. The three-pillar principle is embedded in the Federal Constitution (Art. 111) and aims to maintain the accustomed standard of living for insured persons or their surviving dependents during retirement, or in the event of disability or death. Pillar 1 ensures a basic standard of living. Together with pillar 2, it should cover 60 percent of the previous income at retirement age. Pillar 3 supplements pillars 1 and 2, and contributes to maintaining the accustomed standard of living.
How the three-pillar principle is structured
Find out more about the individual components that make up the Swiss "pension provision house." Click on the corresponding arrows in the chart below.
The goal of the 1st pillar (state pension) is to cover the basic needs of pension recipients, disabled persons, and surviving dependents. It forms the basis of Switzerland's three-pillar system and provides benefits during retirement as well as in the event of disability or death. The state pension comprises the Old Age and Survivors' Insurance (AHV), Disability Insurance (IV), and supplementary benefits (SB). It is obligatory for everyone residing or gainfully employed in Switzerland.
Detecting and closing gaps in pension provision
Pension gaps can significantly reduce the pensions from the first and second pillars. In order to counter this or close existing gaps, the following options are available:
- You can make up for missing AHV contributions up to five years later.
- If your second pillar has coverage gaps, under certain circumstances you may be able to make a pension fund purchase.
- Generally speaking, but especially for pension gaps, private pension provision with pillar 3a is an effective method of building retirement capital. If possible, contribute the maximum amount.