Pension provision in Switzerland: What newcomers need to know about the three pillars

New to Switzerland? This is how to keep track of your pension provision.

Are you new to Switzerland? Find out how to use the Swiss pension system comprising state, occupational, and private pension provision correctly, and keep track of it. This will ensure that you are optimally protected in retirement.

Newcomers are automatically insured in the first pillar

If you move to Switzerland from abroad, compulsory insurance in the AHV is automatic – as for everyone in Switzerland. You have to pay contributions if you are between 21 years of age (18 if you are gainfully employed) and retirement age. In Switzerland, retirement age is 64 for women and 65 for men. The retirement age for women will be gradually increased from 64 years to 65 years starting in 2025.

When you arrive in Switzerland, the AHV/IV central settlement office will provide you with an AHV number, which is valid for life and is used as your social security number.

  • If you have been given a B or C residence permit by the immigration authorities, the central migration information system of the State Secretariat for Migration will apply for your AHV number. You will receive it 14 days after your residence permit is issued.
  • If you have been given a short-term residence permit (permit L), there are two options: Either your health insurer, with which you must take out insurance within three months of moving to Switzerland, will apply for your AHV number –you will receive it one month after concluding the contract; or your employer will request an AHV number for you by registering you with the AHV compensation office in your canton of residence. This must be done no later than four months after you commence employment.

To keep track of your AHV pension, you should regularly check whether your employer has actually paid the deducted amounts to the compensation fund. This is because missing contributions lead to contribution gaps and a lifelong reduction in the pension. The AHV's recommendation is to order a free account statement from your individual account every four to five years. Click on the link to access the application directly.

Employee benefits insurance is only compulsory for employees

If you are an employee and earn more than CHF 22,050 per year, your employer is obliged to insure you in the mandatory employee benefits insurance. If you earn more than CHF 88,200 per year, it depends on your employer whether they have also insured the amounts above that sum in the extra-mandatory employee benefits insurance. To find out more, contact your pension fund or HR unit. It's important to know that pension funds are linked to the employer. If you switch jobs to a different employer in Switzerland, you must generally also switch pension funds. In this case, your accrued assets, known as vested benefits, will be transferred to the new employer's pension fund. If you are self-employed, it is up to you whether to join a pension fund.

All contributions and the resulting benefits are usually summarized by the pension fund at the beginning of the year on the pension fund statement, and this information is made available to you. Many pension funds also have an online portal nowadays, where you can download information. To do so, you must set up a user account.

If you find out that your benefits will not be sufficient to cover your needs in retirement, you can purchase pension benefits to improve your retirement assets. But beware: In the first five years after moving to Switzerland, there are limits on the amounts you can purchase.

Foreigners can also pay into the third pillar

If you are employed, as a foreigner you can also improve your retirement assets voluntarily and enjoy tax advantages by paying into Pillar 3a up to the legally defined maximum amount.

  1. For your private pension provision you can save with a bank or insurance company and open an account at a branch or online.
  2. You can choose between a Pension account – 3rd pillar and a Pension securities account – 3rd pillar, where the assets are invested in securities. The right option for you will depend on your personal circumstances and your future plans. The best thing is to contact us for a consultation.
  3. After opening the account, you can start paying in right away.
  4. You will receive an annual account statement. If you have access to online banking, you can view the performance of your assets at any time. The Pillar 3a account or safekeeping account is displayed in the same way as a normal bank account.

Did you know that, if you leave Switzerland definitively, you can withdraw your Pillar 3a assets early.

Of topical interest: Be well protected despite falling pensions

Demographic change is presenting pension systems worldwide with challenges, including in Switzerland. At the same time, interest on retirement assets is low and conversion rates are falling. This means that pensions from the first and second pillars are likely to be significantly lower in the future.

The most effective way to protect yourself well in your retirement despite this is to have a private pension. So, open a Pillar 3a pension as soon as possible after your move to Switzerland and use the annual maximum amount to the full.