The 3-pillar principle of Swiss pension provision

The Swiss pension system is based on a 3-pillar principle. This principle is anchored in the Federal Constitution (BV Art. 111) and is intended to guarantee comprehensive financial risk coverage in the event of death, disability and old age.

1st pillar – state pension

Old-age and survivors’ insurance (AHV) and disability insurance (IV) form the 1st pillar. Together with any supplementary benefits (EL), they are intended to secure the company’s existence.

2nd pillar – occupational pension

The occupational old age, survivors’ and disability insurance (BVG) and the Accident Insurance Act (UVG) form the 2nd pillar of the 3-pillar principle. It is compulsory for employees in Switzerland. Together with the 1st pillar (AHV / IV), the occupational pension scheme should enable the continuation of the accustomed standard of living by providing benefits in old age, in the event of death or disability.

3rd pillar – private provision

The 3rd pillar is used for private self-provision and is voluntary. It can be used to close pension gaps. The aim is to build up a more extensive pension individually with private savings or the purchase of private property.

The most important social security contributions at a glance

AHV

Old-age and survivors’ insurance (AHV) is the most important pillar of social security in Switzerland. It replaces part of the income that has been reduced or lost due to old age or death.

All people who live or work in Switzerland are insured with the AHV. This does not apply to anyone who is not subject to insurance due to a special regulation such as an intergovernmental agreement.

BVG

The occupational pension corresponds to the above-mentioned second pillar and, together with the first pillar, enables you to continue your accustomed standard of living in an appropriate manner. It is primarily regulated by the BVG. Employees are also insured against the consequences of occupational accidents and illnesses in accordance with the law (UVG).

For more information on the subject, you can find out more here: Federal Social Insurance Office (FSIO).

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