The three-pillar principle. How pension insurance in Switzerland works.
The Swiss pension system in a nutshell
The Swiss pension system is firmly anchored in the Swiss Constitution and in specific laws. The three-pillar principle is pivotal to the pension system. It comprises compulsory state and occupational pensions as well as voluntary private provision for retirement. These three pillars are closely coordinated, complement each other and provide financial benefits in the event of disability, retirement or death.
State pension: the first pillar
Everyone who lives or works in Switzerland is covered by the state old-age, survivors’ and disability insurance schemes (OASI/DI).
Employees’ contributions are deducted directly from their salaries. Those who are not gainfully employed must pay at least the minimum contribution, though the latter can be waived if their spouse pays at least double the minimum contribution.
Benefits are paid in the form of retirement, disability or survivors’ pensions. However, the maximum benefits are limited and also depend on how many years of contributions you have paid.
Occupational benefits: the second pillar
The Act on Occupational Old-Age, Survivors’ and Disability Benefit Plans (LOB) and the Act on Accident Insurance (AIA) regulate the cover all employees enjoy via their employers for occupational pensions (pension funds) and for occupational and non-occupational accidents.
The employees’ contributions are deducted directly from their salaries. The employer must pay at least the same contribution of their behalf. The employer must also pay the insurance contributions for occupational accidents.
Benefits are paid in the form of retirement, disability or survivors’ pensions. However, the maximum statutory benefits are limited and supplement the benefits paid under the first pillar.
Private pension provision: the 3rd pillar
Voluntary private pension provision (pillars 3a or 3b) allows everybody to supplement their first- and second-pillar benefits in line with their needs. The federal government offers tax incentives to encourage this additional form of pension insurance, especially tied pension provision (pillar 3a).
If you make voluntary provision for your retirement, you pay the contributions yourself. Under pillar 3a, these contributions can be deducted from your annual taxable income, up to the maximum amount set by the Federal Council.
Depending on your needs, the insurance can cover a variety of different benefits. The latter are paid out as capital benefits, retirement/disability pensions or death benefits.
What others wanted to know
Our customer advisors can provide answers to selected FAQs. Just tell us what you want to know. We will be happy to help you.
Beat B. (57), Kreuzlingen
How much money do I need each month as a pensioner in Switzerland?
That depends entirely on your personal needs and on the plans you have for your retirement. It is best to draw up a personal income/expense statement. On the one side, enter the money you will need to finance your retirement plans. Be sure to note down your recurring living expenses, health insurance costs as well as food, taxes, etc.
On the other side, enter all the income you have. You can contact the OASI office directly to find out how high your potential retirement pension will be. The insurance certificate issued by your occupational pension fund also shows the likely amount of your future pension. And perhaps you have some savings tucked away that could boost your monthly income in retirement?
To ensure everything is shipshape and your post-retirement finances are in order, we recommend you make an appointment with your customer advisor to plan your pension.
Rolf J. (65), Lucerne
What income will I have in retirement if I have no third pillar insurance?
You will definitely have your OASI pension. The amount of this pension will depend on how many years of contributions you have accumulated. Your OASI office can tell you the potential amount of your future OASI pension.
If you are employed and are a member of a pension fund, you will also receive a pension from the latter. The insurance certificate issued by your pension fund shows the likely amount of your future pension.
If you pay into the OASI scheme without interruption and are also insured with a pension fund via your employer, you can expect to receive pension income equal to about 60% of your final income as an employee. But that figure can be appreciably lower if you earned a high salary, took longer breaks from work or did not pay all your contributions. That is why the provision you make yourself via the third pillar is key to making up any shortfall in income.
Beat B. (57), Kreuzlingen
How much money do I need each month as a pensioner in Switzerland?
That depends entirely on your personal needs and on the plans you have for your retirement. It is best to draw up a personal income/expense statement. On the one side, enter the money you will need to finance your retirement plans. Be sure to note down your recurring living expenses, health insurance costs as well as food, taxes, etc.
On the other side, enter all the income you have. You can contact the OASI office directly to find out how high your potential retirement pension will be. The insurance certificate issued by your occupational pension fund also shows the likely amount of your future pension. And perhaps you have some savings tucked away that could boost your monthly income in retirement?
To ensure everything is shipshape and your post-retirement finances are in order, we recommend you make an appointment with your customer advisor to plan your pension.
Rolf J. (65), Lucerne
What income will I have in retirement if I have no third pillar insurance?
You will definitely have your OASI pension. The amount of this pension will depend on how many years of contributions you have accumulated. Your OASI office can tell you the potential amount of your future OASI pension.
If you are employed and are a member of a pension fund, you will also receive a pension from the latter. The insurance certificate issued by your pension fund shows the likely amount of your future pension.
If you pay into the OASI scheme without interruption and are also insured with a pension fund via your employer, you can expect to receive pension income equal to about 60% of your final income as an employee. But that figure can be appreciably lower if you earned a high salary, took longer breaks from work or did not pay all your contributions. That is why the provision you make yourself via the third pillar is key to making up any shortfall in income.
