Switzerland’s pension system is based on three pillars and has consistently proven its worth in international comparisons.
The First Pillar (AHV, IV, EO)
This is in line with the principle of solidarity. All working people (including cross-border commuters) and employers pay monthly contributions that fund current retirees (AHV pension).
The retirement age is 65 for men and 64 for women.
The first pillar thus provides a basic livelihood in old age and in the event of death (AHV), in the event of disability (IV), and in the event of loss of earnings (EO). The goal here is to ensure a basic livelihood.
The Second Pillar (BVG, UVG)
Occupational pension plans constitute the second pillar. This refers to company pension funds. Together with the AHV (first pillar), these are intended to provide coverage for 75% of a person’s final salary. Unlike the first pillar, this is not a pay-as-you-go system; rather, each individual saves based on their salary within the pension plan. The second pillar is thus designed to promote individual savings.
Pension fund contributions are mandatory, and at least 50% must be paid by the employer.
The Third Pillar
This constitutes private pension provision, which was enshrined in the Federal Constitution in 1972.
It is designed to close pension gaps in the first and second pillars and to build wealth.
A distinction is made between Pillar 3a (restricted pension savings) and Pillar 3b (unrestricted pension savings).
Pillar 3a is capped by the government at a maximum annual amount and is tax-deductible. It is also subject to certain restrictions on when the funds can be withdrawn (retirement, purchase of a home, emigration). Pillar 3b has fewer restrictions but also offers no tax benefits. The purpose of Pillar 3 is to supplement income after retirement.