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The Swiss Three Pillar Pension System

As an introductive information to the Swiss Pension System based on three pillars, please find below a very brief summary on the main features:


The so called first Pillar is the Swiss state pension system (a PAYGO system) has three components:

  • AHV (Old-Age & Survivor Pension)
  • AI (Invalidity Insurance)
  • APG (Income compensation insurance)

How is the system financed?

  • Contribution from employees, employers, self-employed, individual non-in gainful employment (students, housewives)
  • Public authorities: direct funding, part of VAT, gambling proceeds

Contribution levels:

  • Student not working: 482 CHF yearly (minimum contribution)
  • Employee 5.125% / Employer 5.125% = 10.25% total
  • Self-employed: up to 9.65%

Objectiveto cover basic living expenses adequately

When does it start : from the 1st of January following 17th birthday

Full pension criteria44/43 years to get 28,440 CHF (single) / 42,660 CHF (couple)


The information below summarizes a “vast & complex” subject.

German BVG – Altersguthaben / die Zweite Säule

English – Occupational Pension Scheme / the second pillar (funded pension plan)

Purposearticle 113 - Swiss Federal Constitution, “the 2nd pillar enables the insured person to maintain his/her previous lifestyle in an appropriate manner”. The 2nd pillar is compulsory since 1985. It has 2 main part components:

  • Old-Age SAVINGS (start at 25 years old up to 64/65)
  • Survivor & Invalidity INSURANCE (start at 18 years old up to 64/65) – Legally 6% of all contributions paid must to fund insurance protection against death & disability


The 3rd Pillar is a private pension scheme. It is optional and financed entirely by the person. The aim of voluntary personal provisions is to cover gaps between the accustomed income of an insured person up until retirement and the 1st & 2nd pillar benefits (supposed to provide up to 60% of one’s previous income)

2 types of Third Pillars3a pillar (TIED) / 3b pillar (FLEXIBLE)

2 types of institutionsbank (Third Pillar account) & insurance (Third Pillar policy)

Who is an insurance Third Pillar for: individual who:

  • Want to stay in Switzerland (for the foreseeable future)
  • Want to protect his family
  • Want to buy a property in Switzerland

For 2020, the maximum tax-deductible allowance in the pillar 3a is:

  • CHF 6,826.- for employed persons who are members of a pension fund
  • 20% of net earnings for self-employed persons who are not members of a pension fund, up to a maximum of CHF 34,128.-

To enable us to certify your savings contributions for this year, your payments must be received by the insurance company or the bank before December 29th, 2020 the latest. However, to be on the safe side, we advise you to order your payments before December 24th, 2020.

The total amount of your contributions is fully tax-deductible.

The tax deduction is not automatic. Individuals must announce they have contributed to a third pillar for the tax-deduction to be effective (done through your return).

To understand more about the Swiss Pillar System or to set up your 3rd Pillar email us today at or call us: +41 225017094.

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