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How does the pension fund work in Switzerland?
The pension fund (pillar 2), together with the Old-Age and Survivors' Insurance (OASI), secures your standard of living in old age and provides protection in the event of disability or death. Find out in simple terms how the system works, who pays contributions, what benefits you can expect, and how you can actively shape your pension plan.
The essentials in 3 steps
- Check your insurance status: Clarify whether you are required to be insured based on your salary and employment relationship.
- Understand your assets: Familiarise yourself with your insurance certificate to know your contributions and projected benefits.
- Take an active role: Use options such as voluntary buy-ins to optimise your pension.
The foundation: Who is insured and who pays?
In Switzerland, all employees are mandatorily insured in a pension fund, provided they meet certain criteria:
- Minimum salary: The annual salary subject to OASI contributions must be higher than the entry threshold set by the Federal Council (CHF 22,050 as of 2025).
- Age: Insurance for the risks of death and disability begins on 1 January after reaching the age of 17. Saving for the old-age pension starts on 1 January after the 24th birthday.
- Employment relationship: The employment contract must be for a term of more than three months.
The pension fund is financed jointly: The contributions are deducted directly from your salary each month, and your employer is legally required to pay at least half of the contributions. These payments flow into your personal retirement savings and also cover the insurance benefits for the risks of disability and death.
Security in every situation: The benefits
The pension fund offers comprehensive protection in various phases of life:
Old-age benefits: Pension or lump sum?
When you reach retirement age, your accumulated retirement savings are converted into a lifelong pension. The amount of the pension is calculated using the conversion rate – a percentage that converts your saved capital into an annual pension.
NOTE
Example: With retirement savings of CHF 400,000 and a conversion rate of 5.8%, the resulting annual pension is CHF 23,200.
Alternatively, you can have all or part of your savings paid out as a lump sum.
Risk cover for disability and death
The pension fund also protects you and your family before retirement. In the event of an incapacity for work due to illness or accident, you will receive a disability pension. In the event of death, your survivors (spouse, partner, and children) are financially supported with a pension.
Flexibility in your career: What happens when you change jobs?
When you change employers, you take your accumulated pension capital with you. These vested benefits – your personal pension fund assets – are transferred directly to your new employer's pension fund. This ensures that your pension provision continues without interruption. If you do not start a new job immediately, your assets will be kept safe for you in a vested benefits account, a special blocked account designed to preserve your pension.
Actively shaping your pension
You have various options for tailoring your occupational pensions to your needs:
- Voluntary buy-in: Do you have contribution gaps, for example, due to a stay abroad or a salary increase? With a voluntary buy-in, you can close these gaps, improve your old-age benefits, and save on taxes at the same time.
- Promotion of home ownership (WEF): You can use a portion of your pension fund assets to buy or build your own home or to pay off a mortgage. Find out more about the promotion of home ownership.
Manage your pension easily and digitally
TIP
As an insured person, a web app like ePlix gives you access to your pension data at any time and in real time. Check your insurance certificate, simulate a buy-in, or track the performance of your assets – simply and digitally. For employers, online platforms like iTellco simplify the entire administration process.
Do you have any further questions? Our team is here to help. Feel free to contact us.
Legal Notice: The content provided in this Knowledge center is intended solely for general informational purposes. It does not constitute binding information, does not replace legal, tax, financial or any other professional advice, and does not contain any recommendation to enter into, amend, or terminate contracts.
The information is prepared with due care and updated regularly. Nevertheless, the companies of the Tellco Group do not assume any guarantee for the accuracy, completeness or timeliness of the content. The only authoritative sources are the applicable legal provisions, the relevant regulations, and the official product and contract documentation, including individual contracts and the pension plans of the respective responsible company.
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