2nd pillar The BVG – the foundation of occupational pensions

What occupational pensions offer and what the benefits of the 2nd pillar are.

by Pascal Meier 07 Mar 2016

Image: iStockphoto

Occupational pensions provided under the law (the BVG), also known as the 2nd pillar, form one of the foundations of the Swiss social insurance system. As one of the 3 pillars, the BVG plays a vital part in ensuring that people insured under this system can maintain an appropriate standard of living in old age, if they become disabled, or when someone they depend on dies. Taken together with AHV/IV insurance, the benefits are meant to equal around 60-70% of final salary.

What is the BVG for?

The BVG adds to AHV and IV benefits, enabling you to maintain an appropriate standard of living. If you retire, become unable to work, or die, the 2nd pillar benefits become payable.

Who has occupational pensions insurance?

Insurance under the BVG is mandatory for employees who are insured with the AHV and whose gross earnings exceed CHF 21,330 per year (or CHF 1,777.50 per month). BVG contributions are split between employer and employee and deducted straight from the latter's salary.

What happens to the BVG if I leave my job?

If you stop working temporarily - to have a child, for example - or permanently, it's advisable to transfer your occupational pension savings to a vested benefits account . This will enable your savings to earn interest at a preferential rate; it can also be supplemented by a vested benefits custody account . Over the longer term, this vested benefits custody account can generate more returns than a vested benefits account. The return depends on how the stock markets perform.