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The Swiss pension system at a glance
How does Switzerland’s 3-pillar system work? Find out more about each pillar, their contents and their forms.
Content:
Pension provision in Switzerland is based on the tried-and-tested 3-pillar principle. It is designed to enable people of retirement age to maintain a reasonable standard of living and close any potential pension gaps. In addition to the state pension (pillar 1), there is occupational pension provision (pillar 2) and private pension provision (pillar 3).
The principle of multi-level coverage is part of the Federal Constitution. Article 111 reads as follows: “The Confederation shall ensure that the Federal Old Age, Survivors’ and Disability Insurance and the occupational benefits insurance can permanently fulfill their purpose.” Its aim is to guarantee financial security in the event of death, disability and old age.
Pillar 1: state pension | Pillar 1: state pension | Pillar 2: occupational retirement planning | Pillar 2: occupational retirement planning | Pillar 3: private retirement savings | Pillar 3: private retirement savings |
|---|---|---|---|---|---|
Pillar 1: state pension | OASI: Old-age and Survivors’ Insurance | Pillar 2: occupational retirement planning | OPA: Occupational Old-Age, Survivors’ and Invalidity Pension Provision | Pillar 3: private retirement savings | Pillar 3a: restricted pension plans |
Pillar 1: state pension | Safeguarding of basic income | Pillar 2: occupational retirement planning | Continuation of accustomed standard of living | Pillar 3: private retirement savings | Closure of individual pension gaps |
Pillar 1: state pension | Mandatory | Pillar 2: occupational retirement planning | Mandatory and voluntary | Pillar 3: private retirement savings | Voluntary |
Pillar 1: state pension | Responsibility of the government | Pillar 2: occupational retirement planning | Responsibility of the employer | Pillar 3: private retirement savings | Responsibility of the individual |
When you think about your retirement, you are faced with some important decisions. Let’s draw up a plan together based on your personal wishes, so that nothing stands in the way of a relaxed financial future.
Anyone who lives or works in Switzerland pays OASI contributions until they reach the reference age. Those in employment pay contributions from the 1 January after their 17th birthday; non-employed persons from the 1 January after their 20th birthday. Contributions and benefits are governed by law. Following the OASI 21 reform, which came into force at the beginning of 2024, the reference age from which women are entitled to draw a pension is to be gradually increased from 64 to the same age as men (65). A pension can be drawn a maximum of two years in advance, which leads to a reduction in the amount, or deferred for a maximum of five years, which results in an increase.
Worth knowing
The amount of the pension is based on the average annual income and the number of years of contributions. A full pension without deductions is paid to anyone who has paid OASI contributions every year without interruption from the age of 20 until the reference age.
Open your pillar 3a conveniently in the Mobile Banking App and decide for yourself how much to deposit. You’ll also save on taxes and can invest your retirement savings the smart way. It’s simple.
The mandatory nature of pillar 1 (for everyone) and pillar 2 (for employees) promotes financial security in old age, while pillar 3 allows you to adapt your pension provision on an individual basis. Because the state promotes personal pension provision through tax incentives, you also have flexible options for tax savings. For example, people with a pension fund can deduct up to CHF 7,258 (as at 2025) per year paid into pillar 3a from their taxable income. In pillar 2, voluntary buy-ins reduce the tax burden.
One of the disadvantages of the system is that you have to keep track of three different types of pension provision. This is also necessary in order to identify possible contribution gaps in good time. If you do not plan your own pension adequately, your savings may not be sufficient in old age. However, not everyone has the financial means to maximize tax benefits through pension contributions. The following also applies: in the 3-pillar system, the amount of future pension benefits depends on possible changes in legislation.
All 3 pillars complement each other, and their purpose is to make the pension system stable. Internationally, the Swiss system is distinguished by the balance of its 3 pillars and the strict division of responsibilities between the state and private actors. A particular feature is also the mandatory affiliation in pillar 2: in other countries, occupational pension provision is often only voluntary.
Worth knowing
In international comparison, the Swiss pension system is considered above average in terms of cost-effectiveness, long-term sustainability and trustworthiness. The publication “International Pension Gap Index
” shows that Switzerland has a strong 3-pillar system and a solid basis for retirement provision. Although Switzerland is well positioned compared to other countries, continuous reforms are necessary to ensure pension security for future generations.
One of the major challenges facing the 3-pillar system is demographic change, particularly in the pay-as-you-go OASI system. Despite rising tax contributions, such as the increase in VAT, the OASI is particularly dependent on contributors if it is to be able to make pension payments.
Demographic trends are causing the number of retirees to grow faster than the working population, which is also linked to increasing life expectancy. There is currently one retired person for every four people in employment. In around 30 years’ time, the ratio will be just two to one. As a result, an imbalance is developing between OASI income and expenditure. Around a quarter of the budget is covered not by contributions but by federal funds, VAT and casino levies.
Pension funds, which invest the money of contributors, have to deal with fluctuations in investment income. In periods of low interest rates and inflation, it is difficult for them to achieve a positive return that compensates for inflation. They are also faced with the task of making payments to pensioners whose life expectancy is increasing. The conversion rate is therefore a recurring topic of discussion.
However, in many cases – especially for part-time employees – the statutory regulations are not sufficient to ensure a secure and comfortable retirement and reliable protection against life risks. Private retirement savings are therefore an important building block for a financially secure retirement and to achieve your desired standard of living.
The 3-pillar system has proven its worth because it ensures a balance between a state pension, occupational retirement planning and private retirement savings. You should take action so that you too will be protected in retirement. In order to close a pension gap whilst saving taxes, you need to detect the gap early on. We can help you by providing individual advice.
Arrange an appointment for a nonbinding consultation, or if you have any questions, just give us a call.
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