The Swiss Second Pillar (BVG/LPP) is Switzerland's mandatory occupational pension — and for most people who work in Switzerland for more than a few years, it quietly becomes one of their largest financial assets and one of the biggest single factors shaping their retirement income. Together with the 1st pillar (AHV/AVS) and the 3rd pillar, it forms the backbone of the Swiss pension system, allowing employees to maintain their accustomed standard of living in retirement and protecting them and their families against the financial consequences of disability and death.
Employees who earn more than CHF 22,680 per year with a single employer (2025 threshold) are automatically enrolled in their employer's pension fund. Contributions are shared: the employer must pay at least 50%, and the money accumulates in an individual retirement account until you retire, become disabled, leave Switzerland permanently or use it for approved purposes such as buying a primary home.
Key takeaways
- The Second Pillar is mandatory for most employees earning above the annual entry threshold (CHF 22,680 in 2025).
- It is funded jointly by employer and employee; the employer pays at least half of the total contribution.
- It provides three types of benefits: retirement, disability and survivors' benefits.
- The minimum BVG conversion rate for the mandatory portion is 6.8% at the ordinary retirement age.
- The minimum BVG interest rate on mandatory retirement assets is 1.25% for 2025 (set annually by the Federal Council).
- The self-employed are not automatically insured but may join voluntarily.
- When you change jobs, your accrued capital moves with you; if you leave Switzerland, special rules apply.
What is the Swiss Second Pillar?
The Second Pillar is the occupational benefits scheme established by the Federal Act on Occupational Retirement, Survivors' and Disability Pension Plans, known in German as BVG (Berufliche Vorsorge) and in French as LPP (Prévoyance Professionnelle). Every employer in Switzerland must be affiliated with a registered pension fund (Pensionskasse / caisse de pension) that insures its employees.
Unlike the 1st pillar, which is financed on a pay-as-you-go basis, the Second Pillar is funded individually: the contributions you and your employer pay are credited to your personal retirement account and earn interest until retirement.
Why the Second Pillar exists
The Swiss Constitution guarantees that the 1st and 2nd pillars together should allow retirees to maintain their previous standard of living in an appropriate manner. In practice, the AHV/AVS alone typically replaces only around 40% of a middle income. The Second Pillar is designed to bridge a substantial part of the remaining gap, with the 3rd pillar covering the rest through voluntary private savings.
How the Swiss pension system works: the three pillars
| Pillar | Purpose | Who runs it | Who pays | Mandatory? |
|---|---|---|---|---|
| 1st pillar (AHV/AVS) | Covers basic subsistence needs | Federal state | Employees, employers, self-employed, non-working residents | Yes, for everyone living or working in Switzerland |
| 2nd pillar (BVG/LPP) | Maintains accustomed standard of living | Employer's pension fund | Employees and employers (min. 50% employer) | Yes, for employees above the entry threshold |
| 3rd pillar (3a/3b) | Closes remaining gaps and provides tax-advantaged savings | Banks and insurers | Individual | No (voluntary) |
For a fuller comparison of the private-savings layer, see our guide to Pillar 3a vs Pillar 3b.
Who is insured under the Second Pillar?
You are automatically insured if you:
- are an employee in Switzerland;
- are aged 17 or older (initially for risks of death and disability only);
- earn more than the BVG entry threshold of CHF 22,680 per year with a single employer (2025);
- are already covered by the 1st pillar (AHV/AVS).
From 1 January following your 24th birthday, contributions to your retirement savings also begin. Before that, only risk contributions (death and disability) are paid.
The following groups are not automatically insured:
- The self-employed, who may join voluntarily via their professional association or their employees' pension fund.
- Employees whose annual salary is below the entry threshold.
- Employees on fixed-term contracts of three months or less (unless extended).
Quick check: am I likely to be insured?
- Employed with one employer, earning above CHF 22,680/year? Yes — you are automatically insured.
- Employed by several employers, each below the threshold? Not automatically — but you can request voluntary insurance via the Auffangeinrichtung BVG.
- Self-employed? No — but you may join voluntarily through your professional association or the Substitute Occupational Benefit Institution.
- Under 25? Insured for death and disability only; retirement savings contributions start from 1 January after your 24th birthday.
- On a short fixed-term contract (≤ 3 months)? Generally not insured unless the contract is extended.
How contributions are calculated
Contributions are calculated on the insured salary (also called the coordinated salary), not the full gross salary. The law "coordinates" your BVG salary with the 1st pillar by deducting a fixed amount:
- Coordination deduction (2025): CHF 26,460.
- Maximum insured salary under mandatory BVG (2025): CHF 62,475.
- Upper salary limit for the mandatory portion (2025): CHF 88,200.
Many pension funds go beyond the legal minimum and insure a larger portion of salary (the extra-mandatory part), up to the tax-relevant BVG maximum of CHF 132,300 (2025) or higher within their regulations.
Total contribution rates rise with age and are set by law as a minimum. Your fund's regulations may be more generous.
| Age band | Minimum retirement credit (% of insured salary) |
|---|---|
| 25–34 | 7% |
| 35–44 | 10% |
| 45–54 | 15% |
| 55 to retirement age | 18% |
The employer must fund at least half of the total contribution (retirement savings + risk + admin costs). Many Swiss employers pay more than 50% as part of their overall benefits package.
Example: a 40-year-old employee
Gross annual salary: CHF 90,000.
Insured salary: 90,000 − 26,460 = CHF 63,540.
Retirement credit at age 40 (10%): CHF 6,354 per year, of which the employer pays at least CHF 3,177. Risk and administrative contributions come on top.
Example: starting your first job in Switzerland
A 26-year-old software engineer signs a permanent contract at CHF 85,000. She is above the entry threshold, so her employer enrols her in its pension fund from day one. Because she is over 25, contributions cover both risk (death/disability) and retirement savings. Her first annual pension certificate will show her insured salary, the retirement credits accumulating in her name and a projection of her future benefits — the reference document she should keep for every job change.
Example: a self-employed consultant
A freelance marketing consultant invoices around CHF 120,000 per year with no employees. He is not automatically insured under the Second Pillar. He can choose to join his professional association's pension fund or the Auffangeinrichtung BVG, or rely more heavily on Pillar 3a — where the self-employed without a Second Pillar can contribute up to 20% of net earned income (capped at CHF 36,288 in 2026).
Example: leaving Switzerland for the EU
A British engineer worked in Zurich for six years and moves back to the UK. Because the UK is outside the EU/EFTA, she can generally request the full payout of her Second Pillar capital (mandatory and extra-mandatory) after deregistering her Swiss residence. A colleague moving to Germany in the same situation would only be able to withdraw the extra-mandatory portion; the mandatory portion stays on a Swiss vested benefits account until retirement.
What benefits does the Second Pillar provide?
Retirement benefits
At the ordinary retirement age (65 for men and women from 2028 following the AHV 21 reform; women's reference age is rising in steps until then), your accumulated retirement capital can be taken as:
- a lifelong monthly pension, calculated by multiplying the capital by the conversion rate (minimum 6.8% on the mandatory portion);
- a lump-sum withdrawal (at least 25% of the mandatory portion by law; many funds allow up to 100%);
- a combination of both.
Early retirement is generally possible from age 58, subject to fund regulations. Both the pension and any lump sum are taxable, though lump sums are taxed separately at a reduced rate.
Disability benefits
If you become unable to work due to illness or accident, the Second Pillar pays a disability pension in coordination with the 1st pillar (IV/AI). Together, they typically replace around 60% of your previous insured income, depending on your degree of disability and fund regulations.
Survivor benefits
If you die, your pension fund pays benefits to your survivors:
- a spouse's or registered partner's pension, usually 60% of the disability or retirement pension;
- an orphan's pension, usually 20% per child, until age 18 (or 25 if in education);
- in some cases, benefits for a cohabiting partner, if the fund regulations allow and conditions are met.
Unmarried couples and rainbow families should check the pension fund regulations carefully: eligibility rules vary widely from fund to fund.
Expert Insight
A common misunderstanding is that the pension fund pays a fixed percentage of your salary. In reality, the retirement pension depends on the capital you have accumulated multiplied by the fund's conversion rate. Two employees with identical salaries can receive very different pensions depending on their fund's regulations, its extra-mandatory portion, past interest credited, and whether they made voluntary buy-ins. Reviewing your annual pension certificate (Vorsorgeausweis / certificat de prévoyance) each year is the single most useful habit for understanding what you are actually entitled to.
Second Pillar vs Third Pillar: the short version
The Second Pillar is your occupational pension, tied to your employment. The Third Pillar is a voluntary private layer with strong tax advantages. Both accumulate capital for retirement, but only the Third Pillar is under your direct control.
See our overview of the Swiss 3rd Pillar, and our detailed comparison of Pillar 3a vs Pillar 3b. A dedicated Second Pillar vs Third Pillar comparison is covered in our upcoming guide.
Changing jobs in Switzerland
When you leave an employer, your entire vested pension capital (Freizügigkeitsleistung / prestation de libre passage) is transferred to your new employer's pension fund. If there is a gap between jobs, the capital is temporarily parked in a vested benefits account (Freizügigkeitskonto) at a bank or foundation of your choice.
The mechanics of vested benefits transfers, timing and paperwork are explained in detail in our dedicated guide (coming soon).
Leaving Switzerland
If you leave Switzerland permanently, what happens to your Second Pillar depends on where you move:
- To an EU/EFTA country: the mandatory portion generally stays in Switzerland (on a vested benefits account) and can only be paid out at retirement or in special circumstances. The extra-mandatory portion can usually be withdrawn immediately.
- To a non-EU/EFTA country: the full capital can typically be paid out.
The EU/EFTA restrictions, tax at source on lump-sum payouts and the choice of vested benefits foundation are explained in detail in our dedicated guide (coming soon).
Vested benefits accounts (Freizügigkeitskonto)
A vested benefits account is a parking account for Second Pillar capital when you temporarily have no pension fund — for example, during a career break, unemployment, self-employment or an interim period between jobs. The capital continues to accrue interest and remains bound by BVG rules.
How to choose a provider, split capital across two foundations for tax optimisation and manage investment strategy is explained in detail in our dedicated guide (coming soon).
Withdrawing your Second Pillar early
The Second Pillar is designed for retirement, but early withdrawal is possible in a limited number of situations:
- Purchase of an owner-occupied primary residence in Switzerland.
- Becoming self-employed as a sole proprietor.
- Permanent departure from Switzerland (subject to the EU/EFTA rules above).
- The pension amount would be very small (fund regulations).
The exact conditions, tax treatment and repayment rules for each early-withdrawal reason are explained in detail in our dedicated guide (coming soon).
Common mistakes and misconceptions
- Assuming AHV alone will be enough. The 1st pillar typically replaces only about 40% of a middle income.
- Ignoring the annual pension certificate. It shows your projected retirement benefits and any buy-in potential.
- Forgetting old pension capital. After multiple jobs, capital can be left behind at old funds or the 2nd Pillar Central Office (Auffangeinrichtung BVG).
- Confusing the mandatory and extra-mandatory portions. Only the mandatory part is guaranteed the minimum interest and conversion rate.
- Overlooking survivor rules for unmarried partners. Cohabitants are not automatically covered.
- Underestimating tax on lump-sum withdrawals. Tax is levied separately, but at cantonal rates that vary significantly.
What this means for you
Your Second Pillar is likely to be your largest single financial asset alongside your home. Treat it accordingly:
- Read your pension certificate once a year.
- Consolidate any orphaned vested benefits accounts.
- Consider voluntary buy-ins to close contribution gaps and reduce taxable income.
- Plan the pension-vs-lump-sum decision well before retirement — it is largely irreversible.
- Coordinate the Second Pillar with your 3a savings, your mortgage strategy and your estate planning.
Before you decide
- Have you requested your latest pension certificate from your fund?
- Do you know your insured salary and the fund's conversion rate?
- Have you checked whether your fund insures salary above the mandatory ceiling?
- Are your beneficiary designations (spouse, partner, children) up to date?
- If you are moving abroad, have you understood the EU/EFTA restrictions?
- Have you spoken to an independent adviser about buy-ins, early retirement and tax planning?
Frequently asked questions
Is the Swiss Second Pillar mandatory?
Yes — for employees earning above CHF 22,680 per year (2025) with a single employer. The self-employed are not automatically insured but may join voluntarily.
Who pays into the Second Pillar?
Both you and your employer. By law, the employer must pay at least 50% of the total contribution; many employers pay more.
What is the difference between BVG and LPP?
They are the same law in different languages: Berufliche Vorsorge (German) and Prévoyance Professionnelle (French). Both refer to the Federal Act on Occupational Pensions.
What is the current BVG minimum interest rate?
The Federal Council sets it annually. For 2025 it is 1.25%, applied to the mandatory portion of retirement assets.
What is the BVG conversion rate?
It is the percentage used to convert your retirement capital into an annual pension. The legal minimum on the mandatory portion is 6.8% at the ordinary retirement age.
Can I take my Second Pillar as a lump sum?
You can take at least 25% of the mandatory portion as a lump sum. Many funds allow larger — sometimes full — lump-sum withdrawals. Lump sums are taxed separately at a reduced rate.
What happens to my Second Pillar if I leave Switzerland?
It depends on your destination. Moving to an EU/EFTA country generally means the mandatory portion stays in Switzerland until retirement; moving to a non-EU/EFTA country usually allows full withdrawal. A dedicated article will cover this in detail.
What happens to my Second Pillar if I change jobs?
Your accrued capital transfers to your new employer's pension fund. If you are temporarily without an employer, it goes to a vested benefits account.
Are self-employed people covered?
Not automatically. They can join their professional association's fund, their employees' fund (if they have staff), or the Substitute Occupational Benefit Institution (Auffangeinrichtung BVG).
What is a voluntary buy-in?
A voluntary purchase of pension years to close contribution gaps. Buy-ins are usually deductible from taxable income in the year they are made, subject to conditions.
Is the Swiss Second Pillar worth it?
For most employees, yes — the employer pays at least half of your contributions, benefits are tax-privileged during the accumulation phase, and voluntary buy-ins can reduce your income tax. It is essentially deferred salary that few private savings vehicles can match on a like-for-like basis.
What happens if I have two employers?
Each employer only insures you if your salary with them exceeds CHF 22,680. If neither reaches the threshold but your combined income does, you can request voluntary insurance through the Auffangeinrichtung BVG so your retirement savings do not stall.
Can expats receive a Swiss Second Pillar pension?
Yes. Nationality and residence do not affect entitlement — what matters is that contributions were paid into a Swiss pension fund. Expats who retire abroad can generally draw their Swiss pension worldwide, subject to double-taxation agreements and the EU/EFTA rules on early withdrawal.
Can I lose my Second Pillar?
Your accrued capital is your legal entitlement and cannot be forfeited. It can, however, be forgotten: capital from old employers may remain at former pension funds or at the 2nd Pillar Central Office. A free search via the Central Office can help locate it.
Is my pension fund guaranteed?
Swiss pension funds are strictly regulated and supervised, and the BVG Guarantee Fund (Sicherheitsfonds BVG) steps in if a fund becomes insolvent, up to defined limits. Vested benefits foundations are covered separately by the deposit protection scheme up to CHF 100,000 per person and foundation.
Where to go next
Understanding the Second Pillar is the foundation of Swiss retirement planning. If you would like a personalised review of your pension fund statement, buy-in potential, or the pension-vs-lump-sum decision, book a free consultation with our team.
Official Swiss sources
- Federal Social Insurance Office (FSIO/BSV) — Occupational old-age, survivors' and invalidity pension (BV): bsv.admin.ch
- ch.ch — Occupational pension provision (2nd pillar): ch.ch
- Federal Act on Occupational Retirement, Survivors' and Disability Pension Plans (BVG/LPP), SR 831.40: fedlex.admin.ch
- Federal Council — BVG minimum interest rate 2025: admin.ch
Last verified against official Swiss sources: 26 July 2026. Figures for 2025 remain the latest officially published values at the time of writing; 2026 values will be added once confirmed by the Federal Council and FSIO/BSV.
This article provides general information about the Swiss occupational pension system and does not replace personalised insurance, legal, financial or tax advice. Individual circumstances, pension fund regulations and cantonal rules may materially change the outcome.