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The 1st pillar (government pension) aims to provide a basic standard of living for retirees and disabled individuals, and their survivors. It consists of old age and survivors’ insurance (AHV), disability insurance (IV) and supplementary benefits (EL), forming the basis of the three-pillar system. As a general rule, the 1st pillar is mandatory for everyone who lives or works in Switzerland.

Since the 1st pillar only provides a basic standard of living, Switzerland introduced the 2nd pillar, occupational pensions, on January 1, 1985. Together, the 1st and 2nd pillars provide 60 percent of your final salary so that you can maintain the lifestyle to which you are accustomed. The legally required minimum is called a “mandatory occupational pension.” However, pension funds can provide additional benefits known as “extra-mandatory pension” benefits. To ensure that your pension coverage is maintained during periods when you are not a member of a pension fund, your pension fund assets must be transferred to a vested benefits institution.

1st and 2nd pillar plans provide 60 percent of your final salary when you retire – but only up to CHF 85,320. With a 3rd pillar plan, you can set aside extra funds to bridge any remaining shortfalls in order to enjoy life after retirement without financial worries.