State pension, pension fund, pillar 3a: the Swiss retirement system in 5 minutes

Swiss retirement provision rests on three pillars. Once you understand what each pillar does and does not cover, it is easier to see where your own gap is. This text explains the system in a few minutes and without jargon.

What is the first pillar (OASI)?Abschnitt verlinken

The first pillar is the state pension, called AHV in German and OASI in English. It is meant to cover basic needs in old age and is funded on a pay-as-you-go basis, which means today's workers pay today's pensions.

The full OASI pension in 2026 is between CHF 1,260 and CHF 2,520 per month. From 2026 there is a 13th payment every December. A married couple together receives at most CHF 3,780 per month, the so-called capping. A full pension needs 44 contribution years. Every missing year reduces the pension noticeably.

What is the second pillar (pension fund)?Abschnitt verlinken

The second pillar is occupational provision, called BVG. Together with the state pension it is meant to secure you around 60 percent of your last salary. Unlike the state pension it is funded by capital: you build a personal balance over the years.

The pension fund is mandatory from an annual salary of CHF 22,680. Not the whole salary is insured, only the part above the coordination deduction of CHF 26,460. Your balance grows through your contributions, your employer's contributions and interest.

How much flows into the balance each year depends on age. In the mandatory part it is 7 percent of the insured salary from 25 to 34, then 10 percent, from 45 it is 15 percent and from 55 it is 18 percent. At retirement the balance is converted into a pension with the conversion rate, which is 6.8 percent in the mandatory part. So CHF 100,000 of balance becomes CHF 6,800 of pension per year. Many funds insure more than the minimum, in which case the pension is higher.

What is the third pillar (pillar 3a)?Abschnitt verlinken

The third pillar is private, voluntary provision. Pillar 3a is the tied part of it: you pay in voluntarily but can normally only access the money from five years before the reference age.

The incentive is a tax one. What you pay in, you can deduct from your taxable income. In 2026 that is at most CHF 7,258 per year with a pension fund, and 20 percent of earned income up to CHF 36,288 without one. When the money is paid out, a separate lump-sum withdrawal tax applies, at a reduced rate.

Alongside it there is pillar 3b, free private provision. This includes ordinary saving, securities or a life insurance policy. It gets no special tax treatment, but has no lock-up period and no maximum amount.

Where does the pension gap come from?Abschnitt verlinken

The gap is the difference between your target pension and what the state pension and the pension fund pay together. At low salaries the first two pillars often cover around 60 percent, at higher salaries this share drops clearly.

Typical reasons for a gap are contribution years missing in the state pension, several years of part-time work or a career break, a coordination deduction that leaves a large part of the salary uninsured, and an early retirement. Whoever stops earlier saves less and draws for longer.

How to proceedAbschnitt verlinken

• Order your OASI statement of account from your compensation fund. It is free and shows contribution gaps.
• Read your pension fund certificate. Look at the projected retirement pension, the buy-in potential and the conversion rate.
• Pay into pillar 3a as soon as you have earned income and a noticeable tax burden. Set the standing order to the start of the year rather than December, then the money is invested a year longer.
• Estimate your gap roughly before you plan larger steps such as a pension fund buy-in.
• If you plan to retire early, first check how much your pension and balance drop as a result.