Swiss Pension Fund (BVG): Second Pillar Explained

The BVG System

The Federal Law on Occupational Retirement, Survivors' and Disability Pension Plans (BVG) obliges all employers with employees above a minimum salary threshold to provide a pension fund. In 2026, the BVG entry threshold is CHF 22,680/year. Employees earning less are not compulsorily covered but may join voluntarily.

Contributions and Coordination Deduction

BVG contributions are calculated on the coordinated salary: gross salary minus the coordination deduction (CHF 26,460 in 2026). Contribution rates increase with age: ages 25–34: 7%; 35–44: 10%; 45–54: 15%; 55–65: 18% (mandatory minimum rates). Employers must cover at least 50% of contributions; many pay more.

Conversion Rate and Pension

At retirement, accumulated capital is converted to an annual pension using the conversion rate (6.8% for the mandatory portion in 2026). Example: CHF 300,000 capital × 6.8% = CHF 20,400 annual pension (CHF 1,700/month). Many pension funds also offer full or partial capital withdrawal at retirement.

Job Changes and Portability

When changing jobs, accumulated BVG capital (vested benefit / Freizügigkeitsleistung) transfers to the new employer's pension fund. Between jobs, capital is held in a vested benefits account (Freizügigkeitskonto). Under specific conditions (definitively leaving Switzerland, self-employment), the BVG capital may be withdrawn in cash.

Mandatory vs. extra-mandatory BVG savings

The BVG distinguishes between the mandatory portion (calculated on coordinated salary up to CHF 88,200) and the extra-mandatory portion (salary above that threshold, governed by the pension fund's own rules). The mandatory conversion rate of 6.8% applies only to the mandatory portion; most funds apply a lower rate (5.0–6.2%) to the extra-mandatory portion, significantly affecting high earners. Understanding which portion applies to your salary band is essential for retirement income planning.

Context on the Swiss job market helps frame any career decision in Switzerland. Our gross-to-net salary guide shows what Swiss gross salaries look like after AVS, LPP and tax deductions. The salary negotiation guide covers how to use market data in offer discussions and which arguments work with Swiss recruiters. Our guide to working in Switzerland as a foreigner covers entry conditions, permit categories and practical relocation steps. The work permit guide explains B, C, G and L permit categories and processing timelines. For cross-sector salary benchmarks, the Switzerland salary guide covers all major roles and cities.

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Frequently Asked Questions

From when am I covered by the Swiss pension fund?

From a gross annual salary of CHF 22,680 (2026) and from age 17 (for disability/death risk coverage) or age 24 (for retirement savings).

What happens to my pension fund when I change jobs?

Your vested benefit (Freizügigkeitsleistung) transfers to the new employer's pension fund. Between positions, it sits in a vested benefits account (Freizügigkeitskonto).

Can I withdraw my BVG capital early?

Yes, under specific conditions: definitively leaving Switzerland, becoming self-employed, or purchasing owner-occupied property (WEF advance withdrawal). Early withdrawal is taxed as income.

What is the 13th month salary in Switzerland?

The 13th month salary in Switzerland refers to an additional monthly salary paid once a year, typically in December. It is included in annual salary benchmarks as standard: when a Swiss employer quotes CHF 120,000 per year, this normally means 13 monthly payments of approximately CHF 9,231 each, not 12 payments of CHF 10,000. The 13th month is governed by the employment contract or collective agreement (GAV), not by statute. It is subject to social contributions (AHV/ALV) and income tax. Always clarify with a prospective employer whether a quoted annual figure includes or excludes the 13th month.

How do Swiss notice periods work for employment contracts?

Under Swiss law (Code of Obligations, Art. 335c), notice periods during probation (default 1 month, up to 3 months by agreement) are 7 days. After probation, statutory notice periods are: 1 month during the first year, 2 months in years 2 to 9, and 3 months from year 10 onwards. Notice must be given in writing by end of calendar month (or end of the agreed notice period month). Contractual or GAV notice periods can be longer but cannot be shorter than statutory minimums. Protected periods exist (illness, accident, pregnancy) during which termination is suspended or prohibited.