Social insurance
Swiss second pillar: LPP/BVG pensions, contributions and 2026 thresholds
Your occupational pension supplements the Swiss state pension, but two jobs with the same salary can provide different pension cover. The pension fund’s rules explain the insured salary, savings and risk benefits.
By Sarah Prieur · Swiss certified accountant
At a glance
Key takeaways
- The 2026 mandatory entry threshold is CHF 22,680 a year with one employer, subject to the other conditions.
- The statutory coordination deduction is CHF 26,460; it is not the entry threshold.
- Minimum retirement credits differ from the total contribution deducted from your salary.
What is the Swiss second pillar, and who is covered?
The second pillar is occupational pension provision. It supplements AVS/AHV, the Swiss state pension, and provides retirement, disability and death benefits. LPP is the French abbreviation for the federal occupational pensions legislation; BVG is its German equivalent. The law sets a minimum, while many funds provide additional, or extra-mandatory, benefits.
In principle, an employee covered by AVS enters mandatory occupational insurance when annual pay exceeds the statutory threshold and the other conditions apply. Exceptions include certain short-term contracts and specific employment situations.
Risk cover begins no earlier than 1 January following the 17th birthday. Mandatory retirement saving begins no earlier than 1 January following the 24th birthday. You may therefore pay for risk cover before mandatory old-age savings start.
For someone joining partway through a year, assess annualised pay and contract duration. Do not simply compare a few months’ earnings with the annual threshold.
Self-employed people are not automatically covered by mandatory LPP insurance, but may join voluntarily under the relevant conditions. A director paid by their own SA or Sàrl is generally an employee for this purpose. Your business legal structure therefore matters.
Swiss LPP/BVG thresholds in 2026
| Mandatory scheme parameter | Annual amount | Purpose |
|---|---|---|
| Entry threshold | CHF 22,680 | Determines mandatory coverage with the other conditions |
| Coordination deduction | CHF 26,460 | Coordinates the insured salary with first-pillar cover |
| Upper salary limit | CHF 90,720 | Caps pay taken into account in the statutory minimum |
| Minimum coordinated salary | CHF 3,780 | Minimum insured base where coverage is mandatory |
| Maximum coordinated salary | CHF 64,260 | CHF 90,720 less CHF 26,460 |
These amounts concern the statutory minimum. An extra-mandatory plan can cover more pay, reduce the coordination deduction or insure salary above the upper limit.
Example: annual salary of CHF 72,000
With the statutory coordination deduction, the insured salary is CHF 72,000 − CHF 26,460 = CHF 45,540. The retirement-credit rate is applied to that base, not automatically to all CHF 72,000.
For a 30-year-old, the 7% minimum retirement credit is CHF 3,187.80 for the year. This is neither the employee’s monthly deduction nor the full cost of pension cover. Risk premiums, expenses and the employer/employee split must also be considered.
Retirement credits and employer contributions
| Age in the statutory scheme | Minimum retirement credit |
|---|---|
| 25–34 | 7% of coordinated salary |
| 35–44 | 10% |
| 45–54 | 15% |
| 55 to reference age | 18% |
These percentages describe minimum retirement saving, not a universal total pension contribution. Risk cover and expenses can add to the cost, and the fund rules determine the actual financing and benefits.
The employer’s aggregate contribution must at least equal the combined contributions of its employees. That does not necessarily mean every component is split 50/50 for each person. Some employers finance a larger share.
For a recruitment budget, obtain a fund quotation or an employee-specific calculation. Age and gross salary alone are insufficient. See the first-employee checklist for the wider payroll obligations.
Part-time work and multiple employers
The coordination deduction can have a proportionally greater effect on part-time workers. The statutory minimum does not automatically reduce it according to working percentage, although a pension plan may offer a more favourable arrangement.
Example: on CHF 36,000 annual pay, the full CHF 26,460 deduction leaves CHF 9,540 of coordinated salary. A plan with a reduced deduction could insure substantially more. Compare fund rules before treating two job offers as equivalent.
If several jobs each pay below the entry threshold, adding the earnings does not automatically create mandatory membership through each employer. Voluntary cover may be possible under the statutory conditions with an institution willing to provide it.
After a change in working percentage, check the updated certificate: reported salary, coordination deduction, contributions and disability/death benefits. A change in net salary does not show every pension consequence.
If your working arrangement includes a side business, assess the pension consequences of being employed and self-employed at the same time.
Pension, lump sum and transfers when you leave a job
At retirement, benefits may be a pension, a lump sum or a combination, subject to statutory rights and fund rules. The legal minimum permits a request for at least one quarter of the relevant mandatory retirement savings as capital. Respect the fund’s advance-notification deadline.
The statutory 6.8% conversion rate concerns mandatory benefits under the legal conditions. Do not multiply all assets in a fund with significant extra-mandatory benefits by 6.8% without checking its rules. Use the projections on your certificate.
On changing employer, transfer vested benefits to the new pension fund. If there is no new fund, preserve them in a vested-benefits arrangement. They do not become freely available spending money.
Early or cash withdrawal is allowed only in defined circumstances, with specific conditions: owner-occupied housing, permanently leaving Switzerland or starting self-employment, for example. Moving to the EU does not automatically release all mandatory savings.
How to read your pension certificate
- Check annual salary, insured salary, employment percentage and the effective date.
- Review accumulated assets and the mandatory/extra-mandatory breakdown.
- Compare projected retirement benefits with disability and death protection.
- Check contributions and the employer’s share.
- Identify potential voluntary buy-in capacity and any previous withdrawals.
Projections depend on assumptions; they do not guarantee unchanged salary, fund rules or parameters until retirement. A stated buy-in capacity is not proof that paying it is appropriate or tax-deductible in every situation. Previous withdrawals, family circumstances and retirement timing need assessment.
Look for certificates and exit statements from earlier employers when locating old assets. The Second Pillar Central Office can help trace forgotten benefits. Establish the full picture before assessing retirement income or buy-in capacity.
Employers should compare plans by benefits and financing, not only by the lowest premium. Explain pension cover as part of the employee’s overall remuneration.
Frequently asked questions
Is the second pillar mandatory from the first franc of salary?
No. The statutory scheme has an entry threshold and other conditions. A pension fund can provide wider cover than the legal minimum.
Why can my pension contribution increase with age?
Minimum retirement credits rise by age band, and your plan may have its own structure. The deduction is not determined solely by AVS rates or gross salary.
Does part-time work automatically reduce the coordination deduction?
No. Some funds adapt the deduction to working percentage, while others use different rules or insure salary more broadly.
Can I withdraw the whole pension fund as a lump sum at retirement?
That depends on the fund rules beyond the statutory minimum right. Check the permitted amount and notify the fund within its deadline.
How can I find forgotten second-pillar savings?
Start with former employers’ pension certificates and exit documents. The Second Pillar Central Office can help search for forgotten assets.
Sources and further reading
About the author
Sarah Prieur
Sarah is a Swiss certified accountant, partner and head of operations at Karpeo. She supports SMEs and self-employed clients with accounting, tax, VAT and payroll, and oversees the quality of client files and year-end accounts. Before Karpeo, she spent eight years in audit at PwC Switzerland, progressing to manager.
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