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A Look Into the Swiss Pension System

A Look Into the Swiss Pension System

If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or WhatsApp (+44-7393-450-837).

This article is not formal tax or any other kind of advice, and the facts might have changed since we first wrote it.


The Swiss pension system is backed by three pillars that receives financing from the federal government, payments made from your employment agreement, as well as individual private pensions.

Let’s get a closer look at the three pillars of the Swiss pension system, according to Swiss authorities.

Swiss Pension First Pillar: The Old-Age and Survivors Insurance (OASI) State Pension

Who is responsible for paying into the OASI?

As per the authorities, the OASI is mandatory and designed to ensure that all residents have access to a certain minimum level of living conditions.

OASI contributions are required to be paid by anyone who works or resides in Switzerland from the start of January after they turned 20 years old up till they hit 65 years old.

This mandatory payment commences when you’re 17 and are employed, and keeps going after you reach the age of retirement so long as you continue working.

The money you will get upon retirement will be determined by the aggregate OASI contributions you paid in over the course of your working career.

How much do you need to pay into your Swiss pension under the OASI scheme?

For the Unemployed

You are required to make annual OASI contributions worth 503 Swiss francs, minimum, if you are any of the following:

  • a student
  • early retiree
  • recipient of insurance pension or per-day allowance for disability, illness or accident
  • unemployed and your benefits claim is over

Other obligatory payments, such as those for disability policy and remuneration for the loss of income, are also factored into the sum.

However, you are exempt from making any contribution if even if you’re not employed, your spouse or registered partner works and contributes two times the minimum required contribution per year.

For the Employed

You are responsible for contributing 8.7 percent of your salary toward your OASI, while your employer is responsible for contributing the other 8.7 percent. Your contributions to the OASI will be charged against your gross salary by your employer, who will then remit those monies to the compensation fund on your behalf.

It is important that you are aware that you are required together with your employer to pay other obligatory contributions, such as those for disability and unemployment policies, as well as remuneration for the loss of income.

For the Self-Employed

It is necessary for you to compute and make payments toward your OASI, which should typically be 8.1 percent of your income. On top of that, you must contribute to other compulsory contributions as mentioned above.

For Late Retirees

If you continue to work after you reach the age of retirement, you are required to keep making payments into the OASI.

On the other hand, once you reach the age required for mandatory retirement (65), you will no longer be required to make payments toward unemployment insurance because you will no longer be eligible for unemployment benefits.

The portion of your income that is greater than 1,400 francs per month or 16,800 per annum will be used to determine the amount of the contribution that you will be required to make during this time.

This sum is taken away from your pay at each of your jobs, in the event that you are employed by two employers or more at the same time.

For Those Who Transfer Overseas

When you move outside of Switzerland, you will typically not be required anymore to pay into the OASI.

You could be eligible to contribute to the OASI voluntarily from a country that is not a member of the European Union (EU) or European Free Trade Association (EFTA) if you move overseas merely on a temporary basis or if an employer in Switzerland sends you overseas.

swiss pension francs
Swiss francs – Switzerland’s currency. Image from Latestfinance.news

What is the maximum amount of pension to which you are entitled?

The first pillar is designed to provide for the retiree’s fundamental requirements.

At the moment, the lowest possible monthly pension you can get if you’re single is 1,195 francs, and the highest possible pension stands at 2,390 francs.

Your pension is determined by a number of factors, the most important of which are as follows:

The number of years that you have participated in the OASI program. If you have participated in the OASI program throughout your entire working life, you are eligible for the maximum pension possible. If you have gaps in your payment history, your pension will be lower as a result.

Say, if you go an entire year without paying into the OASI, your pension will be trimmed by approximately 2.3 percent.

Your OASI payments will increase in direct proportion to the level of your salary, which will also result to a jump in the pension amount you’ll get.  To qualify for the highest pension, you must have a minimum income of about 86,040 francs per year on average.

If you are married or are in a registered partnership, your pension is capped at 150 percent of the maximum allowed for a single pension or 3,585 francs. This applies even if your pensions combined end up to be higher than this figure.

What of shortfalls in your OASI contributions?

If you aren’t able to settle your payments on a consistent basis, there could be some shortfalls in the total amount that you have contributed under the Swiss pension’s first pillar.

Those individuals who did not make their required contributions to OASI while they were students might find themselves in this position.

You have the option to buy back missed contributions; however, you can only do so for the last five years. You won’t be allowed to make up for older missed payments.

Would an Early or Late Retirement Affect Your OASI Pension?

You can opt to retire a year or two years earlier than planned; however, this will result in a decrease in the amount of the pension you’re entitled to.

For a year of earlier retirement, the reduction in your Swiss pension stands at 6.8 percent, while 13.6 percent will be deducted for two years of earlier retirement, according to Swiss authorities.

Meanwhile, should you choose to delay your retirement for one to a maximum of five years, the amount of your Swiss pension will jump proportionally to the number of years after retirement that you continue to work.

OASI Pension Estimate

You have the ability to make a request at any time for an estimate of your Swiss pension.

In the event that your OASI pension is not sufficient to cover your essential costs of living, you are eligible to receive supplementary benefits.

When a person’s pension and income are not enough to cover the minimum costs of living, the supplementary benefits are available to those who qualify for OASI and invalidity insurance. They are treated as a legal entitlement instead of social welfare.

The cantons are in charge of determining the supplementary benefits, which are then split into two classifications:

  • Benefits accrued annually and distributed on a monthly basis
  • Coverage of medical expenses and disability payments

Swiss Pension Second Pillar: The Occupational Pension

The primary purpose of the second pillar, which works in conjunction with the first pillar, is to guarantee that you will have an adequate financial support once you reach retirement age.

You are required to make regular payments into the plan all through your employment years so as to receive the benefits of it. Under certain conditions, you may be able to access this money even if you haven’t officially reached retirement age yet.

Who is required to pay into the occupational pension scheme?

If you fulfill all of the requirements listed below, you are required to make payments into the second pillar of the Swiss pension system:

  • You have reached the age of 17 or older
  • You have coverage under OASI
  • You are currently employed full time and earn a minimum annual salary of 21,510 francs.

You are allowed to voluntarily make contributions under the second pillar even if you fail to satisfy the above requirements, so long as:

  • Your employer voluntarily enrolls you in a pension plan belonging to the second pillar of the Swiss retirement system.
  • Your employer voluntarily enrolls you in a pension plan belonging to the second pillar of the Swiss retirement system.
  • You pay into the scheme out of your own volition, even if your employment agreement is only for three months or less or if you’re self-employed.

How much do you need to pay into your Swiss pension under the Second pillar?

You are responsible for contributing fifty percent of the total amount to your occupational pension.  Your employer covers the remaining portion and has the option of covering more than half of the cost as well.

Your contributions are deducted from your salary in a direct manner by your employer, and then they are wired to your account under the pension fund that they have selected.

If you are self-employed and have made the decision to pay voluntary contributions to the second pillar of the pension system, you can get the information you need by contacting the pension fund of your choice.

Since the private sector is in charge of administering the pension funds that make up the second pillar, each has its own regulatory requirements. Thus, the minimum amount that you are required to transfer is not fixed and may vary.

What are vested benefits accounts?

You are not obliged to pay into the occupational pension scheme anymore if:

  • your income doesn’t hit 21,510 francs per year
  • you’re jobless
  • you move overseas for some time
  • you aren’t employed due to studies or training

However, this doesn’t give you a free pass to the funds that you have been able to accumulate up till then. Rather, you are required to deposit the money into a vested benefits account at your preferred financial institution. This is where your savings for your occupational pension will be kept secure for the mean time.

You are required to move the money from your vested benefits account to your new occupational pension account as soon as you meet the prerequisites for making contributions to the 2nd pillar once more.

Your second-pillar capital will be transferred into an account under the Substitute Occupational Benefit Institution if you do not create a vested benefits account. This will occur automatically.

When are you allowed to withdraw your savings from the occupational pension account?

Home Acquisitions

You can use the money from your second pillar investment to purchase a home, settle an existing mortgage, or obtain shares in a housing-focused cooperative prior to your retirement.

The following conditions must be met:

  • You are required to use the home you purchase as your primary residence.
  • You are permitted to withdraw the entirety of your funds until you reach 50 years old
  • You are only allowed to withdraw a portion of that funds once you reach more than 50 years old.
  • You are permitted to submit a request for an early withdrawal once over a five-year period.
  • You need your spouse’s or registered partner’s go-ahead.
  • If you dispose of your home at a later date, you will typically be required to pay back the capital from the second pillar that you took to pay for the acquisition.


If you work for yourself, you will not be required to make payments into the occupational pension plan. But if you have contributions you will be able to withdraw your funds should you fulfill the following conditions:

  • You are required to submit a request to withdraw capital ahead of schedule within the first year of your self-employment.
  • Demonstrate that you indeed are self-employed by showing your commercial register or social security paperwork.
  • You need your spouse’s or registered partner’s nod.

Permanent Departure from Switzerland

Should you decide to permanently depart from Switzerland , you have the option of receiving your occupational pension funds in advance.

If, on the other hand, you intend to make your permanent home in one of the EU or EFTA countries, you will not be able to do this. If you relocate to any of the member states, you will be eligible for pension, disability, and survivor’s benefits as they are required by law.

So in such a scenario, a portion of your occupational pension funds is required to be held in a Swiss blocked account. You won’t be able to cash in on it until you reach the age for retirement at 65. You have the option of having the remaining portion of your second pillar savings, which represents the optional component, paid out in cash.

Retirement Payout

When you turn 65, you become eligible to receive the money that you have been saving all through the years you’ve been employed. If you retire earlier than expected, for instance, you may be able to access the money in certain pension funds beginning at the age of 58. If you keep working after the age at which you are required to retire by law, you may be able to postpone receiving your retirement benefits until you reach the age of 70.

The amount of your pension from the second pillar is determined by both the contributions you have made to your pension fund over the course of your working life and the rules that govern the pension fund that you have contributed to.

The various pension funds offer options such as paying out 25 percent or above of your occupational pension funds through a one-time payment; the remainder will be paid out on a monthly basis.  Another option is to pay out the full lump sum instead of receiving a pension.

A conversion rate is used as the base for the calculation of the Swiss pension. The amount of the annuity that you you’re entitled to get is determined by applying the conversion rate to the sum of money that has been accrued in your second pillar account. 6.8 percent is the legal floor for the acceptable exchange rate as of now, as per the authorities.

Would an Early or Late Retirement Affect Your Occupational Pension?

Your pension will be scaled back if you retire earlier than planned. If you delay your retirement, your pension’s conversion rate will rise along with your pension.

swiss pension early vs late retirement
Early vs late retirement. Image from Canaltragedy

Swiss Pension Third Pillar: Individual Pension Account

The Swiss pensions system’s third pillar is a private savings plan that is voluntary and advantageous from a tax perspective. Your cumulative retirement savings can be increased by contributing additional funds to an individual pension account.

In most cases, you’ll be able to get all of your money from the third pillar all at once. The earliest possible withdrawal can be executed at 60 years old, or up to 70 years old so long as you can show proof that you still are part of the workforce.

What is the restricted private pension plan (3a) and what are its features?

These are savings at an insurer or bank over the course of your working life, which you keep there until you reach retirement age.


  • There is a limit to the amount of money that can be placed in your account yearly
  • Offers higher interest rates versus savings accounts.
  • Your contributions can be deducted from your taxable income.
  • The distribution of funds from an investment under this plan is governed by stringent rules.
  • When you make withdrawals from your savings under this scheme, you are required to pay a one-time tax that is calculated depending on your earnings during the time of withdrawal.

What is an unrestricted pension plan (3b) and what are its features?

This refers to savings in cash, investments, life insurance policy, or savings accounts.


  • Unlimited amount of yearly contributions.
  • You are required to report any funds incurred per year to the relevant tax authorities.
  • In most cases, a yearly tax is charged on the funds.
  • You are free to request a withdrawal of the funds whenever you need to.
  • When you withdraw money from your savings, you will not be subject to any additional levies.

Individual Pension Scheme Benefits

Who qualifies for benefits under the restricted private pension scheme 3a?

  • If you are currently contributing to an occupational pension plan
  • If you do not have a pension under the OASI or invalidity provision
  • You’re an overseas resident but make your living in Switzerland
  • The Swiss government’s unemployment insurance program provides you with an allowance per day
  • You are an insured person who is partly disabled, and your income qualifies you to receive OASI benefits
  • If you have hit the age of retirement but continue to be employed, you can keep making contributions to your retirement fund until 70 years old.
  • You are able to keep paying your contributions even while rendering civil or military service, unemployed, or ill.

The 3b unrestricted pension plan does not have any additional requirements that must be met.

How much can you contribute into an individual pension plan?

There is a limit to the amount of money that can be contributed to Pillar 3a on an annual basis. In 2023, such figure is at 7,056 francs for employees, as per the authorities.

If you are self-employed and do not have access to a second pillar, you can contribute 20 percent of your income, with the total amount not exceeding 35,280 francs.

Meanwhile, there are no yearly caps placed on the amount that can be contributed to the Pillar 3b.

When is it possible to take money out of an individual pension plan?

In general, you are permitted to access the funds in your third pillar savings account when you’re 65 years old or at least 60.

swiss pension for women
Women strike in 2019 seeking equal rights. Image by Keystone/Peter Schneider

Challenges Facing the Swiss Pension System

A longer average life expectancy is having a negative impact on the Swiss pension system, just as it is in a great number of other countries. This is because the ratio of people working to those who are retired is no longer sufficient.

According to news and information provider Swissinfo, the authorities predict that the Swiss pension scheme will not be able to balance its books beginning in the year 2032.

The pensions paid out by the OASI are not enough for retirees to maintain their standard of living and a large number of retirees are forced to rely on additional state benefits, as per the report.

The raising of the retirement age for women (from 64 to 65) in the country is merely the beginning; the Swiss pension system can still use a lot of improvement.

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Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.

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