Pension Fund (BVG/Pensionskasse) in Switzerland

Who Is Covered and What Is Insured

BVG is mandatory for employees earning at least CHF 22,680/year from one employer (2026 entry threshold). The coordinated salary (versicherter Lohn) = AHV salary minus the coordination deduction (CHF 25,725/year). This is the base for contributions. Employer and employee each contribute age-dependent rates: 7% (age 25–34), 10% (35–44), 15% (45–54), 18% (55–65). The capital accumulates in your pension fund account, generating a minimum guaranteed return (BVG minimum rate, currently 1.5% p.a.).

Capital vs Pension at Retirement

At retirement (age 65), you choose between: pension (calculated by applying the conversion rate to accumulated capital, e.g. 5.5% rate on CHF 500,000 = CHF 27,500/year), or lump-sum withdrawal (capital paid out, taxed at preferential rate). Many pension funds offer a hybrid. The minimum BVG conversion rate (mandatory part) is 6.8% (2026). Funds typically apply lower rates (5.0–5.8%) to the over-mandatory portion. The choice is irrevocable, once you elect a pension, you cannot switch to capital.

Portability, Vesting Account and 3rd Pillar

When leaving an employer, your BVG capital transfers to your new pension fund or to a vesting account (Freizügigkeitskonto). Failure to transfer results in it landing at the BVG catch-all fund (Auffangeinrichtung), still accessible but earning lower returns. Early withdrawal is only permitted for: home purchase, emigration from Switzerland, or starting self-employment. The 3rd pillar (voluntary): Pillar 3a (tied pension savings, max CHF 7,258/year for employees in 2026, tax-deductible) and Pillar 3b (free savings, less tax advantage).

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

Can I take my BVG capital as a lump sum when I retire?

Yes, if you notify your pension fund before the deadline (usually 3 years before retirement). The capital is taxed at a preferential rate (separate from income). Many people take a partial lump sum to combine cash flexibility with pension security.

What happens to my pension fund if I leave Switzerland?

EU/EFTA citizens can only withdraw the over-mandatory portion; the mandatory portion stays until retirement or goes to a Swiss vesting institution. Non-EU/EFTA citizens may withdraw the full amount upon permanent departure from Switzerland.

What is the difference between the mandatory and over-mandatory BVG?

Mandatory BVG covers the insured salary up to CHF 88,200/year with a guaranteed minimum conversion rate and guaranteed minimum return. Over-mandatory (for salaries above CHF 88,200) has more flexibility, pension funds can set lower conversion rates and different contribution structures.

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.