Swiss Pension Fund (BVG): Second Pillar Explained
The Swiss occupational pension fund (Pensionskasse / BVG) is the second pillar of Switzerland's three-pillar pension system. Employer and employee jointly contribute; accumulated capital converts to a pension (or lump sum) at retirement age.
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 Under specific conditions (definitively leaving Switzerland, self-employment), the BVG capital may be withdrawn in cash.
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.