The Swiss system of retirement provision consists of three pillars. Together with the 1st (state) pillar, the main aim of the 2nd (occupational) pillar is to ensure that you have a decent income in retirement. To benefit from the scheme, you must pay in monthly contributions throughout your working life. There are certain circumstances in which you can withdraw this money before you actually retire.
Contributions to a 2nd pillar pension scheme are compulsory if you meet all of the following criteria:
You are at least 17 years old
You are insured under the primo 1st (state (AHV)) pillar
You are in fixed employment and earn at least CHF 21,510 a year.
If you do not meet these criteria you can still insure yourself voluntarily:
If your income is less than CHF 21,510 a year, your employer can insure you voluntarily with a 2nd pillar pension scheme.
If you are self-employed or are working on a short fixed-term contract of no more than three months, you are not obliged to pay contributions, but may decide to do so voluntarily.
You and your employer each pay half of your 2nd pillar contributions. Your employer may also decide to cover more than half.
You do not need to do anything. Your employer deducts your contributions directly from your salary, and transfers them to your account with their chosen pension fund.
If you are self-employed and decide to pay 2nd pillar contributions voluntarily, you can contact the pension fund of your choice to find out what you need to do.
2nd pillar pension funds are run by private-sector pension providers. Each of these has its own regulations, so the amount that you need to transfer may differ from one to the next. It is not fixed.
You are no longer required to pay 2nd pillar contributions if your annual income falls below the threshold level of CHF 21,510, you become unemployed, you go abroad for a time, or you stop working to study or train.
This does not mean that you have free access to the capital that you have saved up to that point, however. Instead, you must pay it into a vested benefits account with a bank or other financial institution of your choice, where your occupational pension savings are safely parked for the time being.
If or when you fulfil the criteria for paying 2nd pillar contributions again, you must transfer the money from your vested benefits account to your new 2nd pillar account with your new employer's pension fund.
If you do not open a vested benefits account, your 2nd pillar capital will automatically be paid into an account with the Substitute Occupational Benefit Institution. Please contact the Substitute Occupational Benefit Institution if you would like to invest your 2nd pillar capital yourself somewhere else that offers a better return.
If you change job, your new salary may be higher than your old one, or your new employer's pension fund may offer better terms.
You might also have contribution gaps because you have not been paying 2nd pillar contributions all your life.
In these cases you can invest in your own 2nd pillar scheme by ‹buying› extra contribution years in the form of additional voluntary contributions (AVCs). The terms and conditions of the new pension fund apply.
You can deduct the amount that you have paid into your 2nd pillar pension from tax.
Your new pension fund can supply information about options and conditions for investing in your occupational pension. Ask your employer for contact details.
To buy a home
You can use your 2nd pillar capital before you retire to buy a home, pay off a mortgage, or acquire shares in a housing cooperative.
The following criteria apply:
The property you buy must be your principal residence
Up to the age of 50 you can withdraw your capital in full
From the age of 50 upwards you can only withdraw part of that capital
You can only apply for an advance withdrawal once every five years
If you are married or living in a registered partnership, you need the consent of your spouse or partner
If you later sell your property, you will usually have to repay the 2nd pillar capital that you withdrew to buy it.
Your pension provider can supply detailed information on withdrawing capital early to buy a home.
If you become self-employed
If you become self-employed you will no longer be required to pay contributions into an occupational pension scheme. You can have the money that you have previously saved in a 2nd pillar scheme paid out if the following criteria are met:
You must submit the application to withdraw capital early within a year of becoming self-employed.
You must prove that you have actually gone self-employed, for example with an extract from the Commercial Register or social security (AHV) documents.
If you are married or living in a registered partnership, you need the consent of your spouse or partner.
Your pension provider can supply detailed information on withdrawing capital early in connection with self-employment.
If you leave Switzerland for good
You can have your 2nd pillar pension capital paid out early if you leave Switzerland for good.
However, this is not possible if you are going to settle in an EU or EFTA country. If you make your new home in one of these states, you will be insured by law there for pension, disability and survivors’ benefits.
In this case part of your occupational pension capital (known as the mandatory portion) must remain in a blocked account in Switzerland. It cannot be paid out until you reach regular retirement age, which is currently 64 for women and 65 for men. You can have the rest of your 2nd pillar savings (the extra-mandatory portion) paid out in cash.
Your pension provider can supply detailed information on withdrawing capital when leaving Switzerland for good.
If you are moving away from Switzerland permanently and still have a vested benefits account, don't forget to take the balance with you!
Once you turn 65 (men) or 64 (women), you can access the money that you have been saving throughout your working life. Some pension funds allow you to withdraw the money from the age of 58 onwards if you retire early, for example. In some cases it is also possible to defer the payout until the age of 70 if you continue to work beyond the statutory retirement age.
Act early to arrange 2nd pillar benefits. Go to the page about preparing for retirement to find out more. Your pension provider can also supply detailed information about what you need to do.
If you get divorced or dissolve a registered partnership, only that part of 2nd pillar capital that was saved during the marriage or partnership is divided up between the parties.
2nd pillar savings are also divided if one spouse/partner has already retired and is receiving a 2nd pillar old-age pension.
In a marriage or registered partnership, the surviving spouse/partner receives a pension if the other person dies.
Providing you meet the following conditions, you will receive a pension if your husband, wife or registered partner dies:
You are at least 45 years old
Your marriage or partnership lasted for at least five years
or
You look after at least one child
If you do not meet any of these criteria, you are entitled to a one-off settlement equivalent to three annual pensions.
As half or full orphans, children who have lost one or both parents also receive a pension until they turn 18. If they are studying or doing an apprenticeship, they continue to receive that pension until they are 25.
Your pension provider can supply detailed information on the topic of pensions.
You will find further information on the Occupational pension[BTFB1] page and in the booklet entitled Switzerland's old-age insurance system, or on the questions and answers on occupational benefit plans page of the Federal Social Insurance Office’s website.
The Federal Social Insurance Office has also issued a brochure entitled Vested benefits: don't forget your retirement assets! It covers all you need to know about vested benefits accounts and what to do if you realise that you left them behind when you left Switzerland.