Pillar 2 - BVG

Risk insurance is mandatory for all employees within a company earning an AHV annual salary of more than CHF 22,680 from January 1st after their 17th birthday, covering the risks of disability and death. Retirement benefits are also insured from January 1st after the individual has turned 24.

Voluntary insurance is available to:

• The self-employed (with the pension plan of their staff, with an association insurance plan or with the BVG Substitute Occupational Benefit Institution)
• Persons with an annual salary of CHF  22,680 or less (where provided for in the regulations)

Insurance is mandatory for annual salaries of between CHF 26,460 and CHF 90,720. Higher and lower salaries are not subject to statutory insurance. However, companies can also insure higher salaries on a voluntary basis. This is referred to as super-mandatory insurance. This enables employees to avoid a pension shortfall, in particular, employees with higher incomes.

• In old age: On retirement the insured person can choose to draw a lifelong retirement pension or can withdraw the capital saved; if the insured person has children, they also receive a retired persons' children's pension if the children rely on the insured for support.
• In the event of death: The surviving partner and children receive a pension and/or a lump-sum death benefit.
• In the case of loss of earnings due to disability: The insured person and their children receive a disability pension; in addition, they are exempt from contributions so that they can continue to save for a retirement pension.

On ordinary retirement – women from the age of 64, men from the age of 65  – the retirement savings capital is converted into a pension. The amount of the pension is determined by three factors:

• The retirement assets saved
• The capital income generated by the retirement assets
• The conversion rate

Example: With accumulated mandatory retirement savings of CHF 100,000 and a BVG conversion rate of 6.8% result in an annual pension of CHF 6,800, i.e. around CHF 570 a month.

Up until the time of retirement, interest must be paid on retirement assets. The interest rate must be at least the minimum interest rate prescribed by the BVG. Interest is credited annually to the existing retirement assets. The interest earned has an important influence on the amount of retirement assets at the time of retirement. A pension fund model that allows the insured to directly participate in investment performance boosts the value of the pension.

The contributions for the occupational retirement provision are generally shared equally between employee and employer. However, the employer can also choose to contribute a larger share.

The total amount is made up of:

• The  savings contribution
• The risk contribution (to protect against the risk of disability and death)
• Additional BVG contributions (for contributions to the security fund and adjustment for inflation)

The statutory savings contributions increase with the age of the insured person, from 7% up to a maximum of 18% of the insured salary. Contributions for the occupational retirement provision are tax-deductible.

The self-employed pay all their own contributions for the occupational retirement provision. They can join a scheme for the occupational retirement provision on a voluntary basis. They can become affiliated with the pension plan of their staff, an association insurance plan or the BVG auxiliary fund.

Detailed information concerning the amount of the benefits insured by your company and the balance of your retirement assets is shown on your pension certificate. 

Are you earning more today than in earlier years? Or have you had to pay part of your pension fund assets to your former spouse? In this case you might be eligible for a tax-deductible purchase of pension fund benefits. 

Your capital from the occupational retirement provision can also be used to finance the purchase of residential property.