Legal bases & legislation
Occupational benefit provision (2nd pillar/LPP), which is jointly financed through employer and employee contributions, is a supplementary insurance scheme. The benefits it provides in the event of old age, invalidity or death supplement the benefits disbursed by the AVS/AI scheme. Occupational benefit provision includes all measures that are taken on a collective basis to ensure that the elderly, surviving dependants and the disabled in receipt of AVS/AI benefits are able to maintain in an appropriate manner the standard of living they enjoyed prior to the occurrence of the insured event of old-age, death or invalidity.
All employees whose annual salary from the same employer is above CHF 21,330 (until 2020), CHF 21,510 (until 2022) and CHF 22,050 (from 2023) must contribute to the 2nd pillar. In contrast, occupational benefit provision is not compulsory for the self-employed, although they are free to pay into the 2nd pillar on a voluntary basis.
The LPP defines minimum benefits in the event of old age, death, and disability. But pension funds are free to provide benefits going beyond the statutory minimum.
Impact of BREXIT on cash payment upon departure: As a result of the United Kingdom's withdrawal from the EU (Brexit), the Agreement on the Free Movement of Persons between Switzerland and the EU (FMOPA), as well as Regulations (EC) No. 883/2004 and (EC) No. 987/2009 on the coordination of social security systems, do no longer apply to relations between Switzerland and the United Kingdom.
As of 1 January 2021, there is no more restriction of the cash payment of the occupational pension scheme after departure to the United Kingdom in accordance with the Swiss national law. As a result, persons residing in the UK are entitled to claim the cash payment of their entire departure benefits of the occupational pension scheme (compulsory and supplementary benefits).
The new bilateral social security agreement, applicable as from 1 November 2021, has no impact on this legal situation since it does not cover the occupational pension scheme.
Switzerland’s old-age insurance system: A tried-and-tested system – in simple terms
This brochure is designed to provide you with basic information on Switzerland's old-age insurance system. It focuses on the first pillar, OASI, and on the second, occupational pension insurance, but also provides a brief summary of the third pillar, voluntary private provision.
Further information is available in french, german and italian.
Occupational pension funds, also called the 2nd pillar, complete the basic 1st pillar AVS/AI/APG system (old age, disability, loss of income). Together, these two insurance systems should ensure that retired people to a large extent maintain their former standard of living. i.e. they should jointly provide approximately 60% of the last salary.
Here you will find an overview of how occupational benefits provision is organised and financed.
Further information
Links
Other links are available in french, german and italian.
