Switzerland's 3-pillar system: how retirement provision works

How is the Swiss three-pillar pension system structured?

The Swiss pension system spreads retirement provision across three pillars. Each one serves its own purpose. Together they secure income in old age, in the event of disability and in the event of death:

• 1st pillar (OASI/DI): state basic security, mandatory for everyone.
• 2nd pillar (pension fund/BVG): occupational provision for the accustomed standard of living, mostly mandatory for employees.
• 3rd pillar (private provision): voluntary supplement to close pension gaps and fulfil personal wishes.

Private provision supplements the basic coverage from the first two pillars. The three-pillar principle has been anchored in the Federal Constitution since 1972; mandatory occupational provision followed in 1985, the tax-privileged Pillar 3a in 1987.

1st pillar: State provision

The first pillar is state provision and mandatory for everyone. It secures the subsistence minimum in old age, in the event of disability and after a death. Its core is OASI (old-age and survivors' insurance), supplemented by disability insurance (DI) and supplementary benefits (SB), which step in when the pension is not enough to live on.

OASI is financed on a pay-as-you-go basis: today's working people pay the current pensions directly with their contributions. The maximum OASI single pension in 2026 is around CHF 2'520 per month, the minimum CHF 1'260. For many households, this covers only part of the costs.

At a glance:

• Comprises OASI, DI and supplementary benefits
• Mandatory for everyone living and working in Switzerland
• Goal: securing the subsistence minimum in old age, in the event of disability and in the event of death

2nd pillar: Occupational provision

The second pillar is occupational provision (BVG), colloquially the pension fund. It builds on OASI and is meant to secure the accustomed standard of living in old age. Anyone employed who earns more than CHF 22'680 per year is mandatorily insured (as of 2026); self-employed persons can join voluntarily.

Unlike OASI, the pension fund works on a funded basis: each insured person saves their own capital, with employee and employer each contributing at least half. Together, OASI and the pension fund cover around 60 percent of the last salary. For the accustomed standard of living, a pension gap therefore often remains.

At a glance:

• Occupational provision (BVG), colloquially the pension fund
• Mandatory from CHF 22'680 annual salary, voluntary for self-employed persons
• Goal: maintaining the accustomed standard of living in old age

3rd pillar: Private provision

The third pillar is voluntary private provision. It closes the gap between pension benefits and the accustomed standard of living and consists of two areas: the restricted Pillar 3a and the unrestricted Pillar 3b.

Pillar 3a is the restricted provision with a tax privilege. Contributions can be deducted from taxable income up to an annual maximum contribution. The capital stays tied until shortly before retirement and is available earlier only in special cases such as home ownership, self-employment or emigration.

Pillar 3b is the unrestricted provision with no contribution limit and no withdrawal rules, but without a tax deduction. The differences between Pillar 3a and 3b determine which combination fits. For most working people, Pillar 3a is worth it as the simplest entry, because the tax advantage takes effect in the very first year.

At a glance:

• Voluntary private provision: restricted Pillar 3a and unrestricted Pillar 3b
• Pillar 3a tax-privileged up to the maximum amount, Pillar 3b without a limit
• Goal: closing pension gaps and fulfilling individual wishes in old age

This article was first published on 15/04/2026