The Swiss Three-Pillar Pension System Explained

AHV, pension fund and private savings: how the three pillars work together and what each one gives you.

6 min read · Retirement & Pensions

Switzerland builds retirement income on three layers. Understanding what each pillar delivers is the first step in working out whether you will have enough.

Pillar 1: AHV/IV (state pension)

The AHV (Alters- und Hinterlassenenversicherung) is a pay-as-you-go system funded by contributions from employees, employers and the self-employed, plus federal money and VAT. It aims to cover basic living costs. The full monthly old-age pension for a single person lies between CHF 1,260 and CHF 2,520 (2025/26), depending on your average income and on whether you have no gaps in your contribution record (44 years). Married couples together are capped at 150 % of the maximum.

Pillar 2: Pension fund (BVG/LPP)

Employees earning above the entry threshold (CHF 22,680) are insured through the employer's pension fund. Both sides pay contributions that rise with age. At retirement you can usually take a lifelong pension, a lump sum or a mix. Together, pillars 1 and 2 should provide roughly 60 % of your last salary for an average earner.

Pillar 3: Private provision

Pillar 3a is a tax-privileged, restricted savings account (see our 3a guide). Pillar 3b covers everything else – free savings, investments, property and life insurance – with fewer tax benefits but full flexibility.

What to do

• Request your AHV account statement and your pension fund certificate every few years.
• Compare your expected income with your desired spending using the retirement gap calculator.
• Close the gap with 3a, voluntary pension fund purchases and investments.

The system is stable but evolving: the 13th AHV pension will first be paid in December 2026, and the AHV 21 reform raises women's reference age to 65.