BVG Pension Calculation (CH) – Explained
Learn how your Swiss BVG pension is calculated: insured salary, retirement assets, conversion rates, and real-world pension examples for employees in Switzerland.
- BVG pensions are not fixed — they depend on salary, years insured and fund rules.
- The conversion rate has a major impact on your lifelong pension.
- Mandatory vs extra-mandatory assets can lead to very different outcomes.
The BVG pension (Pillar 2) is the second building block of the Swiss retirement system and, for many employees, the largest source of retirement income after AHV. Yet the calculation behind it is often misunderstood.
This guide explains how your BVG pension is calculated, what role conversion rates play, and how to estimate your future pension using realistic assumptions.
1. What is the BVG pension?
The BVG pension (occupational pension) complements AHV and is designed to help maintain your standard of living in retirement. Employees earning above the BVG entry threshold are insured through their employer.
Overview: Pillar 2 (BVG) Explained
2. Insured salary & coordination deduction
Your full salary is not insured under BVG. The coordination deduction removes the AHV-covered portion to avoid double insurance.
Insured salary = gross salary − coordination deduction
Deep dive: Coordination Deduction BVG
3. Retirement assets (BVG savings)
Your BVG retirement assets grow through:
- Employee contributions
- Employer contributions
- Interest credited by the pension fund
Contribution rates rise with age, which strongly affects long-term outcomes. BVG Contributions Switzerland
4. Conversion rate explained
The conversion rate determines how your accumulated BVG assets are turned into an annual pension.
CHF 500,000 × 6.8% = CHF 34,000 annual pension
Mandatory BVG assets use a legally defined minimum rate, while extra-mandatory assets often use lower rates. BVG Minimum Interest Rate
5. Mandatory vs extra-mandatory BVG
Many employees assume a single conversion rate applies to all assets. In reality:
| Part | Rules |
|---|---|
| Mandatory BVG | Minimum legal conversion rate |
| Extra-mandatory BVG | Defined by pension fund, often lower |
More details: BVG Extra-Mandatory Benefits
6. Example: BVG pension calculation
Let’s assume:
- Retirement assets: CHF 600,000
- Mandatory portion: CHF 300,000
- Extra-mandatory portion: CHF 300,000
Mandatory: CHF 300,000 × 6.8% = CHF 20,400
Extra-mandatory: CHF 300,000 × 5.0% = CHF 15,000
Total annual BVG pension: CHF 35,400
7. Lump sum vs annuity impact
Your BVG calculation changes if you choose a lump sum instead of a lifelong pension. The conversion rate only applies to the annuity portion.
Compare options: Lump Sum vs Annuity Switzerland
8. How to increase your BVG pension
You can actively influence your BVG outcome:
- BVG buy-ins (Einkäufe) to close gaps
- Higher insured salary (if employer plan allows)
- Longer working life (late retirement)
- Strong extra-mandatory pension plans
Next reads: Pension Fund Buy-In · Late Retirement Switzerland
9. FAQ: BVG pension calculation
Is the BVG conversion rate fixed?
Only for the mandatory portion. Extra-mandatory conversion rates vary by pension fund.
Why is my expected BVG pension lower than expected?
Common reasons include coordination deduction, lower extra-mandatory conversion rates, and fewer insured years.
Can I calculate my BVG pension myself?
Yes, approximately — but your pension fund statement provides the most accurate projection.
Estimate your real BVG pension
BudgetHub helps you combine AHV and BVG projections, test scenarios, and see your full retirement picture — clearly and realistically.
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