Pillar 2 (BVG) Explained – Swiss Employee Pension
How the Swiss occupational pension (BVG/LPP) works: contributions, insured salary, pension funds, buy-ins and retirement benefits explained for 2026.
- Understand how BVG works and when it becomes mandatory.
- See how contributions grow and affect your retirement income.
- Learn where pension gaps come from and how to close them.
Pillar 2, also called BVG (German) or LPP (French), is the occupational pension system in Switzerland. It complements the state pension (AHV) and is designed to help you maintain your standard of living after retirement.
For most employees, Pillar 2 becomes the largest source of retirement income. Understanding how it works is essential for realistic pension planning.
1. What is Pillar 2 (BVG)?
Pillar 2 is a mandatory occupational pension for employees earning above a certain salary threshold. Contributions are paid into a pension fund and invested over time.
Together with AHV (Pillar 1), BVG aims to replace around 60–70% of your last salary after retirement.
2. Who must contribute to BVG?
BVG is mandatory for employees who earn more than the legal entry threshold. Self-employed people are generally not obliged but may join voluntarily.
Learn more: BVG Entry Threshold · Self-Employed Pension Options
3. Contributions & insured salary
Contributions are calculated based on your insured salary, not your full gross income. The coordination deduction plays a key role here.
| Factor | Impact |
|---|---|
| Age | Contribution rates increase with age |
| Salary level | Only insured salary counts |
| Employer plan | Extra-mandatory benefits possible |
Related guides: BVG Contributions Switzerland · Coordination Deduction Explained
4. Pension funds & statements
Your employer chooses the pension fund. Each year, you receive a pension fund statement showing savings, insured benefits and projections.
Important reads: Pension Fund Statement Explained · Pension Fund Comparison
5. Retirement benefits & conversion rates
At retirement, your BVG assets are converted into a pension using a conversion rate or paid out as a lump sum (or a mix).
BVG capital: CHF 500,000
Conversion rate: 6.0%
→ Annual pension: CHF 30,000
Learn more: BVG Pension Calculation · Lump Sum vs Annuity
6. Pension gaps & buy-ins
Career breaks, part-time work or salary changes can create BVG pension gaps. These gaps can often be closed through voluntary pension fund buy-ins.
Deep dives: Pension Gap Switzerland · Buy-In to Pension Fund (Einkauf)
Important: Buy-ins have tax benefits, but withdrawals are restricted for several years. Planning timing is crucial.
7. FAQ: Pillar 2 (BVG)
Is Pillar 2 mandatory in Switzerland?
Yes, for employees earning above the BVG entry threshold. Self-employed individuals can join voluntarily.
Can I withdraw my BVG money early?
Early withdrawals are possible in specific cases such as home purchase, self-employment or leaving Switzerland.
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