Retirement provision in Switzerland: How your financial security works

How much pension is left in the end, and what is missing for the accustomed standard of living? This article shows how to calculate the need in old age, where the gap comes from, and which instruments the three pillars provide for it.

In order to be able to use the available instruments in a targeted manner, it is best to start by recording your personal situation. Then, once you have identified the funding gaps for your retirement, you will be in a position to use the government programs as well as other tools in a targeted and efficient manner.

This article gives tips on how to identify gaps in your retirement planning and provides information on the main instruments you can use to close them.

The most important facts in brief

• Swiss people are still considered to be very wealthy by international standards.
• In statistics on old-age poverty, Switzerland does not score particularly well.
• The 3-pillar principle spreads retirement provision across the state, the employer and private saving.
• Early financial planning is the basis of sound retirement planning.
• In December 2024, 225,900 people received supplementary benefits to the AHV, 12.2 percent of all old-age pensioners (source: FSIO).

Old-age provision: Realistically calculating needs in old age

Retirement planning is part of a long-term financial plan. There are many factors to consider in order to realistically calculate your needs for retirement.

Life expectancy

Life expectancy has a direct impact on retirement savings needs. The longer you live, the greater your need for financial support in old age. Life expectancy at birth is 82.7 years for men and 86.3 years for women (FSO, as of 2025). For pension planning a different figure matters: those who reach retirement age have longer ahead of them than the figure at birth suggests, namely a further 20.7 years for men and 23.2 for women.

Income

The higher the income and the more stable it is today, the greater the need for retirement planning. It is important to be aware of what income you will need in old age and how much money you will need to ensure this in the long term.

Expenses

The cost of housing, insurance and other expenses can go up or down as you age, so retirement needs have to be planned accordingly. It’s important to figure out what expenses will be incurred in retirement and whether they can be covered by existing income or if you need to save additional money.

Budget

It is recommended that you create your household budget for retirement to determine what portion of the income will be covered by the AHV and the pension fund.

Part of these costs falls away, because job-related expenses and commuting costs no longer apply. In addition, monthly installments for a mortgage on a condominium or house may decrease or be eliminated. Saving for private retirement savings also ends.

Often, there is no longer a need to spend money to support children of training or college age because they are now self-supporting. At the same time, however, new expenses may arise because you have more free time or want to travel or need to pay for medical treatment. Less money is usually needed in retirement than during working life, which is why the 80 percent rule is often applied.

For budgeting purposes, you should consider the following expenses in summary:

• Housing situation: If you live in an owner-occupied property, the management costs must be planned for. In addition, there must be an investment reserve for repairs or modernisation. If you live in rented accommodation, you must assume future rent increases in addition to the current rent.
• Living expenses: These include expenses for food, clothing, replacement and purchase of electrical appliances and communication technology.
• Mobility: costs of purchasing and maintaining a car, as well as expenses for public transportation.
• Travel: Many look forward to the time after retirement to travel more frequently. To do so, financial resources must be saved in time.
• Loan obligations: Will all loans be paid off by retirement or do remaining installments need to be budgeted for?
• Taxes: When preparing the budget, the income tax item should not be missing.
• Health: How comprehensive is your health insurance? Health costs rise with age, and health insurance does not cover all of them.
• Inheritance: Do you have the desire to leave an inheritance to your children?

Reading tip: Financial Advice for Women

Old-age poverty in Switzerland: Informing and avoiding it

Anyone who stops working before the regular retirement age receives a permanently reduced pension. The third pillar cushions this, but not everyone uses it: in the 2019 Swiss Labour Force Survey, around 56 percent of respondents aged 25 to 64/65 said they paid into pillar 3a regularly (source: FSO).

Reality of old-age poverty

It is undeniable that Switzerland is a wealthy country where many people have sufficient financial resources. According to the “Global Wealth Report” (published by UBS since 2023, previously Credit Suisse), Switzerland ranks among the wealthiest countries in the world by average wealth per adult. The wealth of the Swiss has continued to grow in recent decades, albeit at a slower pace.

Even so, the pension does not stretch everywhere. In December 2024, 225,900 people received supplementary benefits to the AHV to cover their subsistence needs. That is 12.2 percent of all old-age pensioners, and the share rises with age: 9.3 percent among 65-year-olds, 23.7 percent among 95-year-olds (source: FSIO, supplementary benefits statistics 2024). This is the measurable side of old-age poverty.

Solid retirement planning begins with an analysis of your personal situation

Before you take a close look at retirement planning instruments, it is important to take stock of your situation.

The following questions serve this purpose:

• What assets do I already have today in addition to the entitlements from state and occupational pensions? These include, in particular, a home that has been fully or partially paid off, endowment life insurance policies, securities deposits and other asset components that have already been planned for the time after retirement.
• What payment streams (such as pensions or investment income) can I generate with the existing assets?
• How much capital is needed for my further life planning in old age (planned investments for yourself or, if applicable, for your children)?
• Can I expect an inheritance?
• How much time do I have until my planned retirement to accumulate the necessary assets?

Identifying gaps in your retirement planning

To check for a gap in your retirement savings, first compile your projected annual pension. This is divided into the AHV pension (1st pillar) and the pension from your pension fund (2nd pillar). Information on your AHV pension can be obtained from the cantonal compensation office. The pension entitlements of your pension fund can be found on your pension certificate.

Common causes of coverage gaps are:

• Contribution gaps: Pension gaps often occur due to interruptions in employment, such as child breaks, further education or stays abroad.
• Part-time work: If you work part-time, there will be less money for your retirement pension because you pay less into the pension fund and have a lower average income. Your AHV pension will also be lower than if you worked full-time due to lower average earnings.
• High income: It may sound contradictory at first, but it is a fact that high incomes lead to pension gaps. The higher the gross income, the lower the coverage by the legally required benefits from the first and second pillar.
• Reduction in conversion rate: Your retirement pension entitlement is based on your pension fund balance and the conversion rate. Unfortunately, this rate is currently decreasing, so that the pension from the second pillar is lower than expected years ago.
• Early retirement: Employed persons who retire earlier pay in less. As a result, the pension is correspondingly lower.

Pension provision in Switzerland: the 3-pillar principle

The pension system in Switzerland consists of three supporting elements: the state, the occupational and the private pension.

The first pillar is dedicated to the existential needs in old age, in case of disability and after the death of the insured. The second pillar is designed to help you continue your accustomed standard of living. However, AHV and pension funds can only fulfill this expectation to a limited extent. The third pillar closes the gap between the benefit providers of the first and second pillar elements and your financially required needs.

The first pillar

The state provides a modest subsistence level with the benefits of the first pillar. This means the cost of living in old age, in the event of disability and for surviving dependents in the event of death. As of 2026, this means a maximum of CHF 2,520 for a single person and CHF 3,780 for married couples. The pension for surviving dependents is even lower. Here, a maximum of CHF 2,016 widow’s or widower’s pension is paid.

Old-age and survivors’ insurance (AHV)

The AHV helps to ensure a livelihood in retirement. Should the insured person die, his surviving family members usually receive a widow’s or widower’s pension or an orphan’s pension. The amount of the pension depends on the amount of contributions as well as the duration of contributions.

Disability insurance (IV)

The first priority of the disability insurance is to reintegrate people who have become disabled due to illness or accident. However, if they can no longer work or are only partially able to work, the disability insurance provides a pension to ensure their livelihood.

Important: A full pension requires that AHV contributions have been paid without interruption between the age of 20 and retirement age. This means that each year without contributions will result in a reduction of the pension.

The second pillar

The so-called occupational pension plan, together with the first pillar, should enable you to maintain your accustomed standard of living in old age or in the event of disability, as well as to provide a pension to your survivors in the event of your death. The amount of your pension is determined by the contributions you have paid in during your working life.

With the benefits of the second pillar, together with the AHV, you secure about 60 to 75 percent of your last income. However, this only applies up to an annual income of CHF 90,720 (as of 2026). If you earn more or are self-employed, additional coverage is required as part of the company pension plan.

The pension benefits of the second pillar will probably decrease for future generations. After all, life expectancy has increased and interest rates have fallen. Private provision therefore carries more of the load.

Important: A lower salary also directly means reduced benefits. In addition, you will only remain insured with most pension funds if your salary exceeds the minimum amount of CHF 22,680 (as of 2026). If you intend to retire early, you can compensate for the lower retirement benefits by making targeted purchases into the second pillar.

The third pillar

The first and second pillars help cover approximately 60 to 75 percent of your final income as part of your retirement plan. The difference can be closed with the third pillar, so that the accustomed standard of living can be maintained in old age, after retirement.

In addition, this pillar offers the advantage that the federal government and the cantons provide tax incentives for pension provision.

The third pillar allows you to build up additional capital for retirement. This is a voluntary, individual pension plan. Private pension provision is divided into pillar 3a (tied pension provision) and pillar 3b (free pension provision).

• Pillar 3a (tied pension provision) offers great tax advantages: Contributions can be deducted from taxable income up to the statutory annual maximum amount, which saves you considerable taxes. For 2026, this is CHF 7,258 with pension fund and CHF 36,288 without a pension fund, capped at 20 percent of earned income. However, to be able to pay into pillar 3a, you must have earned income subject to AHV.
• Pillar 3b (free pension provision) includes assets that are not already tied up in the first, second and pillar 3a. Pillar 3b includes classic savings accounts and investing for various goals, such as a new car and, of course, for retirement. In addition to interest accounts, securities solutions are among the typical investment instruments.

Other retirement planning instruments

For the planning of your personal retirement provision, a basic understanding of the topics of financial investments and asset classes pays off.

The following is therefore a brief overview and classification of various forms of capital investment and thus also of retirement provision.

Real estate

Real estate ties up capital for the long term and requires assets that are not needed elsewhere.

Incidentally, the purchase of an owner-occupied home is one of the special cases in which Pillar 3a funds can be withdrawn in advance.

Important: Capital tied up in a property is not available for day-to-day spending. Anyone who depends on liquidity in retirement has to cover it from other sources.

After purchase, real estate provides you with cash returns in the form of rental income or profits from the sale of the property at a higher price than you originally paid. Furthermore, the tax advantages of real estate investments can optimise profits. Risks include, in particular, loss of rent and repair and maintenance costs.

Savings accounts

The advantage of interest-only accounts is, on the surface, security. For fear of price fluctuations, many people prefer to invest their money in savings accounts, call money accounts or time deposit accounts despite low interest rates. If the interest paid stays below inflation, the balance loses value in real terms. Even within the third pillar of the Swiss pension system, many assets are lying dormant in interest accounts.

An interest-bearing account carries no price risk. In return, even modest inflation eats into purchasing power, and in long-term wealth accumulation that adds up. For reserves that need to be available at short notice, the account is the right vehicle; what role it plays in the rest of a portfolio depends on the investment horizon and on risk capacity.

Life insurance

While life insurance policies used to be one of the classic instruments of old-age provision, the financial product has come under pressure as a result of the low-interest phase. This applies both to tax-incentivised programs and to free pension plans. Death and disability cover can also be arranged separately from saving, that is, as pure risk insurance without a savings component. Some insurers therefore offer unit-linked policies alongside pure risk cover. Here the savings component is invested in fund units.

Shares

The Corona era, low interest rates and a lack of investment alternatives have brought the so-called neo-brokers numerous, mainly young, new customers. The increased interest in the stock market is basically gratifying. However, investing in individual stocks involves a high issuer risk. Trading also requires corresponding expertise and time. Those who are able and willing to make use of this can invest the part of their assets in individual stocks on which they are not dependent.

Funds and fund savings plans

With funds, you also take advantage of the return opportunity on the stock market or other financial markets. The main advantage is that the fund invests your money in a large number of different securities at once. This spreads the capital across many holdings, so the risk attached to individual securities falls. Market risk remains.

To build up capital on a regular basis, for example as a retirement provision, fund savings plans with regular monthly contributions are a good option. You will also find these among the third pillar financial instruments on offer.

Important: The time remaining until retirement determines how much room a portfolio has for fluctuations. The shorter it is, the less time remains to sit out temporary price drops. There is no guarantee that a decline will be made good within any particular period.

Precious metals (gold, silver)

Gold marked an all-time high of US$5,589 per troy ounce on 28 January 2026 and has traded well below that since.

Precious metals are in particularly high demand in times of crisis, which drives the price up. However, it cannot be deduced from this that they are particularly suitable for retirement provision. The price fluctuations of the last few years show that, in both directions.

Other (cryptocurrencies, crowdinvesting)

Cryptocurrencies and investments in crowdinvesting should be representative of highly speculative capital investment at this point.

Crowdinvesting is about providing capital as a subordinated creditor. This means that in case of insolvency of the project, all other creditors are served first.

Cryptocurrencies do not enjoy deposit protection and the value depends heavily on how much demand there is at the time. There are further risks of loss due to the possible closure of exchanges or if countries prohibit trading.

In the context of a long-term asset accumulation, the described speculative investments do not play a major role because of the described risks.

How to make private retirement provisions

Despite the high average wealth in international comparison, part of the retired population depends on supplementary benefits. Although there are decent earned incomes in Switzerland, many retirees are affected by old-age poverty. So that you can look forward to your time in old age and maintain your accustomed standard of living, it is worth looking into the figures in good time and setting your own financial goals. How to do that is covered in Private financial planning, how to achieve your individual goals.

Those who hand over the management find various forms for it, from case-by-case support to a wealth management mandate. They differ in minimum assets, cost structure and decision-making authority.

Important points to consider with regard to your retirement planning:

• Start immediately: Medical progress has ensured that we are allowed to grow older and older. However, this also means that retirement savings must last longer. If you start early, you can achieve a lot with manageable amounts and take advantage of tax benefits during your prime earning years.
• Take full advantage of government programs: Extensive here means taking advantage of the maximum amounts. The deduction applies in the year of payment; the tax advantages therefore accrue regardless of how the investment performs.
• Plan the time of retirement: The desire for early retirement is increasing among Swiss people as their level of education and income rise. If you, too, want to determine your own retirement date, take into account possible pension gaps for high incomes and the deductions on an early pension.
• Budget planning including leisure activities: You rightly want to look forward to the time after retirement. This includes the certainty that even in old age you will have the financial means for the activities you want to pursue then. So think about capital for travel, hobbies and other wishes.
• Compare costs: Fees differ markedly between providers and work on the final capital over decades. A look at the total expense ratio is worth it before any contract is signed.