Understanding the Swiss Pillar System

Apr 5, 2023 | Europe, Pensions

Understanding the Swiss Pillar System & What You Need to Know

Retiring in Switzerland can be a desirable option for many people, thanks to the country’s high standard of living, excellent healthcare, and picturesque scenery. However, it’s important to understand the country’s unique retirement system, known as the “Swiss pillar” system, before making the move.

The Swiss pillar system is a three-tier system that includes the following:

The First Pillar: State-Run Social Security

  • This is the state-run social security system, which provides a basic level of income for retirees.
  • It is financed through payroll taxes and is mandatory for all residents of Switzerland.
  • To qualify for the first pillar, you must have been a resident of Switzerland for at least five years.

The Second Pillar: Occupational Pension Scheme

  • This is the occupational pension scheme, which is typically provided by employers.
  • It is a mandatory savings plan that is intended to supplement the income provided by the first pillar.
  • The second pillar is mandatory for those who are employed and have a Swiss source of income.

The Third Pillar: Private Savings Plan

  • This is the private savings plan, which is optional and allows individuals to save additional money for their retirement.
  • This can include individual retirement accounts (IRAs), annuities, and other investment vehicles.
  • The third pillar is optional and can be used to supplement the income from the first and second pillars.

Key Things to Keep in Mind

  • The Swiss currency (Swiss franc) is strong, and it may be beneficial to consider the currency risk before making any investment decision.
  • The cost of living can also be high in Switzerland, and it’s important to consider that when budgeting for retirement.

Switzerland offers a high standard of living and an excellent healthcare system, but it’s important to understand the country’s unique retirement system, the Swiss pillar system, before making the move. There are certain tax advantages of transferring second-pillar pensions to more tax-favourable cantons before leaving the country. It’s best to consult with a financial adviser to review your current options and to assess your exit plan should you plan to reside elsewhere

This communication is for informational purposes only based on our understanding of current legislation and practices which are subject to change and are not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

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Schedule an Obligation-free Call With an Adviser

By scheduling an appointment with an adviser they will reach out to you at your requested time. 
Personal advice, whenever it suits you.

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