3-pillar system in Switzerland

The general pension of Switzerland is divided into three so-called pillars. A distinction among the pillars is made between mandatory and voluntary provisions.

Click on the individual pillars for additional information.

The first pillar is mandatory, therefore a compulsory insurance for the entire population. The purpose of this pillar is the security of one’s livelihood and the avoidance of poverty.

These include among others:

  • Old Age and Survivors’ Insurance (AHV)
  • Disability Insurance (IV)
  • Supplementary benefits (EL) for AHV and IV
  • Compensation for loss of earned income during military service, civil service, community service or maternity (EO)

The second pillar contains various types of insurance for working people, consisting of:

  • Mandatory occupational pension fund (see Pension Fund)
  • Additional occupational pension fund (the addition of optional additional benefits for occupational pension provision)
  • Mandatory accident insurance
  • Unemployment insurance
  • Voluntary supplemental insurance in addition to the mandatory accident insurance (employer)
  • Voluntary salary continuation insurance (employers)

The third pillar is comprised of voluntary, and usually tax-favored, private  pension insurance in addition to the 1st and 2nd pillar:

  • fixed retirement savings schemes (3a)
  • flexible retirement saving schemes (3b)

Deductions from salaries

The following deductions are to be taken into consideration as an immigrant:

The Old Age and Survivors’ Insurance is the equivalent of the retirement insurance in Switzerland. It ensures the financial security of basic needs.

The retirement pension can be received by women at the age of 64 and by men at 65.

It is also possible to obtain the pension before the relevant age. For this purpose, certain conditions are necessary and sometimes also a reduction in contributions.

If the pension is to be taken later than the planned age, a bonus is awarded.

Unemployment insurance assures the income of affected persons during times of unemployment.

The employer usually pays the Salary Continuation Insurance for the worker in order to ensure the continued pay in case of illness.

The employer pays the work-related accident insurance for the employee while the employee pays the non-work related accident insurance.

After a defined contribution to the pension fund, monthly contributions by employers are deducted from gross wages; excluding the 13th month of salary if employer pays 13 months instead of 12 months. Employees under the age of 25 need to pay much lower contributions and are only covered for disability and death.

lohncomputer.ch uses the following percentages as the basis for its calculations:   

  • 1.4%
  • 7%
  • 8%
  • 9%
  • 10%

(Source: www.sulzer.com)

There are different bases for calculating the withholding tax which is primarily dependent on the residence status. For you, immigrants with permanent residence in Switzerland, the following rule applies:

Employment income, as well as any other supplemental income, is taxable. In principle, the withholding tax is similar to the German wage tax, but differs in the extent that the tax burden is definitive. This regulation can lead to having more or less burden as opposed to a regular assessment (e.g. as in Germany).

Cross-border commuters

Cross-border commuters ("Grenzgänger") are people who enter only to work in Switzerland, but whose residence is in another country (eg Germany).

They are subject to different tax rates, for example, in calculating the withholding tax. A flat rate of 4.5% has to be paid in Switzerland. Other taxes have to be paid in the country of residence.

Health insurance

Please refer to our section on health insurance.


lohncomputer.ch calculates the monthly salary for all employees. For some groups, for example civil servants, different tax rates may apply.

lohncomputer does not apply to the self-employed.

Yes! It is quite likely since lohncomputer can not identify all cases. In general, the deviations will not exceed 100 CHF.

We can not guarantee the accuracy of the data.

For the calculation of contributions to the pension fund the following percentage basis is set by lohncomputer:

  • 1.4%
  • 7%
  • 8%
  • 9%
  • 10%

Different percentages are used depending on the industry, which typically are not significantly different. The percentages used by lohncomputer are based on the specification www.sulzer.com.

In order to make the results or the calculation more comparable, we automatically convert the amount in CHF into EUR.

Basis of the exchange is the current rate of the European Central Bank, which sets a daily basis of all relevant courses. Through an interface, the currency rates are transferred to lohncomputer.

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