The Swiss pension system is typically presented as a 3-pillar system: - Pillar 1: AHV (Old Age and Survivors' Insurance) - Pillar 2: Occupational pension - Pillar 3: Tied pension (3a) + Voluntary pension (3b)
I argue that each pillar should actually be presented as a paired pillar: 1a, 1b, 2a, 2b, 3a, 3b.
This helps to better understand the pension system, see where redistribution and conflicts of interest occur, and ultimately make better decisions for oneself.
The figures mentioned throughout the text (contribution limits, interest rates, etc.) are as of 31.12.2025 and change over time.
Pillar 1 is typically equated with AHV. The maximum monthly AHV pension is 2,520 CHF, and the minimum is 1,260 CHF. A 13th AHV pension will soon be added, representing roughly an extra 8% increase.
Suppose someone worked in Switzerland for only 10 years and earned about 20-25 thousand CHF per year, meaning their 2nd pillar is empty. They can then only count on 1,260 CHF (or 1,360 if you include the 13th AHV payment), which in Switzerland (a high-cost island!) borders on starvation. A modern state doesn't let people starve on its territory. What does this mean in practice? The principle of securing basic needs kicks in, and so-called EL (supplementary benefits) are paid out. Essentially, this is part of Pillar 1. What then is the financial incentive to work if EL provides assistance? One is granted more freedom: for example, AHV is also paid out if you reside abroad.
Seen this way, EL can be labeled as 1a, and AHV as 1b (we'll leave IV/disability insurance aside here).
Pillar 2 can also be clearly divided into 2a and 2b. When looking superficially at Pillar 2, one quickly encounters an apparent contradiction: the legal minimum conversion rate is 6.8%, yet some pension funds set it at 4% - how is this possible?
However, if you view Pillar 2 as 2a ("mandatory") + 2b ("supplementary"), it quickly becomes clear: the minimum conversion rate only applies to 2a; for 2b, in extreme cases, payouts could theoretically be close to 0%.
"Mandatory" refers to contributions on income below 90k CHF per year; "supplementary" covers the portion above that.
Furthermore, a significant portion of assets can still end up in the supplementary category, even if someone's income was below the mandatory threshold (currently about 90k CHF per year) their entire working life: interest on assets exceeding the 1.25% limit (previously even 1%) goes into the supplementary portion, contributions on bonuses go into the supplementary portion, and so on. If someone earned about two median salaries (theoretically half mandatory and half supplementary) and was insured with a "good" pension fund, they end up at the end of their career with only 20% of their assets in the mandatory portion.
This division into mandatory/supplementary allows the state to lock the door in case of a run.
Pillar 3 is already officially divided into 3a and 3b, so no additional explanation is needed here.
The pension system is easier to understand when you consider 3 paired pillars instead of 3 pillars.
In the next part, we'll explore the question of whether the Swiss pension system is secure.