The three pillars: pension and social security for foreign employees

Your employee is about to start work in Switzerland, and payroll asks one question: what happens to pension and social security? The Swiss pension system for expats is built on three pillars. Two of them are compulsory for most employees. The third is optional. This page explains the logic, the employer's duties and the decisions to take before the transfer.

The short version for HR

Switzerland does not run one pension. It layers three.

• Pillar 1 is the state pension (AHV in German, AVS in French). It covers the basic living costs and includes disability and loss-of-earnings cover.
• Pillar 2 is the occupational pension (BVG in German, LPP in French). It is run through the employer's pension fund and tops up the state pension.
• Pillar 3 is private, voluntary saving, with its own tax rules.

Think of Pillar 1 as the floor, Pillar 2 as the main structure and Pillar 3 as an optional extension.

Pillar 1: the state pension (AHV/AVS)

Pillar 1 combines three schemes: old-age and survivors' insurance (AVS), disability insurance (AI) and loss-of-earnings compensation (APG). For 2026 the combined contribution is AVS 8.70%, AI 1.40% and APG 0.50%, which makes 10.60% of gross salary, split equally between employee and employer, according to the Federal Social Insurance Office (FSIO).

In practice, the employer deducts the employee's half from salary and pays both halves to the compensation fund. Your payroll provider normally handles this. What HR must check is that the new hire is registered from the first pay run.

Contributions are tied to work in Switzerland, not to nationality. A transferee who is a US, Indian or Japanese national pays on the same basis as a Swiss colleague, unless a specific exemption applies. Whether an exemption applies depends on the home-country arrangement and the employment set-up. A specialist reviews each case.

Pillar 2: the employer's pension fund (BVG/LPP)

Pillar 2 is compulsory only above an entry threshold. For 2026 the LPP entry threshold is CHF 23,040 per year, per the FSIO AHV/IV information centre. Below it, the employer is not required to affiliate the employee.

Above the threshold, the employer must affiliate the employee to a pension fund. The fund decides the detailed rules: contribution split, retirement options, death and disability benefits. These vary widely between employers. Ask your fund for its regulations and share them with the transferee before the contract is signed.

Two points deserve attention.

1. Portability. Pillar 2 capital builds up in the employee's name. When the employee leaves Switzerland, the treatment of that capital depends on the destination and the type of capital. Rules differ for EU/EFTA and non-EU/EFTA leavers. Raise this at the start, not at the exit.
2. Plan design. Some employers offer enhanced plans for senior staff. The transferee's package should say which plan applies.

Pillar 3: private savings

Pillar 3 is voluntary. It has two forms: bound pension saving (Pillar 3a), which has tax advantages, and free saving (Pillar 3b). Access to Pillar 3a depends on being gainfully employed in Switzerland, and the tax treatment depends on the canton and the individual.

For HR, the point is limited. Do not treat Pillar 3 as part of the employer's obligations. It is a personal decision, and any tax advice is individual. Your employee may want a specialist view once the first payslip arrives.

What changes with the permit route

Two admission regimes exist: nationals of EU/EFTA states and nationals of third states, as set out by the State Secretariat for Migration (SEM). The regime decides how the employee gets in, not whether pension contributions apply. Once the employee works in Switzerland, the three pillars apply on the same logic.

What changes is coordination with the home system. EU/EFTA coordination rules and bilateral agreements with some other countries may allow periods to be counted across systems or may prevent double contributions. Which rules apply depends on the nationality, the home country and the type of assignment. Seasoned assignees often have an existing pension in the UK, the US, India, Germany, France, Canada, China, Japan, the Gulf or Australia. Map that before departure.

See payroll, social security and withholding tax for assignees for how assignments interact with home-country coverage, and withholding tax at source for the tax side.

The employer's sequence of steps

1. Before departure. Confirm contract type, salary level and whether the assignment is local hire or home-country payroll. Ask a specialist whether home-country coverage continues.
2. Before the first pay run. Register the employee with the compensation fund through payroll. Confirm Pillar 2 affiliation if the salary is above the threshold.
3. On arrival. The employee reports to the municipality of residence within 14 days, usually with an identity document, the residence or work permit and proof of health insurance, per ch.ch. The exact delay can vary by municipality, so check locally.
4. Within the first weeks. Health cover is a separate compulsory scheme, not a pension pillar. See Swiss health insurance for expatriate employees and accident insurance through the employer.
5. First payslip. Check the deductions line by line against what the transferee was told.

Checklist for the mobility team

• Confirm whether home-country social security continues during the assignment
• Register the employee with the compensation fund before the first pay run
• Check the Pillar 2 threshold against contracted salary
• Obtain the pension fund regulations and send them to the employee
• Explain what happens to Pillar 2 capital on departure
• Tell the employee that Pillar 3 is voluntary and personal
• Agree who pays for specialist tax and pension advice
• Brief the employee on municipal registration after arrival

Common mistakes

Employers most often get these wrong:

• Assuming a short assignment automatically avoids Swiss contributions.
• Forgetting that the transferee's pension fund choice is the employer's decision, not the employee's.
• Presenting Pillar 3 as a benefit rather than an option.
• Leaving the exit rules for Pillar 2 until the last month.

For the wider programme, see employee relocation to Switzerland and immigration support. If your case involves a split payroll or a long-term assignment, use the request at the bottom of the page: a specialist examines your case.

Frequently asked questions

What is the Swiss three-pillar system?

It is the Swiss pension model: a state pension (Pillar 1), an occupational pension through the employer (Pillar 2) and voluntary private saving (Pillar 3). Together they are meant to cover basic needs, maintain a living standard and allow extra saving.

Do foreign employees pay into the Swiss pension system?

Generally yes, if they are employed in Switzerland. Contributions follow the place of work, not nationality. Exemptions can exist for assignees who stay covered in another system. A specialist checks this per case.

Is the Swiss state pension compulsory for expats?

For most employees working in Switzerland, yes. The employer registers the employee and deducts the contribution from salary. HR should confirm registration before the first pay run.

Who pays the Pillar 1 contribution?

Employee and employer share it equally. The employer deducts the employee's half from gross salary and pays the total to the compensation fund. The rates are set out under Pillar 1 above.

What is the AHV/AVS?

It is the old-age and survivors' insurance, the main part of Pillar 1. The same pillar also includes disability insurance and loss-of-earnings compensation. Terms differ by language: AHV in German, AVS in French.

What is the BVG/LPP?

It is the federal law on occupational pensions, and the term also names Pillar 2. The employer must affiliate eligible employees to a pension fund, which manages their retirement capital.

Is Pillar 2 compulsory for every employee?

No. It applies above an entry threshold set annually. For 2026 that threshold is CHF 23,040 per year, as published by the FSIO. Below it, affiliation is not required.

Can the employee choose the pension fund?

Usually not. The employer affiliates employees to its own fund or plan. Some employers offer plan options within the fund. Ask for the regulations.

What does the employer pay into Pillar 2?

It depends on the fund regulations. The law sets minimum rules, and many employers offer more. Request the plan summary from your fund rather than relying on a general figure.

Is Pillar 3 mandatory?

No. It is voluntary. Pillar 3a is a bound form with tax advantages, and Pillar 3b is free saving. Neither is an employer obligation.

Can a transferee open a Pillar 3a account?

Access generally depends on gainful employment in Switzerland and on the provider's conditions. A bank or insurer confirms eligibility. Treat it as a personal matter.

Do contributions differ for EU/EFTA and non-EU/EFTA nationals?

The admission regimes differ, as the SEM explains, but the contribution logic once employed in Switzerland is the same. Coordination with the home country is where nationality matters.

Will home-country pension years count in Switzerland?

Sometimes. EU/EFTA coordination rules and some bilateral agreements allow periods to be considered across systems. The outcome depends on the countries involved. A specialist should review it.

Can an employee avoid double contributions?

In some assignment situations, yes, if a certificate keeps the employee in the home system. This depends on the countries, the length and the nature of the assignment. Ask early, before the first payroll.

What happens to Pillar 2 capital when the employee leaves Switzerland?

It depends on the destination and the type of capital. Rules differ for those moving to EU/EFTA states and elsewhere. Request a written explanation from the fund before the departure date.

Can the employee get the pension capital paid out?

Only in defined situations, and the conditions depend on the type of capital and on the destination. Do not promise a payout. The fund and the authorities set the rules.

Does a short assignment avoid Swiss social security?

Not automatically. Short stays may still trigger registration. Exemptions depend on home-country coverage and the assignment. Check before departure.

Is health insurance part of the three pillars?

No. Health insurance is a separate compulsory scheme. Anyone domiciled in Switzerland must take out basic cover within three months of taking up residence, per the Federal Office of Public Health. See Is Swiss health insurance mandatory?.

Who registers the employee with the state pension?

The employer, usually through payroll. The employee does not register separately. Ask your provider to confirm the registration after the first pay run.

Does the employee need to report to the municipality first?

Municipal registration is a separate step, due within 14 days of arrival, though local rules vary. It is not a pension step, but it belongs in the same arrival timetable.

Who gives advice on tax and pension for a transferee?

The employer should not give personalised tax or pension advice. A qualified specialist examines the individual case. Use the request at the bottom of the page to be put in touch.

Does the employer need to explain the three pillars to the employee?

It is good practice. A clear written summary at offer stage avoids surprises on the first payslip. Include what is compulsory, what is optional and who to contact.

Where can I find the official rules?

Start with the FSIO and the AHV/IV information centre. Your pension fund holds the Pillar 2 regulations. Related reading: relocation support request.

Sources

• Federal Social Insurance Office (FSIO), AHV/IV information centre
• Federal Social Insurance Office (FSIO)
• State Secretariat for Migration (SEM), admission of workers from non-EU/EFTA states
• ch.ch, the Swiss authorities' public portal
• Federal Office of Public Health (FOPH), compulsory health insurance