Occupational benefits (LPP)
Occupational pension, also called LPP, is the 2nd pillar of pension provision in Switzerland. Its purpose, under the Constitution, is to supplement AHV/AI benefits in order to enable retired persons, survivors and disabled persons to maintain their standard of living appropriately.
By accumulating the first two pillars, insured persons should be in a position to maintain their previous standard of living, with the aim of reaching around 60% of the last salary.
For employers
Anyone who employs people who must be insured under the 2nd pillar must contribute at least half to the financing of occupational pension contributions.
For employees
All employees subject to AHV and receiving an annual salary of more than CHF 22,680.- CHF must be insured.
The obligation to take out insurance begins at the same time as the first contributions of work and, at the earliest, as early as the 17th year. Initially, the contributions only cover the risks of death and disability and from the age of 25, the insured person also contributes as an old-age pension.
Except for:
- Persons with a fixed-term employment contract of a maximum of three months.
- Persons employed on an ancillary basis (when they are already compulsorily insured for a main dependent or self-employed gainful activity)
- People who, in the sense of AI, are considered disabled for at least 70%.
For the self-employed
Self-employed persons are not obliged to insure themselves at the LPP; they can do so on an optional basis. It is also possible to withdraw capital from a 2nd pillar if a person goes under the status of self-employed.
Financing the 2nd pillar
Occupational pension provision is based on individual savings, so it is a process of saving in a personal account throughout the years of contribution. The accumulated assets in the account are ultimately used to finance the old-age pension received at retirement age. Upon retirement, the insured person can receive the capital accumulated in the form of an annuity or in the form of capital
Remove your 2nd pillar
It is possible to withdraw your 2nd pillar before retirement age subject to certain conditions:
- If the purpose of the withdrawal is to finance a primary residence
- In case of permanent departure abroad, except if it is from an EU/EFTA country
- When starting an independent lucrative activity.
- Up to 5 years before retirement age
- If you become 100% disabled
