Switzerland has a unique three-pillar pension system designed to ensure that everyone has financial security in retirement.
Your Pillar 1 is the first part of this system.
In basic terms, your Pillar 1 is the State Pension.
Pillar 1 is a mandatory State-run pension scheme in Switzerland primarily designed to provide a basic level of financial support in retirement, ensuring that everyone has enough to cover their essential living expenses.
But Pillar 1 isn’t just for retirees.
It also provides benefits for those who become disabled and for surviving dependents if the insured person passes away.
The Pillar 1 is a pay-as-you-go system, which means that current workers and their employers contribute to the scheme through social security taxes.
Specifically, employed persons contribute 4.35% of their salary directly towards their Pillar 1, and employers match this with an additional 4.35%.
The insurance element of the Pillar 1 system for disability and surviving dependents brings the total contribution to 5.30% from the employed person’s salary, and 5.30% from their employer.
The amount you receive from Pillar 1 when you retire depends on a few factors, including how many years you’ve contributed and your average income over those years.
There’s a minimum and maximum pension amount set by the government, which they can adjust to keep up with inflation and changes in the cost of living.
One important thing to note is that Pillar 1 is intended to cover only the basic necessities.
It’s not designed to fully replace your income or support a lavish lifestyle in retirement.
That’s where the other pillars of the Swiss pension system come in, such as Pillar 2, which is employer-sponsored, and Pillar 3, which is private and voluntary.
Whether you’re a Swiss citizen, a resident, or even an expatriate who has contributed to the system and moved away, Pillar 1 is there to support you in retirement.