The First Pillar (AVS, AI and APG)
Enshrined in the Constitution, the purpose of the first pillar is to ensure the minimum subsistence level for living. It is composed of Old Age and Survivors Insurance (AVS), Disability Insurance (AI), and Earnings Loss Benefit (APG). It works according to the distribution system, that is to say that everyone contributes to a common pot which is then shared between the people who benefit from it.
Everyone in Switzerland from the age of 18 contributes and is insured under the 1st pillar.
The Second Pillar (LPP and LAA)
The 2nd pillar is composed of occupational benefits (LPP) and accident insurance (LAA). The LPP is mandatory for employees starting at a fixed minimum wage, but it is optional for the self-employed.
The LPP is financed half by the employer and half by the employee and aims to reach, in retirement, with pensions from the first pillar, around 60% of the salary that the insured person had during their working life. The LPP works according to the capitalization system, which means that everyone pays for their individual benefits. In retirement, you have the choice between withdrawing the accumulated capital or converting it into a monthly pension for life.
The LAA is mandatory for employees and allows them to be covered in the event of a professional and non-professional accident. The insured person is covered for all treatment costs and also receives daily allowances that amount to 80% of his last salary.
Learn more about the 2nd pillar
The Third Pillar
Recognized as a complement to the 1st and 2nd pillars by the Federal Constitution since 1972, the 3rd pillar provides the necessary guarantees to benefit from the same standard of living during the transition to retirement. The 3rd pillar is optional, it complements the benefits from the first two pillars, which are often insufficient to guarantee a comfortable retirement and to cover financial needs in the event of death or disability.
The 3rd pillar aims to improve retirement and protect those around the insured with a secure and guaranteed contract. By adapting the 3rd pillar according to needs, the insured protects their loved ones in the event of disability or death. Finally, it can be an important aid in order to one day become an owner.
