The abbreviation BVG (Occupational Pensions Act) has often come to your attention – but do you know what it really means? Swiss Life answers the key questions on the topic.
What does BVG mean in Switzerland?
In general, the term BVG is used for occupational provisions, i.e. the second pillar of the social security system in Switzerland. The abbreviation BVG stands for "Federal Law on Occupational Retirement, Survivors' and Disability Pension Plans". It governs the minimum requirements for occupational provisions with a pension fund.
Since when has the BVG been in existence?
The Federal Law on Occupational Retirement, Survivors' and Disability Pension Plans came into force on 1 January 1985.
What are occupational provisions for?
Occupational provisions provide cover for both insured persons and their dependants and help them lead a self-determined life. In the event of old age, disability or death, the 2nd pillar is to enable maintenance of the accustomed standard of living in an appropriate manner. The goal is for the 1st and 2nd pillars to cover pension income of around 60% of the last salary.
When are occupational provisions mandatory?
Anyone who meets the following conditions is subject to mandatory insurance:
- you are subject to AHV contributions, i.e. you are already insured under the 1st pillar.
- You are at least 17 years of age and are not yet at the statutory retirement age (insurance for disability and death is valid from 1 January following your 17th birthday. From 1 January following your 24th birthday you are also insured for retirement benefits.)
- Your annual salary is over CHF 21 510 (as of 2021).
Who is not insured for mandatory occupational benefits?
- The self-employed
- Employees with a fixed-term contract of employment (max. 3 months)
- Family members working at their own farm
- Persons who are at least 70% disabled (as defined by the IV)
Can I insure myself voluntarily through the 2nd pillar?
Yes. If you work part-time and earn less than CHF 21 510 (as of 2021), you can take out voluntary insurance with the Foundation for the BVG Contingency Fund.
If you are self-employed, take out insurance with your professional association or with the employee benefits institution of your employees. However, in case of doubt you may always contact the Foundation for the BVG Contingency Fund.
BVG payout: when will my pension be paid out?
Insured persons can withdraw their pension fund assets in various ways: as a monthly pension, as a one-off lump-sum payment or as a combination of the two. This will happen as soon as you reach the statutory retirement age.
Do you prefer a monthly pension or a one-off lump-sum payment? Our guide provides an answer: "Pension or lump sum – eight tips for making the decision easier".
How much is the BVG offset?
The amount of your BVG contribution depends on your salary, age and pension plan.
If you are between 25 and 34 years of age, the pension fund contribution amounts to only 7% of your insured salary. If you are between 55 and 64 years of age, 18% is due. Your employer pays at least half of this amount. It also decides which pension fund you are insured with. For example, companies such as Franz Carl Weber, Globetrotter and Strellson are Swiss Life's BVG clients.
Is it possible to make an early withdrawal of pension fund assets?
Yes, but only under certain conditions:
- You purchase owner-occupied property
- You take up self-employment
- You emigrate
- You opt for early retirement
Do you have any other questions about future provisions?
Make an appointment now – our experts will be happy to provide you with personal advice with no obligation involved. We would also be happy to advise you by video instead of in the General Agency or at your home.