Are you planning for retirement in Switzerland or moving abroad?
The Swiss 2nd pillar is likely your largest financial asset, yet it remains one of the most misunderstood aspects of Swiss wealth management.
From tax-saving buy-ins to the complexities of withdrawing funds when moving to countries like Spain, understanding this pillar is key to securing your financial future.
Discover how to optimise your pension potential and avoid costly pitfalls.
For many expatriates, securing a pension in Switzerland for foreigners is one of the most significant wealth-building opportunities they will encounter.
Switzerland operates a world-renowned three-pillar system that serves as more than just a safety net; for the international professional, it is a sophisticated vehicle for tax optimisation and long-term wealth preservation.
Whether you are a British executive in Zurich, a US tech professional in Geneva, or an EU cross-border worker, understanding how these pillars interact with your specific residency status is the difference between a secure retirement and a significant, avoidable tax liability.
The Swiss retirement landscape is divided into three distinct “pillars.” Each serves a specific purpose, from covering basic needs to providing for a comfortable lifestyle.
The first pillar, known as AHV (German) or AVS (French), is the Swiss state pension designed to cover basic living costs. It is mandatory for everyone living or working in the country.
Minimum Contributions: You must contribute for at least one full year to be eligible. For many expatriates, “contribution gaps” are common, resulting in a partial pension rather than the full amount.
The 13th Pension Payment: Starting in December 2026, all OASI (AHV) pensioners will receive a 13th monthly payment. This increase applies to foreigners receiving their pension abroad, provided they meet the eligibility criteria.
Exporting Your Pension: One of the most vital aspects of the pension in Switzerland for foreigners is that AHV can be paid globally. You do not need to remain a resident to collect your entitlement.
If you are a national of a country that does not have a social security agreement with Switzerland (and you are not an EU/EFTA citizen), you may not receive an annuity. Instead, you can apply for a lump-sum refund of your AHV contributions when you leave Switzerland permanently.
The second pillar (BVG/LPP) is tied to your employment. If you earn above the 2026 entry threshold of CHF 22,680, participation is mandatory.
Mandatory Portion: This covers salary up to CHF 90,720. The rules for withdrawing this portion are strict, especially if moving to the EU.
Extra-Mandatory Portion: For high-earning foreigners, contributions on salary above the mandatory limit offer more flexibility. This capital can often be withdrawn as a lump sum for property purchases or when starting a business.
When discussing the pension in Switzerland for foreigners, portability is key. If you leave your employer, your funds move to a Vested Benefits Account.
The third pillar is voluntary but provides the highest tax-optimisation potential for residents.
Pillar 3a is a tax-privileged account. Contributions are deductible from your taxable income up to a yearly limit (CHF 7,258 in 2026 for those with a pension fund).
Pillar 3b includes any non-tied savings, such as life insurance or brokerage accounts. While it offers no immediate tax deduction (except in Cantons like Geneva or Fribourg), it provides total liquidity.
For a pension in Switzerland for foreigners, 3b serves as a flexible “bridge” for those who may move frequently.
Do You Need Help With Your Pension in Switzerland?
Navigating the transition from Swiss resident to international retiree requires an understanding of how your capital moves across borders.
Yes.
Foreign nationals have the same fundamental rights to their contributions as Swiss citizens. Your entitlement is determined by contributions made, years worked, and employment status.
Citizenship is not a deciding factor; however, bilateral agreements are. Switzerland has social security treaties with over 50 countries (including the EU, UK, and USA) that ensure your years worked in Switzerland count toward your total pension record globally.
Leaving Switzerland does not mean forfeiting your savings, but the method of access changes significantly.
Your AHV (1st Pillar) record remains in Switzerland to be claimed at age 65. For the 2nd Pillar, if moving to a non-EU/EFTA country (like the USA or post-Brexit UK), you can typically withdraw the full lump sum. If moving to the EU, the “mandatory” portion usually stays in a Vested Benefits Account until retirement.
Pillar 3a assets can generally be withdrawn in full upon leaving permanently.
Swiss pensions are commonly paid to retirees worldwide via international bank transfer. To ensure you aren’t taxed twice, Switzerland utilises Double Taxation Agreements (DTA) with most major nations.
A critical wealth-preservation tactic is the “Source Tax” Strategy: by moving your 2nd pillar funds to a Vested Benefits Foundation in a low-tax Canton like Schwyz before you leave, you can reduce the withdrawal tax by 50% or more.
An example can be if moving from Switzerland to Spain. You can find out more here.
Expatriates must prioritise portability (knowing exactly what can be taken in cash) and contribution gaps. High-earners should consider “Buy-ins” to the 2nd pillar to fill gaps and reduce current Swiss income tax.
Most importantly, ensure tax-efficiency by coordinating your withdrawal with your new country’s laws to avoid “Pension Traps” where your Swiss capital is taxed as high-rate local income.
For Americans, Pillar 3a is often viewed by the IRS as a Passive Foreign Investment Company (PFIC). This can lead to punitive taxation. We assist US clients in focusing on 2nd Pillar “Buy-ins,” which are generally more tax-efficient under the US-Swiss tax treaty.
Post-Brexit, the UK and Switzerland have a specific social security coordination agreement. This ensures that your Swiss contribution years are recognised when calculating your UK State Pension, and vice versa.
If you move to an EU/EFTA country, you cannot withdraw the mandatory portion of your 2nd pillar in cash if you remain subject to social security in your new country. It must stay in Switzerland until retirement age.
To help you visualise the benefits and restrictions of each component, we have compiled a technical comparison of the 2026 Swiss pension landscape. This table outlines the mandatory nature, withdrawal flexibility, and the latest 2026 legislative enhancements.
Summary Table: Pension in Switzerland for Foreigners Recap
Pillar | Type | Mandatory? | 2026 Update / Key Benefit | Withdrawal at Departure |
1st (AHV) | State | Yes | 13th Payment introduced Dec 2026. | Monthly annuity at age 65. |
2nd (BVG) | Occupational | Yes (>CHF 22.6k) | Inflation adjustment (2.7%) for benefits. | Lump sum (Non-EU) or Vested Account (EU). |
3rd (3a) | Private | No | Retroactive “Catch-up” for 2025 gaps. | Full lump sum (Taxable). |
3rd (3b) | Private | No | Maximum flexibility; no annual limits. | Full liquidity at any time. |
The Client: A Senior Director at a Basel-based pharmaceutical multinational (UK National) with CHF 1.5M in 2nd Pillar (BVG) assets.
The Challenge: The “Full Income” Trap The client planned to move to Valencia in July. Under Spanish Law, there is no “tax-free lump sum” for pensions. If they had withdrawn the CHF 1.5M while a Spanish tax resident, Spain would have treated the entire sum as General Income, taxing it at progressive rates of up to 47% (or even 50% in some regions). This would have resulted in a tax bill of roughly CHF 700,000.
The PCC Solution: The “Split & Stagger” Engineering We implemented a multi-layered strategy 12 months prior to their departure:
The Result: By avoiding the Spanish General Income tax and utilizing the low-tax domicile of Schwyz, the effective tax rate was reduced from 47% to under 8%. The client preserved over CHF 580,000 in capital—wealth that would have otherwise been lost to avoidable taxation.
No.
Your contributions remain yours. Depending on your destination, they are either paid out as a lump sum or held in a vested benefits account until you reach retirement age.
It is equal to one-twelfth of the total AHV pension you received during the year, effectively providing an extra month of income in December.
For high-earners, yes. Buy-ins are 100% tax-deductible. However, there is a three-year blocking period: if you make a buy-in, you cannot withdraw any capital as a lump sum for three years.
You can use your 2nd Pillar and 3a funds to purchase a primary residence, but only if it is your main home. This is a common strategy for foreigners planning their move home.
The Swiss system is robust, but for the international professional, it requires active management. Between the new 2026 3a catch-up rules and the complexities of cross-border tax treaties, “settling” for the default option is a recipe for losing wealth to the taxman.
At Private Client Consultancy Switzerland, we specialise in the nuances of the pension in Switzerland for foreigners. We ensure that your transition into, or out of, the Swiss system is a catalyst for wealth creation, not a tax burden.
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