The purpose of the Swiss pension system with its three pillars is to ensure financial security for people in Switzerland in their old age, in the event of disability and in death cases.

As mentioned, Switzerland’s pension system consists of three pillars: state, occupational and private pension provision. Whilst pillars 1 and 2 are mandatory, pillar 3 is optional.

The purpose of pillar 1 – old-age, survivors’ and disability insurance, or AHV – is to secure livelihood.
Pillar 2 – occupational benefits insurance, or BVG – is intended to maintain the accustomed standard of living in old age.
Pillar 3, which is voluntary, enables you to build up private pension provision so that you can be secure in old age, but it also allows you to save on taxes and insure risks such as death cases and occupational disability. For these reasons, even though it is not mandatory, it is common use in Switzerland to adopt pillar 3.

Following a visual representation of the Swiss pension system: