Key points
Switzerland's three-pillar system is meant to secure a basic income in case of disability or death. Whether it maintains your standard of living depends heavily on your situation: salary level, type of employment, marital status, children and mortgage. If you are insured only at the statutory minimum in occupational pensions, your risk is considerably higher.
- As a rough guide: if benefits from the first, second and third pillars together fall below about 80 to 90 percent of your previous net income, a closer look is worthwhile.
- Particularly exposed are self-employed people without a pension fund, higher earners insured only at the BVG minimum and unmarried couples.
- The pension fund's annual certificate is the most important starting point for the analysis.
Where gaps typically arise
Pension gaps are rarely a single hole. Usually several effects add up, depending on whether an event is caused by illness or accident and on who is affected.
| Situation | What basic cover provides | Typical gap |
|---|---|---|
| Long illness | Continued salary payment; daily sickness benefit only if insured | No legal obligation for daily sickness insurance, gap until the IV decision |
| Disability | IV pension and disability pension from the pension fund | At the BVG minimum only part of the salary is insured |
| Death, married | Survivors' pensions from AHV and the pension fund | Running costs, mortgage and children's education often not covered |
| Death, unmarried couple | No AHV survivor's pension for the partner | Pension fund benefit only if the regulations provide for it and conditions are met |
| Self-employment | AHV and IV; occupational pension only voluntary | Without joining a pension scheme the second pillar is almost entirely missing |
Rules are changing
AHV survivors' pensions, especially for widows and widowers, are subject to political reform. Check the current status with your AHV compensation office or a specialist before basing decisions on them.
Reading your pension certificate
The annual pension certificate looks confusing at first. For a risk check, however, a few items are enough. Note them down and compare them with your budget.
- Insured salary: how much of your salary is insured at all? The coordination deduction can push the insured salary well below your AHV salary.
- Disability pension: the annual pension in case of full incapacity for work.
- Spouse's or partner's pension: amount and conditions.
- Orphan's or child's pension per child.
- Lump sum on death: whether and how much capital is paid in addition to pensions.
- Waiting period and contribution waiver: when benefits start and whether contributions are covered in case of disability.
If an item is missing or unclear, ask the pension fund. The regulations are binding, not the summary on the certificate.
Calculating the gap in four steps
- Define the need: what net income does the household require to cover housing, running costs, children and taxes?
- Add up benefits: AHV disability or survivors' pensions (the compensation office provides an estimate on request), pension fund benefits, existing private insurance.
- Separate scenarios: calculate illness and accident separately, because accident insurance pays different benefits for employees.
- Assess the difference: how large is the annual gap and how long does it last, for example until the children are independent or the mortgage is paid down?
An example: a couple with two young children and their own home lives mainly on one partner's income. If that partner dies, survivors' pensions are paid, but usually well below the previous salary. If the mortgage can no longer be carried, the house may have to be sold. A lump sum on death covering part of the mortgage can ease this situation.
Ways to close the gap
- Pension fund: employers can offer extra-mandatory or management plans that insure higher salaries and better risk benefits.
- Self-employed: voluntary membership of an occupational pension scheme, for instance via a professional association's pension institution or the substitute occupational benefit institution. The Swiss managers' association SKV says it offers such a solution even without own staff.
- Private risk insurance in pillar 3a or 3b: disability income, lump sum on death, orphan's pension.
- Daily sickness benefit: check it if you are self-employed or an employee without a collective policy.
- Unmarried couples: register the partner as beneficiary with the pension fund, and arrange mutual cover through risk insurance and a will.
Answer health questions truthfully
Private risk insurance requires a health assessment. Signing up while healthy gets you better terms. False or incomplete answers can mean the insurer does not pay when it matters. If unsure, seek advice from an independent specialist.