The three pillars at a glance
The Swiss model was written into the Constitution in 1972. Its principle: spread retirement cover (plus death and disability risks) across three complementary sources, so you never depend on just one.
- 1st pillar (AVS/AI): compulsory state provision that secures the vital minimum.
- 2nd pillar (LPP): the occupational pension fund, compulsory for most employees, designed to maintain your usual standard of living.
- 3rd pillar: optional private provision that fills what the first two do not cover and offers tax advantages.
1st pillar: AVS/AI (state provision)
The AVS (old-age and survivors' insurance) and AI (disability insurance) form the compulsory foundation. They work on a pay-as-you-go basis: today's workers' contributions directly fund current pensions. The AVS aims to cover basic needs — not to maintain your lifestyle. Its maximum pension stays modest against an average Geneva salary, which is why the following pillars matter so much.
2nd pillar: the pension fund (LPP)
The 2nd pillar (occupational provision, LPP) is compulsory above a certain annual salary. It is funded: your employer and you build up an individual account that follows you throughout your career. Combined with the AVS, it aims to cover around 60% of your last salary. The self-employed are usually not covered, which widens their need for private provision.
3rd pillar: private provision (3a and 3b)
The 3rd pillar is optional, and that is precisely why the Confederation and cantons encourage it with tax relief. It comes in two forms:
- Pillar 3a (tied): contributions deductible from taxable income, capped (CHF 7,258/year for an employee in 2026), capital locked until retirement save for exceptions.
- Pillar 3b (free): no contribution ceiling, capital available at any time, tax deduction only in Geneva and Fribourg.
For the full picture of this choice, see our dedicated page: the difference between 3a and 3b.
The pension gap, in figures
This is the figure that changes everything. The first two pillars aim to replace around 60% of your last salary — and often less for high earners or interrupted careers.
In other words, without extra savings your income drops by about 40% the day you retire. The 3rd pillar exists precisely to fill that hole — the subject of our page on preparing for retirement.
Why the 3rd pillar makes the difference
Unlike the AVS and LPP, over which you have almost no control, the 3rd pillar is the only lever you steer: you choose the amount, the vehicle (bank or insurance), the risk level and the beneficiaries. And every franc paid into a 3a lowers your taxable income from the current year. It is therefore both a retirement tool and a means of immediate tax optimisation.
Cross-border workers and the self-employed each face an even wider pension gap. Our free simulator quantifies yours in 2 minutes.
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