The first "pillar", simply put, constitutes the basic state pension insurance and is based on the "Old Age and Survivors' Insurance Act" ("AHV"). The fund of the "first pillar" is formed from solidarity contributions from both the insured and the state.
As noted in a publication by the portal Swissinfo.ch, living solely on this pension in Switzerland is practically impossible. If contributions to the "first pillar" are made over the maximum possible period (44 years for women, 45 years for men), the minimum pension payment can be 1,200 francs per month, which is very little for Switzerland.
The second "pillar" of the pension system consists of contributions from both the insured as an employee and the employer. This procedure is regulated by the "Federal Act on Occupational Retirement, Survivors' and Disability Pension Plans" ("Bundesgesetz über die berufliche Alters-, Hinterlassenen,- und Invalidenvorsorge"). Contributions under this scheme are paid by almost all employees, while self-employed persons can do so voluntarily.
The main goal of the second "pillar" is to ensure that people retiring, in combination with the "first pillar", maintain their accustomed standard of living, at a minimum of about 60% of their last salary, and a maximum of up to 80%. The pension under the "second pillar" is calculated based on a "conversion rate".
For example, having accumulated 500,000 francs in one's pension account, a person can receive 2,800 francs per month. This, let's not forget, is in addition to payments from the "first pillar". This results in an approximate pension of 4,000 francs. This amount is at the level of the actually applicable minimum wage in Switzerland, which by local standards is still quite modest.
The third "pillar" of the Swiss pension system is voluntary. Investing in one's pension under this "pillar" can be done based on countless options offered to their clients by the country's leading banks. This is precisely the system of independent care for one's own pension.
In Switzerland, the voluntary insurance system is actively used because—and this is very important to note—it entails significant tax benefits. These contributions are deducted from the taxable base, making such investments very advantageous. Theoretically, using all three "pillars", one can earn a pension of 6,000 francs per month, which is already equivalent to a good salary at a mid-level management position.
Currently, the Swiss parliament has begun discussing a long-overdue pension reform. The government proposed increasing the pension under the first pillar for all persons living and working in Switzerland by 70 francs per month. However, parliament rejected this option, instead proposing to strengthen the position of the second pillar by increasing contributions under this line, which would benefit primarily people with low incomes and those working part-time.
But for now, all parliamentarians are united only on one point, namely the need to raise the retirement age for women to 65 years and reduce the aforementioned "conversion rate" from the current 6.8% to approximately 5.3%, based on which the specific amount of pension payments to a given person is calculated. A decision on the proposed pension reform must be reached by consensus in both equal chambers of parliament by March 16 of next year. If this does not happen, the reform will fail. A referendum is not provided for in this case.