Three lines on every Swiss payslip. Most employees accept them without asking what they fund — or what they're entitled to receive in return. AHV/IV/EO, ALV, and BVG together consume roughly 13.4% of gross salary from the employee's side, with the employer contributing a matching amount. On a CHF 120'000 salary, that's around CHF 16'000 annually entering three different systems. Knowing what each buys, and what happens to those contributions if you eventually leave Switzerland, belongs to the category of things worth understanding before they become relevant.
AHV/IV/EO — The First Pillar in Practice
AHV — old-age and survivors' insurance — is the foundation of the Swiss pension system. It runs alongside IV (disability) and EO (earnings compensation for military service, maternity, and paternity leave). Employee contribution: 5.3% of gross salary, no ceiling. Employer match: 5.3%.
Retirement pensions begin at 65 for both genders, following the AHV 21 reform effective 2025. The maximum monthly AHV pension for a single person in 2026: CHF 2'520. That's the floor — intentionally insufficient on its own. The system was designed as a foundation, with the second and third pillars expected to build disposable retirement income above it.
For expatriates: AHV contribution years accumulate regardless of nationality. Every year of Swiss employment counts. Switzerland has totalization agreements with the EU, the US, Canada, Australia, and many others — contribution periods abroad combine with Swiss periods for eligibility thresholds. If you've worked across multiple countries, a combined view of your pension entitlements is worth building early.
ALV — What Unemployment Insurance Actually Pays
ALV (Arbeitslosenversicherung) deduction: 1.1% employee, 1.1% employer. A solidarity surcharge of 0.5% each side applies above an annual salary ceiling of CHF 148'200.
Benefits: 70–80% of average insured salary for up to 520 days, depending on age and contribution history. Full benefit entitlement requires 12 months of ALV contributions within the preceding two years. For recently arrived professionals, this timeline matters from day one — arriving and becoming unemployed within the first few months may not trigger full benefits if the threshold hasn't been reached.
Variable pay, bonuses, and regular commission are generally included in the insured salary calculation. Professionals with significant variable compensation components should verify with their employer how insured salary is defined in their specific contract — the number that determines ALV benefits may differ from the gross figure on the offer letter.
BVG/LPP — Your Pension Fund, Explained
The BVG — Berufliche Vorsorge, or LPP in French — is the occupational pension, the second pillar. Unlike AHV, which is a national pay-as-you-go scheme, BVG is fully funded and individually attributed. Your employer's Pensionskasse accumulates personal retirement capital on your behalf throughout your working years.
Minimum statutory employee BVG contribution in 2026: approximately 7% of the "coordinated salary" — the band between the coordination deduction (CHF 26'460) and the upper insured limit (CHF 89'040). Above the statutory ceiling, many employers operate enhanced "wrap" or "envelope" plans covering higher salary bands, often with employer contributions of 8–15%.
Three components make up the BVG contribution: the savings credit (retirement capital), the risk premium (disability and death benefits for your family), and Pensionskasse administrative costs. That third element is easy to overlook. A fund with high administrative fees meaningfully erodes long-term retirement capital compared to a lean fund with equivalent nominal contributions. If your employer offers a choice of pension plan, the fee structure is part of the total compensation comparison.
Leaving Switzerland permanently? Vested BVG benefits (Freizügigkeitsleistung) transfer to a vested benefits account at a Swiss bank, held until retirement age or permanent EU/EEA departure. Leaving to a non-EU country typically allows full withdrawal, subject to withholding tax at source. The tax rate on that withdrawal varies by the canton where the vested benefits account is held — a minor but real optimization when choosing where to park the capital.