The BVG reform — officially the revision of the Federal Act on Occupational Retirement, Survivors' and Disability Pension Plans — is the most significant change to Switzerland's pension architecture since the original law came into force in 1985. After years of parliamentary debate and a failed referendum in 2024, a revised version passed and entered force in 2025. If you have a Swiss employment contract, it affects how much ends up in your pension account and, indirectly, your net take-home pay.
The core issue the reform addresses: the old BVG structure systematically disadvantaged part-time workers, low-income earners, and people with multiple employers — a group disproportionately composed of women. The changes are structural, not cosmetic.
The Coordination Deduction: The Change That Affects Everyone
Under the old system, a flat coordination deduction of CHF 25'725 was subtracted from gross salary before BVG contributions were calculated. This meant someone earning CHF 40'000 per year only had CHF 14'275 of insured salary — a disproportionately small pension base. For part-time workers earning less than the coordination threshold, BVG coverage was often zero.
The reform replaces the fixed deduction with a percentage-based model: the coordination deduction is now set at 20% of gross salary, capped at CHF 12'548. For a full-time employee earning CHF 120'000, the insured salary rises modestly. For a part-time worker earning CHF 36'000, the insured salary more than doubles — from CHF 10'275 to CHF 28'800. Their BVG contributions increase accordingly, reducing net pay slightly but building a dramatically larger pension base.
For high earners above CHF 62'475 (the upper BVG threshold, unchanged), the reform has limited direct impact on pension contributions. The insured salary calculation still caps at this level. But the downstream effects — employer contribution matching, risk coverage for disability and death — shift across the workforce.
Conversion Rate: The Most Contested Number in Swiss Finance
The conversion rate is the percentage applied to your accumulated pension capital to calculate your annual retirement pension. The old mandatory minimum was 6.8%. Given current life expectancy and investment return assumptions, this rate was financially unsustainable — pension funds have been cross-subsidising mandatory pensions from higher-yield discretionary portfolios for over a decade.
The reform reduces the mandatory minimum conversion rate to 6.0% for the coordinated portion of the salary. For someone retiring with CHF 400'000 in BVG capital, this means an annual pension of CHF 24'000 instead of CHF 27'200 — a reduction of CHF 3'200 per year. The reform attempts to offset this via higher contribution rates during the accumulation phase and a transitional supplement for those close to retirement.
The practical implication: if you are more than 15 years from retirement, higher contributions now should roughly offset the lower conversion rate at exit. If you are within 10 years of retirement, the math is tighter and warrants professional review. In either case, voluntary BVG buy-ins — where permitted — become more attractive in the years immediately before retirement.
What This Means for Your Payslip in 2026
For most full-time employees in the upper-income brackets, BVG contributions in 2026 will be broadly similar to 2024 levels, possibly slightly higher depending on your Pensionskasse's specific plan rules. The coordination deduction change primarily benefits the lower-income and part-time segments.
Employers are required to match employee BVG contributions at a minimum. As employee contributions rise for lower-income workers under the new coordination model, employer costs rise proportionally. Some employers — particularly those with large part-time workforces — will see meaningful increases in total payroll costs in 2026, with potential knock-on effects for salary negotiations in affected sectors.
The reform also introduces a supplement mechanism funded collectively: a levy on all insured salaries, targeted at compensating the transitional generation (those born between 1958 and 1979) who will retire under the lower conversion rate but had insufficient time to accumulate under the higher contribution structure. This levy affects all contributing employees modestly.
Action Items for Swiss Employees in 2026
First, request your Pensionskasse's updated 2026 pension statement and verify the new insured salary calculation matches the reformed BVG rules. Errors in transition years are not uncommon. Second, if you are within 15 years of retirement, model the impact of the lower conversion rate on your projected pension and assess whether voluntary buy-ins make sense — contributions are tax-deductible in the year made, and the deduction amounts can be substantial. Third, if you hold multiple part-time positions, confirm with each employer that BVG coverage is being correctly applied under the new coordination rules. The reform was designed to close gaps here; verify it actually has in your case.