What is the insured salary in the 2nd pillar and what is the BVG minimum and maximum? We show you the facts about the insured salary in the 2nd pillar of Switzerland.
Contents
What is the insured salary in the 2nd pillar?
In the second pillar, you save money for old age with pension fund contributions. The insured salary is taken into account when calculating these contributions to the pension fund .
There are upper and lower limits for the insured salary. These limits are regulated by law (BVG). A distinction is made between
- the BVG compulsory scheme
- the BVG extra-mandatory scheme
- 1e plans
BVG minimum: What is the minimum income for contributions to the 2nd pillar?
In 2024, the minimum income for joining a pension fund will be CHF 22,050. Once this threshold is reached, at least CHF 3,675 will be insured under the BVG.
The BVG minimum will increase to CHF 22,680 in 2025. This applies if you receive this minimum wage from a single employer.
Good to know: The minimum income for the pension fund is just another term for the BVG minimum.
How can I calculate the insured salary for the BVG mandatory scheme?
Salaries from CHF 22,050 up to a maximum of CHF 88,200 are insured under the BVG mandatory scheme. To calculate the insured salary in the BVG mandatory scheme, you must deduct the coordination deduction from your gross salary. The result is your insured salary in the pension fund, also known by law as the coordinated salary.
However, there is an exception to this calculation method. Namely, if the difference is lower than the minimum insured salary. In this case, the insured salary is rounded up to this minimum amount. Currently, the minimum insured salary in the pension fund is CHF 3,675.
- Salaries up to 22,050: insured salary of 0 francs
- Salaries from 22,050 to 29,400 francs: insured salary of 3,675 francs
- Salaries from CHF 29,400 to CHF 88,200: insured salary = gross salary less coordination deduction
- Salaries over CHF 88,200: BVG maximum of CHF 88,200 less coordination deduction = insured salary of CHF 62,475
Why is the coordination deduction necessary?
The coordination deduction serves to equalise the portion of income that is already covered by the AHV/IV (1st pillar). In concrete terms, this means that only salaries that exceed 7/8 of the maximum annual AHV retirement pension are insured in the second pillar.
Good to know: Pension funds are free to waive the coordination deduction. However, the pension plans must remain appropriate and may not exceed the upper limits for the mandatory and extra-mandatory pension plans.
All BVG limits at a glance
The BVG limits are different for the mandatory and extra-mandatory schemes. We have prepared the BVG limits for you in a table below.
Limit amounts for the BVG mandatory scheme
Of particular importance here are the BVG minimum and the BVG maximum, i.e. the lower and upper limits for the BVG mandatory pension. The BVG maximum is three times the maximum annual AHV retirement pension. For salary components above this, the limits for the BVG extra-mandatory scheme apply.
| (annual wages) | 2024 | 2025 |
| BVG minimum | CHF 22,050 | CHF 22,680 |
| Coordination deduction | CHF 25,725 | CHF 26,460 |
| BVG maximum | CHF 88,200 | CHF 90,720 |
| Minimum coordinated wage | CHF 3,675 | CHF 3,780 |
| Maximum coordinated wage | CHF 62,475 | CHF 64,260 |
Limit amounts for the BVG extra-mandatory scheme
If salary components in excess of CHF 88,200 are insured by the pension fund, this is referred to as extra-mandatory insurance. In contrast to the mandatory scheme, the legislator does not stipulate any requirements regarding the amount of contributions, interest and conversion rate for the extra-mandatory scheme. The maximum insurable salary is ten times the upper BVG mandatory limit.
| (annual wages) | from | until |
| 2024 | CHF 88,200 | CHF 882,000 |
| 2025 | CHF 90,720 | CHF 907,200 |
Limit amounts for 1e solutions
For salary components above CHF 132,300, there are so-called 1e plans. With 1e plans, the insured person chooses the investment strategy for their pension assets themselves – this is not possible with other pension plans.
| (annual wages) | from | until |
| 2024 | CHF 132,300 | CHF 882,000 |
| 2025 | CHF 136,080 | CHF 907,200 |
BVG: Golden rule explained
The golden rule of the pension fund is designed to ensure that your retirement assets will later provide an adequate pension. The golden rule imposes the following condition: The interest on your pension fund assets should grow at the same rate as your salary over the course of your working life.
If the golden rule is adhered to, your retirement assets in the pension fund will reach a pension of around 34 % of your last coordinated salary (at a conversion rate of 6.8 %). Together with the AHV (1st pillar), this should cover around 60 % of your last salary – the goal of retirement provision.
Excel with the calculation of the golden ruleToday, the golden rule no longer corresponds to reality: interest rates are often lower than salary growth, employment biographies are more irregular and people are living longer, meaning that the capital saved must last for more years.
This makes it all the more important to actively organize your pension provision. Pillar 3a and investing in particular allow you to build up assets independently of the 1st and 2nd pillars. At finpension, we offer good solutions for both. See for yourself.
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