How do I calculate my old-age pension?
21 October 2025 | Comment(s) |
Lesly Kiameso
In Switzerland, pension benefits are based on a unique system: the three pillars of pension provision. This model allows everyone to gradually build up retirement capital by combining social insurance, occupational pension provision and private savings. But how can you estimate how much you will receive when you retire? Here is a clear and practical guide to help you calculate your retirement pension.
Switzerland and its three-pillar system
The Swiss pension system is based on three interconnected levels:
- First pillar (AVS/AHV): the foundation of pension contributions, compulsory for everyone.
- Second pillar (LPP/BVG): occupational pension provision, linked to paid employment.
- Third pillar: private savings, optional but strongly recommended.
First pillar – AVS/AHV
Principle and contributions
The AVS/AHV (old age and survivors' insurance) pension is a form of financial protection designed to cover basic needs in retirement. It is financed by contributions deducted from salaries from the age of 18.
Maximum and minimum amounts
In 2025, the monthly AVS/AHV pension will range from CHF 1,260 (minimum) to CHF 2,520 (maximum), depending on the number of years of contributions or average income.
Key factors affecting final amounts
- Contribution period: 44 years for a full pension.
- Average income: calculated over the entire career.
- Marital status: in the event of divorce, AVS/AHV contributions paid during the marriage are divided equally between the former spouses upon separation. Married couples receive an AVS/AHV pension capped at 150% of the maximum individual pension.
- Bonus periods: remuneration for educational tasks (parents who have raised their children) or assistance to relatives.
Second pillar – LPP/BVG
Contributions
LPP/BVG contributions are shared between the employer and the employee, generally on an equal basis. Employees contribute from the age of 25 and the contribution amounts increase according to age group (35, 45 and 55). The threshold for access to occupational pension provision, i.e. the minimum annual salary for contributions, is CHF 22,680.
Conversion rate
This rate, which is a minimum of 6.8%, determines the amount of the annual pension based on the accumulated capital (with pension capital of CHF 100,000, the annual pension would be CHF 6,800, for example). It should be noted that assets in the second pillar can be withdrawn upon retirement in the form of a pension, capital or a combination of both.
Insured salary
The insured salary under the LPP/BVG, known as the "coordinated salary", represents the gross annual salary minus the coordination deduction set by law (CHF 26,460 for 2025) and avoids double coverage with the AVS/AHV, which already insures part of the income. Therefore, only the portion of the salary not covered by the AVS/AHV is taken into account for occupational pension purposes. The higher the salary, the greater the accumulated capital.
Third pillar – individual pension provision
Private and voluntary pension provision allows individuals to save money for retirement or other life projects (such as buying a home or starting a business) and thus fill the gaps left by the first and second pillars.
The tax advantages of pillar 3a
Pillar 3a (tied pension savings) is a sensible tool for those who want to save wisely. Every Swiss franc you put into it can be deducted from your taxable income, allowing you to save on tax while building up capital for your retirement. In 2025, you can pay in up to CHF 7,258 if you are an employee affiliated to a pension fund and up to CHF 36,288 if you are not affiliated.
When you withdraw your savings, pillar 3a assets are taxed separately from other income at a preferential rate. By planning a staggered withdrawal, you can further optimise your tax situation and make the most of your savings.
The flexibility of pillar 3b
This pillar, known as "untied pension provision", can only be taken out with an insurance company. It offers direct tax advantages in certain cantons (Geneva and Fribourg) and greater flexibility in the management of pension assets. In addition, a 3b contract also allows for personalised estate planning, giving you the freedom to designate the persons of your choice as beneficiaries, according to your wishes.
Supplementary income
The third pillar is a smart solution that compensates for the shortcomings of the first two pillars, particularly in the event of a career break, part-time work or early retirement.
How to simulate and calculate your total pension
Online simulators or your pension advisor allow you to estimate the pension you will receive once you retire by combining your AVS/AHV, LPP/BVG and third pillar benefits. Below you will find some guidelines and factors to consider when calculating your retirement pension, as well as examples with figures for different life situations. To obtain a realistic estimate, you need to add up:
- The AVS/AHV pension
- The LPP/BVG pension
- Income from the third pillar, which, when taken out early, can significantly improve your retirement benefits.
Some examples
Lucas: 30 years old, young professional at the start of his career, full-time employee with an annual income of CHF 55,000, has been contributing to the AVS/AHV for 10 years and to the second pillar for five years, and has no third pillar yet. Here is a projection at age 65 (without career interruption):
| Estimated AVS/AHV | CHF 1,900/month |
|---|---|
| Estimated LPP/BVG | CHF 1,300/month |
| Third pillar | Estimated capital of CHF 0 (at this stage) |
| Estimated total | CHF 3,200/month |
→ Advice: Lucas could take out a pillar 3a contract to improve his future retirement benefits and enjoy tax advantages. Ideally, you should start contributing to third pillar early on in order to optimise your retirement situation.
Claire: 45 years old, mother working part-time (60%) with an annual income of CHF 38,000, career breaks to raise her children, contributes to the AVS/AHV and second pillar, has opened a pillar 3a. Here is a projection at age 65:
| Estimated AVS/AHV | CHF 1,600/month |
| Estimated LPP/BVG | CHF 900/month |
| Third pillar | Estimated capital of CHF 120,000, which could supplement his income by CHF 400/month for 25 years |
| Estimated total | CHF 2,900/month |
→ Advice: Educational bonus allowances could increase Claire's AVS/AHV pension. She could also increase her contributions to the third pillar or make additional payments into her second pillar for greater financial security.
Marc : 58 years old, self-employed for 20 years with an average annual income of CHF 80,000, contributes to the AVS/AHV and pillar 3a, has no second pillar. Here is a projection at age 65:
| Estimated AVS/AHV | CHF 2,300/month |
| Estimated LPP/BVG | CHF 0 (not affiliated) |
| Third pillar | Estimated capital of CHF 180,000, which could supplement his income by CHF 1,000/month for 15 years |
| Estimated total | CHF 3,300/month |
→ Advice: Marc could consider a voluntary occupational pension scheme to supplement his pension.
Fatima : 62 years old, employed in public administration with an annual income of CHF 90,000, continuous career, has been contributing to the three pillars for 40 years. Here is a projection at age 65:
| Estimated AVS/AHV | CHF 2,520/month (maximum pension) |
| Estimated LPP/BVG | CHF 2,000/month |
| Third pillar | Estimated capital of CHF 150,000, which could supplement her income by CHF 625/month for 20 years. |
| Estimated total | CHF 5,145/month |
→ Fatima receives a full pension thanks to an uninterrupted career and a regular savings strategy.
The consequences of early retirement
It is important to note that in Switzerland, each year of early retirement results in a reduction in the amount of the AVS/AHV pension (6.8%) and LPP/BVG pension (lower accumulated capital and potentially less favourable conversion rate). Even in the case of early retirement, it is mandatory to continue contributing to the AVS/AHV until the reference age. Furthermore, it is no longer possible to make tax-effective payments into pillar 3a without AVS/AHV income. To overcome these difficulties, however, it is possible to:
- Save more via the third pillar before retirement
- Make purchases into your pension fund to make up for the shortfall and reduce the impact of the reduction in the conversion rate
- Delay retirement partially, in a gradual manner
- Optimise contributions at the end of your career
Groupe Mutuel, your pension partner
As a well-established player in the field of private and occupational pensions, Groupe Mutuel offers a wide range of products tailored to all profiles and life situations. Whether you are looking for simple savings solutions, life insurance in the form of pillar 3a or LPP/BVG cover for the self-employed, take the lead in terms of pension and financial protection and ensure a comfortable and more secure situation once you reach retirement age.
Our pension advisors are here to help you!
Calculate and estimate your pension benefits
- How is the AVS/AHV pension calculated?
The AVS/AHV pension is generally calculated based on the number of years of contributions, average income and personal circumstances (marriage, divorce, single status).
- What is the role of the second pillar?
The second pillar (LPP/BVG) represents occupational pension provision and supplements the AVS/AHV thanks to the capital accumulated through contributions from employment.
- What is the impact of early retirement?
Early retirement reduces the AVS/AHV pension by approximately 6.8% per year and the LPP/BVG coverage by between 0.15 and 0.25 percentage points per year of early retirement.
- How can you calculate the pension you will have once you retire?
To estimate your old-age pension, you need to add up your assets from the first, second and third pillars at retirement age.
