Pension provision for young workers: take control of your future
16 July 2026 | Comment(s) |
Santiago Mouriz Moreno
Between first pay cheques, personal projects and travel, pension planning is rarely a priority for young workers. And yet, these are often the years that make all the difference, because the greatest luxury when it comes to retirement planning isn’t money – it’s time! In this article, we share a few tips on when and how to take control of your personal retirement planning strategy.
Many young people put off setting up a personal retirement planning strategy, thinking they have plenty of time. However, time is probably your greatest ally when it comes to saving when entering professional life. Thanks to compound interest, it allows your capital to grow exponentially over the years.
- The good news is that you don't necessarily need to start with large sums.
- The most important thing is to start early enough.
Why start planning your retirement early?
The Swiss pension system is based on three pillars. The first two – AVS/AHV and LPP/BVG – provide a safety net, but it is often the third pillar that enables you to build solid and sustainable financial freedom. This is because, these days, pensions from the first two pillars rarely exceed 60 % of your final salary.
The earlier you start taking charge of your pension planning, the more you benefit from the advantage that time brings. Setting up a third pillar at the age of 25 rather than 35 can therefore make a considerable difference when you retire.
“When it comes to retirement planning, the best decisions aren’t always the most spectacular. They are often the ones taken early enough to let time do its work. “
Pillar 3a is often the preferred pension option because it allows you to save for the future whilst making tax savings every year. Pillar 3b, on the other hand, offers greater flexibility depending on your individual plans and needs. But beyond this choice, one fact remains the same: starting as early as possible makes all the difference.
A simple example
If you invest CHF 200 per month from the age of 25 in a third pillar, with an average return of 5%, your savings could reach around CHF 305,000 by the age of 65 years. If you start at the age of 35 with the same level of saving, the capital would be around CHF 166,000.
With just CHF 24,000 in additional savings over 10 years, you generate nearly CHF 139,000 more in capital. The earlier you start saving, the more your capital can grow naturally over the years, thanks to the compounding effect of time and interest.
Taking control of your pension provision whilst you are young and in work also makes it easier to access disability or death cover, often with more favourable premiums and fewer medical restrictions.
The three key moments when private pension provision becomes a real game-changer
- First job: get a head start
Starting to set up a third pillar right from the start of your working life, – even with just CHF 100 or CHF 200 a month – already allows you to take full advantage of compound interest over the long term and to grow your retirement savings. A first stable job is often the ideal time to take the first step and establish a sustainable savings habit.
- Real estate project: preparing for more than just a purchase
The third pillar can also be a useful way to build up your own funds when buying a flat or house, or to help with the mortgage repayments for your future property project.
- Parenting or part-time work: avoiding blind spots
A reduction in working hours can create significant gaps in your pension provision. Anticipating these gaps using a third pillar helps ensure greater financial security for your future.
How much should you contribute to your third pillar as a young worker?
The most important thing is not to start “big*, but rather to set a realistic amount that you can invest over the long term. A few hundred francs a month, paid regularly, can already have a considerable impact in the long run. This year, the annual contribution limit for Pillar 3a is set at CHF 7,258 for employees and CHF 36,288 for the self-employed.
“When it comes to pension provision, consistency often counts for more than one-off efforts. “
Good to know: retroactive top-ups in Pillar 3a
Since 2026, it has also been possible, subject to certain conditions, to make retroactive contributions to your Pillar 3a. This option is capped at the amount of the “small contribution”, i.e. CHF 7,258 for 2026. This is a way for people who started their Pillar 3a later in life to gradually make up for missed contributions from previous years.
Do I take out a third pillar with a bank or with an insurance company?
- A bank-based third pillar scheme often appeals to young workers due to its simplicity and flexibility.
- An insurance-based third pillar, on the other hand, allows you to include additional cover in the event of death or disability, on top of your savings.
This freedom can be a real advantage, but it also requires a certain amount of discipline. Without a clear framework or a regular routine, it becomes easy to put off saving until the next month… then the next year, until you sometimes end up being your own worst enemy.
This is also why many people now opt for a mixed approach: keeping a flexible portion with a bank-based solution whilst securing part of their long-term retirement provision with an insurance policy.
There is therefore no one-size-fits-all solution, but rather a retirement plan that evolves in line with each person’s plans, lifestyle and priorities. And for young professionals, the key is to start early enough to let time work in your favour.
Today, careers are more flexible – and so is retirement planning
Nowadays, retirement planning is becoming just as crucial for young workers with irregular and less linear career paths: the self-employed, freelancers, part-time workers or those taking career breaks.
In these circumstances, the third pillar often plays an even more central role in gradually building and consolidating long-term financial stability.
Questions many young workers ask themselves
- Do you need to be earning a good living to start a third pillar?
Not necessarily. Starting early enough, even with modest contributions, can already have a real impact on your long-term retirement savings.
- What if I change jobs?
The third pillar is yours alone and follows you regardless of your employer. It is designed to help you build up capital for your retirement but can also be used to buy a property or set up your own business.
- Is it really worth it if I might move abroad later on?
In many cases, yes. Pension provision can remain relevant even if you have plans to move abroad or your career path is less straightforward.
- When you’re young, is it wiser to set up a third pillar with a bank or an insurance company?
Every solution is unique to each individual. A hybrid approach combining a bank and an insurance company allows you to benefit from the flexibility of a banking solution whilst safeguarding your savings against unforeseen events with an insurance policy.
