Women and pension provision: are there really gaps?
01 May 2025 | Comment(s) |
Adrien Jacquérioz
According to federal statistics, women have around 30% less retirement assets than men when they reach retirement age. What are the main causes of these contribution gaps and how can they be remedied? This blog article provides some answers.
The Swiss pension system is based on three pillars designed to guarantee financial security in retirement. However, there are significant gender disparities within the system, particularly in occupational pension provision (second pillar). Women also live longer than men on average and therefore need pension benefits for longer.
The causes of the gender pension gap in pension provision
There is a real gender pension gap between men and women in terms of pension provision and retirement savings. While the gender difference is not significant for state pensions, the gap is more pronounced in the second pillar, where women receive 44% less than men in occupational pension benefits. But how can this phenomenon be explained? The factors are mainly related to family models combined with women's activity in the labour market.
- Maternity leave and career breaks
Depending on their family role, women have different career paths from men, typically characterised by career breaks. This is mainly due to maternity leave and career breaks to look after children.
Women also tend to devote more time to activities that are not necessarily paid, often related to the family circle. This limits their pension contributions and therefore increases their pension savings gap. - Part-time work
In Switzerland, around 60% of women work part-time, whether for family or other reasons, which results in a gap in pension contributions compared to men, who mostly work full-time. - Low wages and inequality
Mainly for the reasons mentioned above, some women tend to earn relatively low wages, which puts them at a disadvantage when it comes to building up assets in the second pillar. Like part-time work, low wages are subject to the LPP/BVG entry threshold (minimum annual wage for contributions to the second pillar) and the coordination deduction (portion of the second pillar insured salary that takes into account the portion already insured under the AVS/AHV).
Women's pension gaps can also be explained by wage inequalities, which, although improving, can have an impact on women's retirement assets. On average, women in Switzerland earn 18% less than men for the same job.
How can these pension gaps be closed?
There are several ways to close, even partially, the pension contribution gaps for women:
- Start by taking control of your pension provision independently and early on. Also get involved in anticipating, planning and managing your retirement in all types of old-age pension schemes. This will enable you to anticipate future situations (family life, divorce, reduction in working hours) and take into account a higher life expectancy.
- Where possible, fill any gaps in your pension provision with voluntary contributions to the AVS/AHV (where contributions are compulsory from age 21 to 65 and gaps can only be filled for the last five years), purchases in the second pillar or payments into a third pillar.
- Take out additional cover such as life insurance in the event of death or incapacity to work due to illness or accident in order to protect yourself financially against unforeseen circumstances.
- Take the necessary measures early on in terms of family life and employment status in order to anticipate any pension gaps once you retire. It should also be noted that AVS/AHV benefits can be supplemented by educational allowances for parents who have or have had parental responsibility for a child under the age of 16. These are not cash benefits but an increase in income taken into account when calculating the AVS/AHV pension.
Divorced women and pension provision
Pension provision and retirement are even more important issues for divorced women. Since 2000, the LPP/BVG has required the pension assets accumulated during marriage to be divided between the former spouses. However, this is not necessarily sufficient to close the pension gaps of women who, for example, have worked part-time or interrupted their careers for family reasons. It is therefore important to analyse your personal situation and take the necessary steps to improve your retirement capital.
Women and pensions: the importance of the third pillar
The third pillar is an attractive pension solution for filling gaps in your contributions. It is a good idea to start investing in a third pillar early on, even with small amounts. You can choose between a pillar 3a (restricted pension plan) and a pillar 3b (flexible pension plan), which differ in terms of tax parameters and flexibility. Individual and voluntary pension provision in the form of a pillar 3a account is mainly used to save for retirement, but it also allows you to:
- save on taxes (annual contributions are deductible from taxable income)
- or even achieve a life goal (start your own business, buy property or move abroad).
Key points to remember
- In Switzerland, women have around 30% less pension assets than men when they retire.
- The main reasons for these contribution shortfalls are maternity leave and career breaks, reduced rates and low salaries.
- It is possible to make up for these gaps in pension provision by purchasing AVS/AHV contributions (only for the last five years, provided that there was an obligation to pay contributions), purchasing LPP/BVG contributions or making payments into a third pillar.
- Take control of your retirement provision early on by analysing your personal and professional situation, anticipating questions relating to retirement and seeking advice if necessary.
FAQ – Women's pension provision in Switzerland
- Why are women more exposed to pension gaps?
Career breaks, maternity leave, unpaid work and frequent use of part-time work result in lower contributions to pension schemes, particularly in the second pillar. - How does part-time work affect women's pensions?
Part-time work reduces contributions to the second pillar and may even prevent contributions from being made if the salary is below the LPP/BVG threshold. This directly leads to a reduction in pension benefits. - Is it possible to buy back AVS/AHV contribution years?
Yes, but only for the last five years and provided that you were required to make contributions at that time. - How can I fill a gap in the second pillar (LPP/BVG)?
You can make voluntary purchases from your pension fund, up to the maximum amount allowed. This allows you to increase your future pension and optimise your tax situation. - What is the best third pillar solution?
Pillar 3a (restricted) is particularly advantageous: it allows you to build up retirement savings while reducing your taxes. It is recommended that you start contributing early, even with small amounts.
