Find out what drives us and what defines our values
Meet the experts who manage your finances with passion.
Discover our current job offers or apply proactively!
Accounting
David Merz | Founding Partner
Zurich, April 16, 2025
Occupational pension funds are a critical component of financial security for employees in Switzerland. For businesses who are subject to occupational pension fund obligations, selecting the right fund is not only about fulfilling their legal requirements. It is also an important decision that can impact employee satisfaction, long-term retention, and financial planning.
In this article, we explore the various types of pension funds available to Swiss companies, the benefits and challenges of different solutions, and how businesses can better navigate the process of selecting and managing their pension schemes.
Book a free initial consultation with our experts.
Switzerland’s social security system is based on its three-pillar model, which combines state support (1st Pillar), occupational pensions (2nd Pillar), and private savings (3rd Pillar) to create a multi-layer safety net for its citizens and residents.
Occupational pensions (BVG) play a critical role in supplementing the first pillar (state pensions) and helping employees maintain their standard of living after retirement. In addition to old-age pensions, the BVG also offers benefits for disability and death for the insured person’s dependents.
BVG is mandatory for employees earning over CHF 22,680 annually (as of 2025), and optional for employees earning under this threshold and for self-employed individuals. Employers and employees share the contributions, with employers being legally obliged to contribute at least 50%.
The first pillar of state support is designed primarily to cover basic living expenses and prevent financial hardship in old age. However, it is often insufficient to maintain a comfortable standard of living. Occupational pensions play a vital role in bridging this gap by supplementing first-pillar benefits, ensuring retirees can sustain a reasonable quality of life. Together, the first and second pillars aim to provide a pension income of approximately 60% of an individual’s final salary before retirement.
Occupational pensions are therefore essential for employees, employers, and the self-employed alike, ensuring financial security and stability. For employees, they supplement state pensions, covering living expenses, healthcare, and providing disability and survivors’ benefits. Self-employed individuals benefit from a safety net that offers long-term stability and peace of mind. For employers, a strong pension plan enhances employee satisfaction, retention, and shows a commitment to employee welfare, making the company more attractive and competitive.
Companies that hire employees for whom the second pillar (occupational pension) is mandatory are required to “set up or join a pension scheme entered in the register of occupational pension schemes” (Article 11, Paragraph 1 of the BVG). Specifically, this means any employer who:
The obligation to set up or join a registered pension scheme is monitored by the AHV office, and employers failing to comply may face penalties and increased scrutiny from authorities.
Swiss companies have several options for meeting their occupational pension fund obligations. Some of the main types of pension funds available to companies include:
Each type of occupational pension has its own advantages and is suited to different company sizes and needs.
Pension funds operate on shared contributions from both employers and employees, which are invested to generate returns, and in turn provide benefits after retirement or in the case of disability or death. The structure of a pension fund influences how contributions are managed, the level of risk involved, and the potential returns.
Key elements include:
Swiss occupational pension funds typically follow one of two management models, which affect how funds are invested and who bears the investment risk:
With a fully insured pension model, the pension contributions from both the employer and employees are pooled into an insurance product. The insurance company manages the investments and guarantees all benefits, including both the retirement savings and risk-related benefits such as disability and survivors’ pensions.
Full insurance solutions offer predictability and security as the employer and employees are not exposed to any of the investment risk. However, they also come with higher costs and lower potential returns. They are best suited for SMEs seeking minimal financial risk and reduced administrative burden.
With a semi-autonomous pension model, the pension fund manages investments independently while only insuring the risk benefit portion (i.e., disability and survivors’ pensions).
This means that the employers and employees are exposed to the investment risk of the retirement capital, but can benefit from greater flexibility, lower costs, and potentially higher returns. As such, semi-autonomous solutions are generally preferred by slightly larger companies with a higher risk tolerance and with an aim to maximize investment return.
Employers choosing between these models should consider risk tolerance, cost efficiency, and long-term financial planning.
Collective foundation pension funds are occupational pension schemes that pool contributions from multiple employers. These funds are typically managed by private insurance companies, community schemes, industry groups or professional associations, allowing businesses to offer employees a cost-effective pension solution without having to establish their own fund. They are especially popular among SMEs due to their simplified administration and shared risk model.
Collective foundation pension funds provide several advantages for Swiss SMEs:
Not all pension funds in Switzerland are equal, and choosing the right one is critical for both employers and employees. Here are some key factors to take into consideration when selecting a pension fund for your company:
Companies can change pension funds at any time, but the process requires careful planning, employee involvement and consent, and compliance with legal requirements. The employer is always responsible for ensuring that the transition is conducted correctly and in line with Swiss regulations.
There is no legal limitation on how often a company can change pension fund providers, provided the contractual notice period is adhered to. However, frequent changes may involve additional administrative effort and potential costs. Furthermore, pension funds assess the composition of insured employees (e.g., age structure), which can make it harder for companies with an aging workforce to switch providers.
Changing pension funds typically takes several months, as it involves employee consultation, provider selection, and administrative processing. The employer must document all relevant terms, employee consent, and procedural steps to ensure a legally valid transition.
Yes. When changing pension funds, employees have the right to co-determination, which means they must be informed and involved throughout the process (Art. 11 para. 3 BVG). Without employee consent, the pension fund change cannot legally take place. The previous pension provider is also responsible for verifying that these requirements have been met before approving the transfer.
Nexova provides expert fiduciary solutions tailored to the needs of Swiss startups and SMEs. With our extensive experience in Swiss tax compliance and financial planning, we provide comprehensive support in selecting, managing, and transitioning occupational pension funds, enabling you to focus on your core business operations while we take care of the rest.
Beyond pension fund management, we also support your company in navigating the broader landscape of Swiss employment law and social security obligations. This includes everything from ensuring compliance with mandatory social insurance contributions to advising on employee benefits and payroll accounting. Nexova provides a truly comprehensive approach to employee financial management.
By partnering with Nexova, your company gains access to industry expertise, strategic guidance, and efficient administrative support, making pension fund management easier, more compliant, and financially sustainable.
Why wait? Contact us today for a free consultation and discover how we can simplify your company’s pension management.
Answers at a click
Employers must provide a pension fund for employees who:– Are subject to AHV (applies from 1st January of the year after they turn 17).– Earn more than CHF 22,680 per year (as of 2025).– Have an indefinite contract or a fixed-term contract longer than three months.Self-employed individuals are not required to have a pension fund but may voluntarily opt into one.
Not necessarily. While some professional associations require their members to participate in their occupational pension scheme, in many cases, companies are allowed to opt out and choose a different pension provider. However, the specific rules depend on the association’s statutes and agreements. Employers should review their contractual obligations and, if needed, consult a legal expert or pension advisor before making a switch.
Employers join a registered pension fund as soon as they become subject to the mandatory occupational pension obligation. This means that once an employee earns more than CHF 22,680 per year (as of 2025) and has a contract exceeding three months, the employer is required to register with a pension fund without delay.The AHV compensation fund conducts checks to ensure compliance. If an employer is found to be non-compliant, they will receive a formal request to join a pension fund within two months.(Art. 11 BVG)
Companies that do not comply with mandatory pension fund requirements risk:– Financial penalties imposed by supervisory authorities.– Legal liability for unpaid contributions, which may need to be paid retroactively.– Reputational damage that could impact employee trust and business operations.The AHV office and pension fund regulators monitor compliance. Failure to comply results in the AHV compensation fund reporting the employer to the BVG Substitute Occupational Pension Fund, which will automatically register the company retroactively. Employers who deliberately evade this requirement or attempt to bypass registration may face legal consequences, as non-compliance is considered a criminal offense.
Yes, self-employed individuals can voluntarily join a pension fund, but they are not required to do so. They have the option to:– Join a professional association’s pension fund, if available.– Contribute to the BVG Substitute Occupational Pension Fund, which is open to all self-employed persons.– Set up a private 3rd pillar retirement savings plan to supplement their future income.
Switzerland does not have a single certification of quality for pension funds, but pension funds must comply with BVG (Swiss Occupational Pensions Act) regulations.
Discover the diversity of our customers
Nexova AG offers highly professional accounting services that have significantly enhanced our financial management at Learning Lab. Their team is precise and reactive, always delivering accurate and timely reports while promptly addressing our queries. With Nexova AG’s support, we manage our clients’ accounts and finances more efficiently. We highly recommend Nexova AG for their exceptional accounting services.
For us as a new catering company, it is essential that our trustee understands our specific needs and responds flexibly to our requirements. In Nexova AG, we have found the ideal partner who supports us competently in all fiduciary matters and actively promotes our growth.
Uncomplicated or serious? Or is it and? A young, clever team is at work here, offering excellent services, highly uncomplicated and competent. Instead of a prestigious reception, expensive offices and chocolates, there are fast services and competent services. For me as a one-man company, this is exactly what I need.
InSphero AG, as a leading company for 3D in-vitro models, has benefited greatly from the accounting services of Nexova AG. The remarkable cost savings of 35% compared to in-house accounting, coupled with Nexova’s reliability, speed and high competence in Business Central and accounting have noticeably optimized our processes. We can highly recommend Nexova and its services.
Arvy AG has found an exceptional partner in Nexova AG. Their very high level of expertise in FINMA-regulated industries ensures that our financial transactions are in safe and competent hands. What sets Nexova apart is their flat-rate pricing structure, which has helped us greatly with budgeting and financial planning. As a company committed to long-term success and integrity in investments, we are very satisfied with the services provided by Nexova AG.
For us as an EdTech startup, it is very important that our trustee is as digital and agile as we are. With Nexova AG, we have found the perfect partner who can actively support us in our growth.