A closer look at the Swiss LPP for cross-border workers
What do you think of when I say ‘2nd pillar’ or ‘LPP’? These two terms refer to the Swiss pension system… which can sometimes seem a bit confusing to non-Swiss people! Are you a cross-border worker or an expat in Switzerland with questions about pension contributions? We explain everything in this article!
• The LPP/BVG (2nd pillar) is Switzerland's mandatory occupational pension scheme for any employee whose annual income exceeds the legal entry threshold (CHF 22,680 in 2025-2026).
• It also applies to cross-border workers and complements the AHV/AVS (1st pillar) and voluntary private savings (3rd pillar).
• Contributions are paid throughout one's career — a key mechanism to understand when planning retirement as a cross-border worker.
Whether you’re just starting your career in Switzerland or approaching retirement, understanding this key pillar of the Swiss pension system is essential for planning your future with peace of mind. In this article, b-sharpe explains everything you need to know about the LPP, or second pillar.
What is the Swiss LPP?
Unless you live in Switzerland, or have worked there for a long time, the term “2nd pillar” or the acronym LPP is probably not familiar to you. Let’s take a closer look!
The LPP, or Occupational Pensions Act
What is the Occupational Pensions Act (LPP)? This Swiss law governs pension provision, in other words, retirement insurance. It forms part of the three-pillar system, Switzerland’s social security system. It aims to guarantee all Swiss residents social protection, particularly with regard to retirement. Whether you earn the Swiss minimum wage or a higher salary, the LPP applies to you. It is based on three pillars:
The three-pillar system
If the LPP is the second pillar of Switzerland’s pension system, what are the other pillars?
- The first pillar covers basic social security, the old-age and survivors’ insurance (AVS/AHV). It is funded by employer and employee contributions, as well as by state contributions. It guarantees all Swiss residents a minimum income as well as health and disability cover. It is managed by federal, cantonal and communal authorities.
- The second pillar covers occupational pension provision and retirement insurance, governed by the federal Occupational Pensions Act (the famous LPP!). The LPP is mandatory for employees subject to the AVS/AHV whose annual salary reaches at least the entry threshold set by law (CHF 22,680 in 2025 and 2026), subject to other eligibility conditions. This also applies to cross-border workers. Contributions are paid throughout the insured person’s working life.
- The third pillar is private pension provision. This is optional and allows individuals to supplement their mandatory occupational pension provision and build up retirement savings. It therefore includes various insurance products, such as savings plans, life insurance or investment funds.
The LPP, or second pillar, with its complex workings, can raise a lot of questions, particularly among foreign workers or cross-border workers in Switzerland.
Cross-border workers and expatriates
Are you a cross-border worker or an expatriate? Even if you don’t hold Swiss nationality, you are subject to the Swiss pillar system and contribute to it.
Who has to contribute to the LPP?
Who contributes to the Swiss 2nd pillar? The LPP is mandatory for all employees over the age of 17 in Switzerland who are subject to the AVS/AHV (the 1st pillar). The annual salary paid by a single employer must exceed the minimum set by the Swiss Federal Council: this is the LPP entry threshold. In 2026, this amount stands at CHF 22,680.
You must be an employee:
- You must already be subject to the AVS/AHV (first pillar)
- You must be over 17 years old
- Your annual salary (paid by a single employer) must exceed the minimum amount set by the Federal Council, namely CHF 22,680/year.
Part of your salary is deducted each month to build up your retirement savings, managed by a pension fund. Your employer also contributes an equal or higher amount. This savings pot grows over the years and, upon retirement, is converted into a pension using the conversion rate, currently set at 6.8%.
How much are LPP contributions in Switzerland?
Currently, the contribution rate to the 2nd pillar varies and is set between 7% and 27% of gross salary. Employers are also required to contribute, with a minimum share of 50%.
The different contribution brackets of the Swiss LPP
Contributions to the Swiss 2nd pillar (or LPP) vary according to the employee’s age. The contribution rate increases as the worker gets older. This is designed to reflect the need to build up more savings as retirement age approaches. Total contributions are shared between employer and employee. The age brackets and minimum contribution rates currently set by Swiss law are as follows:
- 25 to 34 years: 7% of insured salary
- 35 to 44 years: 10% of insured salary
- 45 to 54 years: 15% of insured salary
- 55 to 64/65 years: 18% of insured salary
These percentages include both the employee’s and the employer’s contributions. The employer must pay at least as much as the employee, but in most cases contributes more. Companies now regard pension provision as a genuine advantage from an HR perspective. Employers who are more generous when it comes to pension provision appear more attractive to candidates and seem to retain their talent more effectively.
Swiss LPP: what are these contributions used for ?
Contributions to the 2nd pillar can be paid out in the following cases:
- Retirement: retirement pension for the employee, child’s pension
- Death: widow’s/widower’s pension, orphan’s pension
- Disability: disability pension (in addition to the AVS/AHV, or first pillar, i.e. health and disability insurance), child’s pension
How and in which cases can you claim back your LPP contributions?
Depending on your situation, it is possible to claim your Swiss LPP contributions. As a foreign worker who has spent part of their career in Switzerland, you will need to carry out specific steps in order to claim back your pension. As for the early withdrawal of the second pillar, it is subject to certain specific conditions… Let’s take a closer look:
I’m retiring
Your career is coming to an end, and the time has come to claim your duly earned pension contributions. Congratulations! Now is the time to claim your second pillar, occupational pension provision (LPP), from your compensation fund. The amounts accumulated can be paid out as a pension, as a lump sum, or as a combination of both. It’s your choice! Be aware, however, that this decision is final.
A word of advice: plan ahead! Processing times at pension funds can be lengthy, so you will need to submit your request in advance in order to receive these amounts on time.
I want to make a major purchase
If you wish to make a major purchase (such as buying a home), you can use the money in your 2nd pillar before retirement. This applies to the purchase of a primary residence. However, this scheme can also apply to repaying a mortgage or buying shares in a housing cooperative.
Be aware, however, that there are a few specific conditions:
- Age matters: before the age of 50, you can withdraw the entirety of your 2nd pillar. After the age of 50, the amount will be limited.
- An early withdrawal request can only be made once every 5 years.
- For married couples, spousal consent is required
- If the property in question is resold, the amounts withdrawn from the 2nd pillar must be repaid
Would you like to withdraw your 2nd pillar early to purchase a home?
How do you go about withdrawing your LPP early? Check with your pension fund, which will ask you to provide a large number of documents (bank financing confirmations, financing plan, notary’s certificate, etc.). Here too, processing times can be relatively long.
I’m becoming self-employed
Are you leaving salaried employment, and wondering whether you can obtain the capital accumulated through the Swiss 2nd pillar? By becoming self-employed, you will no longer be required to contribute to the 2nd pillar. You can therefore withdraw the capital accumulated up to that point. Here too, specific conditions apply:
- the withdrawal request must be made in the year following the start of your new self-employed activity
- you will need to provide proof of registration in the commercial register
- For married couples, spousal consent is required
What if I leave Switzerland?
Is your life in Switzerland, whether professional or personal, coming to a definitive end? What then becomes of your LPP? You will only be able to withdraw your entire 2nd pillar if you decide to settle in a country outside the EU/EFTA. If you are a Franco-Swiss cross-border worker, you will therefore not be able to claim back the mandatory portion of your LPP. However, you do have the option of unlocking what is known as the extra-mandatory portion, which relates to the additional amounts allocated to pension contributions. Find out here how to claim back your Swiss pension.
Good to know: given the complexity of the Swiss pension system, it is often advisable to seek support from an expert, particularly as a cross-border worker, since this situation involves unique specificities. Personalised advice will notably enable you to optimise your pension while ensuring that you comply with the regulations in force, on both sides of the border.
Would you like to bring the money from your 2nd pillar back from Switzerland? To convert your funds from Swiss francs into your euro account, you will no doubt need a reliable and transparent online currency converter. b-sharpe supports you, whether it’s your personal savings or the funds from your 2nd or 3rd pillar. We guarantee you a simplified process as well as favourable exchange rates.
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