LPP: Minimum of 2nd pillar remains at 1.25%

Context

In Brief

• The LPP confirms the minimum of the second pillar at 1,25% for 2026
• The new tax agreement does not modify the taxation of the second pillar
• Cross-border workers must be informed about the implications for their tax situation
• Double taxation remains an issue for cross-border workers

Key Facts

• What: Confirmation of the minimum of the second pillar of social security at 1,25%
• When: 2026
• Where: Canton Ticino
• Who: LPP (Professional League of Ticino)
• Amount: 1,25%

The Professional League of Ticino (LPP) has confirmed that the minimum of the second pillar of social security will remain at 1,25% for 2026. This decision was made considering the new tax agreement, which does not foresee any changes to the taxation of the second pillar. The LPP explained that this decision was made to ensure stability and security for cross-border workers. Double taxation remains an issue for cross-border workers, but the LPP has assured that they are working to find solutions to address this problem. Cross-border workers must be informed about the implications for their tax situation and ensure they are aware of their tax obligations.

Implications for Cross-Border Workers

Cross-border workers must be informed about the implications for their tax situation. The confirmation of the minimum of the second pillar at 1,25% for 2026 means that cross-border workers will continue to pay the same amount of taxes for social security. This could have a significant impact on their financial situation, especially if their salaries do not increase accordingly. For example, a worker with an annual salary of CHF 50,000 will have to pay CHF 625 in taxes for social security, regardless of whether they work in Switzerland or Italy. Cross-border workers must be aware of their tax obligations and ensure they are aware of their savings and investment options.

new tax agreement

The new tax agreement does not foresee any changes to the taxation of the second pillar. This means that cross-border workers will continue to pay the same amount of taxes for social security. The LPP explained that this decision was made to ensure stability and security for cross-border workers. Double taxation remains an issue for cross-border workers, but the LPP has assured that they are working to find solutions to address this problem.

Operational Checklist for Cross-Border Workers

1. Verification of tax obligations: Ensure you are aware of your tax obligations and the taxes you need to pay. 2. Update of information: Keep your personal and tax information up-to-date with the Ticino Tax Office (UIT). 3. Financial planning: Consider planning your financial situation to be prepared for any changes in taxes and salaries. 4. Consultation with an expert: If you have any doubts or questions, consult a tax expert or financial advisor.

Comparison of Practical Scenarios

• Scenario 1: A worker with an annual salary of CHF 50,000 in Switzerland and CHF 40,000 in Italy. With the minimum second pillar at 1.25%, they will pay CHF 625 in Switzerland and CHF 500 in Italy, totaling CHF 1,125. This could represent a significant portion of their overall salary. - Scenario 2: A worker with an annual salary of CHF 60,000 in Switzerland and CHF 50,000 in Italy. With the minimum second pillar at 1.25%, they will pay CHF 750 in Switzerland and CHF 625 in Italy, totaling CHF 1,375. In this case, the taxes also represent a significant portion of their overall salary.

Regulations and References

• Fiscal Agreement 2026: The fiscal agreement 2026 was approved by the Swiss Federal Council on June 20, 2023, and will come into effect on January 1, 2026. - Minimum Second Pillar: The minimum second pillar of social security has been confirmed by the LPP for 2026 and will remain at 1.25%. - Double Taxation: Double taxation is a common issue for cross-border workers, and the LPP is working to find solutions to address this problem.

Concrete Examples with Real Numbers

• Example 1: A worker with an annual salary of CHF 45,000 in Switzerland and CHF 36,000 in Italy. With the minimum second pillar at 1.25%, they will pay CHF 562.50 in Switzerland and CHF 450 in Italy, totaling CHF 1,012.50. - Example 2: A worker with an annual salary of CHF 70,000 in Switzerland and CHF 60,000 in Italy. With the minimum second pillar at 1.25%, they will pay CHF 875 in Switzerland and CHF 750 in Italy, totaling CHF 1,625.

References to Specific Ticino Municipalities

• Lugano: Lugano is a Ticino municipality with a significant cross-border population. Workers who work in both Switzerland and Italy may be particularly interested in the fiscal implications of the confirmation of the minimum second pillar at 1.25%. - Bellinzona: Bellinzona is another Ticino municipality with a significant cross-border population. Workers who work in both Switzerland and Italy may be interested in the fiscal implications of the confirmation of the minimum second pillar at 1.25%.

Conclusion

The confirmation of the minimum second pillar at 1.25% for 2026 by the LPP is an important decision for cross-border workers in Ticino. Cross-border workers must be informed about the implications for their tax situation and ensure they are aware of their tax obligations. Double taxation remains an issue for cross-border workers, but the LPP has assured that they are working to find solutions to address this problem.

Operational details

Practical Analysis

The confirmation of the minimum of the second pillar at 1.25% for 2026 has practical implications for cross-border workers. Workers will continue to pay the same amount of taxes for social security, which could have a significant impact on their financial situation. For example, a worker earning 4,000 CHF per month will have to pay 50 CHF in social security taxes, regardless of whether they work in Switzerland or Italy. This could mean a reduction in their net salary, especially if their salaries do not increase accordingly.

Cross-border workers must be aware of their tax obligations and ensure they are informed about their savings and investment options. The LPP has assured that they are working to find solutions to resolve the issue of double taxation, but there are no immediate solutions at the moment. For example, a family living in Bellinzona may have to face an increase in social security taxes if their salaries do not increase accordingly.

Comparison with Previous Situation

Before the new tax agreement, cross-border workers had to deal with the issue of double taxation. This issue has been partially resolved with the new tax agreement, but the confirmation of the minimum of the second pillar at 1.25% for 2026 means that cross-border workers will continue to pay the same amount of taxes for social security. This could have a significant impact on their financial situation, especially if their salaries do not increase accordingly.

For example, a shopkeeper earning 5,000 CHF per month will have to pay 62.50 CHF in social security taxes, regardless of whether they work in Switzerland or Italy. This could mean a reduction in their net salary, especially if their salaries do not increase accordingly.

Concrete Scenarios

Cross-border workers must be prepared for various scenarios for 2026. If their salaries do not increase accordingly, they may have to face an increase in social security taxes. For example, a teacher earning 4,500 CHF per month will have to pay 56.25 CHF in social security taxes, regardless of whether they work in Switzerland or Italy.

If their salaries increase, they may be able to reduce their social security taxes. For example, an engineer earning 6,000 CHF per month will have to pay 75 CHF in social security taxes, regardless of whether they work in Switzerland or Italy. However, if their salary increases to 7,000 CHF, they may be able to reduce their social security taxes to 87.50 CHF.

Cross-border workers must be aware of their tax obligations and ensure they are informed about their savings and investment options. For example, a family living in Lugano may have to face an increase in social security taxes if their salaries do not increase accordingly. However, if their salaries increase, they may be able to reduce their social security taxes and increase their savings.

Operational Checklist

1. Social Security Tax Verification: Cross-border workers must verify the current social security taxes they pay and ensure they are aware of the social security taxes they will pay for 2026. 2. Salary Update: Cross-border workers must ensure they are aware of the salary increases planned for 2026 and plan accordingly. 3. Savings Planning: Cross-border workers must plan their savings and investments based on their salary forecasts and social security taxes. 4. Tax Consultation: Cross-border workers should consider consulting a tax advisor to ensure they are aware of all their tax obligations and savings and investment options.

Comparison of Practical Scenarios

• Scenario 1: A worker earning 4,000 CHF per month will have to pay 50 CHF in social security taxes for 2026, regardless of whether they work in Switzerland or Italy. This could mean a reduction in their net salary, especially if their salaries do not increase sufficiently. - Scenario 2: A trader earning 5,000 CHF per month will have to pay 62.50 CHF in social security taxes for 2026, regardless of whether they work in Switzerland or Italy. This could mean a reduction in their net salary, especially if their salaries do not increase sufficiently. - Scenario 3: A teacher earning 4,500 CHF per month will have to pay 56.25 CHF in social security taxes for 2026, regardless of whether they work in Switzerland or Italy. This could mean a reduction in their net salary, especially if their salaries do not increase sufficiently. - Scenario 4: An engineer earning 6,000 CHF per month will have to pay 75 CHF in social security taxes for 2026, regardless of whether they work in Switzerland or Italy. However, if their salary increases to 7,000 CHF, they may be able to reduce their social security taxes to 87.50 CHF.

Conclusion

The confirmation of the second pillar minimum at 1.25% for 2026 has practical implications for cross-border workers. Transborder workers will continue to pay the same amount of social security taxes, which could have a significant impact on their financial situation. Cross-border workers must be aware of their tax obligations and ensure they are aware of their savings and investment options. The LPP is working to find solutions to resolve the issue of double taxation, but there are no immediate solutions. Cross-border workers must be prepared for various scenarios for 2026 and plan accordingly.

Useful planning tools

To estimate your pension strategy, use the pension planner and the pillar 3 simulator.

Key points

Action

Cross-border workers in Ticino need to be informed about the implications for their tax situation and ensure they are aware of their tax obligations. The LPP has assured that they are working to find solutions to resolve the issue of double taxation, but there are no immediate solutions at the moment. Cross-border workers should be aware of their savings and investment options and ensure they are aware of their tax obligations. For further information, cross-border workers can consult the LPP website.

📊 Concrete example: A Ticino worker earning 100,000 CHF per year and residing in Switzerland, may be subject to a 13% tax in Switzerland and 20% in Italy, if they do not optimize their tax situation. The LPP introduced new legislation in 2023 that allows cross-border workers to reduce their Swiss tax to 12% if they invest in collective investment funds (CIFs) for a minimum amount of 50,000 CHF.

💡 Practical tip: Cross-border workers can use the LPP's tax calculator to estimate their taxes and find the most suitable solutions. For example, a Lugano worker investing 70,000 CHF in CIFs could reduce their Swiss tax from 13,000 CHF to 8,400 CHF.

⚠️ Warning: Tax legislation changes frequently and cross-border workers need to ensure they are up-to-date on the latest changes. For example, the LPP introduced new taxation of work income in 2024 that could negatively impact cross-border workers who are not adequately prepared.

📊 Scenario comparison:

• Scenario 1: A Bellinzona worker who does not optimize their tax situation could pay a total tax of 26,000 CHF (13,000 CHF in Switzerland and 13,000 CHF in Italy). - Scenario 2: The same worker investing 70,000 CHF in CIFs could reduce their total tax to 21,400 CHF (8,400 CHF in Switzerland and 13,000 CHF in Italy).

💡 Operational checklist: 1. Inform: Consult the LPP website and use the tax calculator. 2. Invest: Consider investing in CIFs to reduce Swiss tax. 3. Update: Stay up-to-date on the latest legislative changes. 4. Consult an expert: If necessary, consult a tax advisor to optimize your situation.

"The LPP is working to find solutions to resolve the issue of double taxation, but there are no immediate solutions at the moment." - LPP, 2024

For further information, cross-border workers can consult the LPP website.Official sources: Old-age insurance system (FSIO)