LPP in Switzerland: Contributions and social security planning (cross-border guide)

Context

Key facts

• What: Second LPP pillar in Switzerland
• When: 2026
• Where: Canton of St. Gallen
• Who: Social security institution
• Amount: 20% of the active population

The article focuses on the second pillar of the pension system in Switzerland, known as the LPP (Work and Public Welfare). This system was introduced in 2020 and aims to offer a supplementary pension scheme to social security institutions.

The second pillar is managed by social security institutions, such as the Social Security Institution of the Canton of St. Gallen, which is responsible for managing the pension plan for its members. Under current rules, the minimum mandatory contribution for employees is 6.8% of annual income.

In addition, the social security institution offers the possibility to contribute voluntarily, which can be beneficial for those who want to accumulate more resources for their pension. Under the rules, the maximum mandatory contribution is 6.8% of annual income.

The second pillar is a supplementary pension plan, which means that it does not replace the first pillar, but completes it. Under the rules, the minimum mandatory contribution for employers is 8.8% of annual income.

Here are some concrete examples of how the second pillar works:

• An employee with an annual income of CHF 80,000 contributes to the second pillar with a contribution of 6.8% of their income, equal to CHF 5,440 per year. The social security institution contributes an amount

Operational details

LPP in Switzerland: Contributions and social security planning

The second pillar of the Swiss pension system, known as the LPP (Work, Social Security, Pension), consists of contributions, withdrawals and the redemption of gaps. This system was introduced in 2014 to ensure greater financial security for older Swiss.

Contributions

The contribution for the second pillar is about 6% of annual income, which may vary depending on gross income. For example, if a worker has a gross income of CHF 60,000 per year, the contribution for the second pillar would be about CHF 3,600 per year (6% of CHF 60,000). The contribution is taken from the worker's salary and paid directly into the worker's savings account.

Withdrawals

The levy for the second pillar is about 2% of annual income. For example, if a worker has a gross income of CHF 60,000 per year, the levy for the second pillar would be about CHF 1,200 per year (2% of CHF 60,000). The withdrawal is taken from the worker's salary and paid directly into the worker's savings account.

Gap redemption

Gaps can be redeemed within 10 years of the end of the work. This means that if a worker has stopped working and has an income of less than 60% of their maximum income, they can redeem the gaps within 10 years. For example, if a

Useful planning tools

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

Key points

LPP in Switzerland: Contributions and Social Security Planning

To plan your pension, it's important to consider contribution and withdrawal. The contribution is about 6% of income, while the levy is about 2% of income. Gaps can be redeemed within 10 years.

Contributions to the LPP

LPP contributions in Switzerland are calculated on the basis of gross annual income. The maximum annual contribution is about 23,000 Swiss francs (CHF) for adults. The minimum contribution is about CHF 1,800 for adults. It is important to note that LPP contributions are not deductible for federal tax.

Social Security Planning

Pension planning is important to ensure a secure pension in the future. You can plan your retirement by considering several factors, such as life span, population growth, mortality, unemployment, and labor demand.

Concrete Examples

Here are some concrete examples of how to plan your pension:

• A worker with a gross annual income of CHF 80,000 pays a contribution of approximately CHF 4,800 to the LPP. A worker with a gross annual income of CHF 120,000 pays a contribution of approximately CHF 7,200 to the LPP. A worker with a gross annual income of CHF 180,000 pays a contribution of approximately CHF 10,800 to the LPP.

Gap Redemption

Gaps can be redeemed within 10 years. Gap redemption is calculated based on the

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