What kind of pension is available to self-employed workers in Switzerland?
Preparing for retirement as a self-employed person in Switzerland requires a thorough understanding of the pension system. Unlike employees who benefit from a structured framework through their employer, self-employed workers must actively manage their retirement provisions.
Between mandatory contributions, voluntary affiliations, and tax optimizations, the path to a comfortable retirement requires foresight and strategy. This article guides you through the essential mechanisms to properly prepare your retirement as a self-employed person in Switzerland.
The Swiss pension system for the self-employed
Switzerland has built its pension system on three complementary pillars. For the self-employed, the particularity is that they are automatically covered only by the 1st pillar, unlike employees who are also mandatorily covered by the 2nd pillar.
1st pillar: the compulsory basis for your retirement
From the start of your self-employed activity, you must register with the AHV (Old-Age and Survivors’ Insurance). This registration forms the foundation of your social protection and will largely determine the amount of your retirement pension.
How do AHV contributions work for the self-employed?
As a self-employed person, you are responsible for the entire payment of your contributions, without any employer participation. The contribution rate amounts to 10% of your annual net income, in addition to the AI (Disability Insurance) and APG (Loss of Earnings Compensation) contributions. A sliding scale system applies for incomes below CHF 58,800 per year in 2025, helping to reduce the burden for start-up activities or modest incomes.
These contributions are calculated based on your assessable income. It is crucial to report your income correctly, as every year of contributions counts toward the final calculation of your pension. A missing or underreported year can significantly reduce the amount of your future retirement benefits.
How much AHV pension can I expect?
In 2025, the AHV pension reaches a maximum of CHF 2,520 per month, while the minimum pension is CHF 1,260 per month. To qualify for the maximum pension, you must have contributed without interruption throughout your working life, usually 44 years, and achieved an average annual assessable income of CHF 90,720 (see scale 44).
The exact amount of your pension depends on three main factors: the duration of your contributions, the amount of income on which you contributed, and any credits for childcare or caregiving. Each missing year results in a reduction of about 2.3% of the full pension. Thus, if you contributed for 30 years instead of 44, your pension will be proportionally reduced.
2nd pillar: a strategic option for the self-employed
Voluntary affiliation to occupational pension plans is done through a collective foundation or the LPP supplementary institution if no other solution is available through your profession. This puts you in a situation comparable to employees, with one major difference: you bear the entire contribution yourself, combining both the employer and employee portions.
In 2025, you can ensure maximum annual salary of CHF 64,260 under the mandatory BVG/LPP scheme. Contributions are based on your age, starting at 7% for the youngest and up to 18% of insured salary for older age groups.
Pension or lump sum: how do I recover my BVG/LPP rights?
At retirement, you will need to choose between receiving your LPP assets as a life annuity or a lump sum. The annuity offers maximum security with a guaranteed income until your death, generally calculated with a conversion rate of around 6% of your total assets. The lump-sum withdrawal, on the other hand, gives you access to all your savings, with favorable separate taxation, but requires you to manage these funds yourself to secure your retirement.
This decision depends on many factors: your life expectancy, your ability to manage a large capital sum, your family situation, and your other sources of retirement income.
Pillar 3a: the freedom to build your retirement
In 2025, if you are not affiliated with the second pillar, you can contribute up to CHF 36,288 per year to your pillar 3a (20% of your net income).
This amount is fully deductible from your taxable income. If you are affiliated to a second pillar, the ceiling drops to CHF 7,258, in line with that for salaried employees.
Pillar 3a offers a wide range of investment options: bank accounts, insurance contracts, or index fund investment solutions. Unlike the second pillar, you retain full control over your investment choices and can adjust your strategy according to market developments and your risk profile.
The capital accumulated in pillar 3a can be withdrawn in certain situations before retirement: purchase of your primary residence, starting a self-employed activity, permanently leaving Switzerland, or buying back LPP contribution years. At retirement, withdrawal is possible five years before the standard AHV retirement age, with favorable separate taxation.
Pillar 3b: retirement without constraints
The pillar 3b, or flexible pension plan, complements the range of available solutions without contribution limits or binding legal framework. Although contributions generally do not benefit from tax deductions (except in certain cantons), pillar 3b offers other advantages, notably beneficiary designation outside the estate and exemption from taxes on the contributed capital.
Optimization strategies for a comfortable retirement
The winning combination: 2nd and 3rd pillars
For self-employed individuals whose income allows, the combination of the second and third pillars offers the best of both worlds. The second pillar provides the security of a life annuity and high deductible contributions, while pillar 3a offers flexibility and higher return potential through active management of your savings.
This strategy allows you to maximize tax deductions while diversifying your sources of retirement income. In doing so, you build a solid foundation with the LPP, supplemented by 3a capital.
Anticipate early to benefit from the compounding effect
Time is your best ally in building your retirement. The earlier you start contributing, the more the compounding of interest works in your favor. Regular contributions to pillar 3a from the start of your self-employed activity can generate a substantial capital over 30 or 40 years, even with modest amounts.
As far as the second pillar is concerned, early enrolment helps to avoid large gaps that would require costly buy-ins later in your career. Even if your income is modest at the outset, maintaining a minimum contribution creates beneficial continuity when calculating your entitlements.
Repatriate and invest your BVG assets
Don’t forget to transfer your LPP assets to a vested benefits account. Otherwise, they will remain with the LPP supplementary foundation, where returns are very low. We also recommend carrying out a search with the Second Pillar Central Office to locate any forgotten assets.
Adapt your strategy to changes in your revenues
A self-employed person’s pension plan must evolve according to the growth of their business. In the early years, focus on pillar 3a with regular contributions, even modest ones. Once your business is stable and your income increases, consider joining the second pillar to benefit from higher tax deductions and secure a life annuity.
You can take advantage of years of high profitability to make BVG/LPP buy-backs or maximize your 3a payments, thus creating a tax and asset reserve for less favorable periods.
Invexa helps you plan your retirement
As a self-employed person in Switzerland, your retirement requires active and forward-looking management, but in return offers unparalleled flexibility to build a tailored protection plan. Between the mandatory foundation of the first pillar, the strategic options of the second pillar, and the freedom of the third pillar, self-employed individuals have all the necessary tools to build a comfortable retirement, provided they start early enough and maintain a disciplined savings habit. At Invexa, we help you develop a complete and customized retirement strategy.
