Most founders learn about the second pillar the awkward way.
Their first employee asks: "Which pension fund am I in?"
And the honest answer is: "Good question."
This guide gives you the plain-English version: when the BVG becomes mandatory, how the numbers work, what it costs, and how to choose a pension solution as a small employer. It uses the 2026 figures from the Federal Social Insurance Office (BSV).
The three pillars in 30 seconds
Swiss retirement provision rests on three pillars:
- First pillar (AHV/IV): state insurance, financed through salary contributions. See Hiring Your First Employee in Switzerland: The AHV Setup to Do Before Payday One.
- Second pillar (BVG): occupational pension through the employer's pension fund.
- Third pillar: private savings (for example pillar 3a).
As an employer, pillars one and two are your job. Pillar three is your employees' choice.
When BVG becomes mandatory
An employee must be insured under the mandatory BVG once their annual salary is at least CHF 22,680 (the 2026 entry threshold).
Mandatory cover starts (BVG Art. 7):
- for risk benefits (death and disability) from 1 January after the employee's 17th birthday, and
- for retirement savings from 1 January after their 24th birthday.
There are exceptions (BVV 2 Art. 1j): fixed-term contracts of up to three months, people who are mainly self-employed and have a side job with you, and people who are at least 70% disabled under IV. If an employee isn't clearly standard, ask your pension fund.
Founder-directors are covered too. If you pay yourself a salary at or above the threshold from your own GmbH or AG, including as the sole owner, the BVG rules apply to you as well.
The 2026 numbers you need
- Entry threshold (minimum annual salary) — 2026: CHF 22,680
- Coordination deduction — 2026: CHF 26,460
- Upper limit of annual salary (mandatory BVG) — 2026: CHF 90,720
- Minimum coordinated salary — 2026: CHF 3,780
- Maximum coordinated salary — 2026: CHF 64,260
The 2026 limits are the same as in 2025. Separately, voters rejected the BVG reform on 22 September 2024, so the existing rules still apply.
The coordination deduction, explained
The BVG doesn't insure the whole salary. It insures the coordinated salary, the part not already covered by AHV.
Coordinated salary = annual salary (up to CHF 90,720) − CHF 26,460
With two floors and ceilings:
- If the result is below CHF 3,780, the coordinated salary is CHF 3,780.
- It can't be more than CHF 64,260.
Example A (hypothetical)
Annual salary CHF 78,000. Coordinated salary: 78,000 − 26,460 = CHF 51,540.
Example B (hypothetical)
Annual salary CHF 24,000, above the entry threshold. 24,000 − 26,460 is negative, so the coordinated salary is the minimum: CHF 3,780.
Example C (hypothetical)
Annual salary CHF 120,000. Mandatory BVG only looks at salary up to CHF 90,720, so the coordinated salary is 90,720 − 26,460 = CHF 64,260 (the maximum). Anything above can be insured through a more generous plan, but it isn't mandatory.
What it costs: savings credits and risk premiums
BVG contributions have two main parts.
1. Savings credits (retirement savings)
The law (BVG Art. 16) sets minimum retirement credits as a percentage of the coordinated salary, rising with age:
- 25–34 — Minimum savings credit: 7%
- 35–44 — Minimum savings credit: 10%
- 45–54 — Minimum savings credit: 15%
- 55 to reference age — Minimum savings credit: 18%
The employer must pay at least half of the total contributions (BVG Art. 66). Many plans split them 50/50. Some employers pay more as a benefit.
2. Risk and cost premiums
On top of savings, the pension fund charges premiums for death and disability cover and its administration costs. They depend on your plan and pension fund, so ask for a quote.
Example A continued (hypothetical)
Employee aged 30, coordinated salary CHF 51,540. Minimum savings credit: 7% × 51,540 = CHF 3,607.80 a year. At a 50/50 split, the employer pays at least CHF 1,803.90 a year for savings, plus their share of risk and cost premiums.
Use this to budget. Your actual numbers will come from your pension fund's plan.
Choosing a pension solution as a small employer
Small companies rarely set up their own pension fund. The common options:
Collective or common foundations
Many small employers join a collective foundation (Sammelstiftung) run by an insurer, bank or independent provider. You get your own pension plan inside a shared structure.
What to compare:
- Plan design: mandatory minimum only, or more generous cover (for example salary above CHF 90,720, or higher savings credits)?
- Cost: risk premiums and administration fees.
- Financial health: look at the funding ratio and how the foundation has treated members' savings (interest credited).
- Service: onboarding, a digital portal, how quickly they answer.
A broker or your Treuhänder can help you compare. Ask how they're paid.
What if you don't choose?
An employer that's required to insure employees and doesn't join a pension fund is affiliated by force with the Substitute Occupational Benefit Institution (Stiftung Auffangeinrichtung BVG). It then owes the contributions retroactively and may have to pay surcharges and costs (BVG Art. 11). It's far better to choose yourself.
The monthly routine
Once you're affiliated, BVG becomes part of the payroll rhythm:
- The pension fund tells you each employee's contributions for the year.
- You deduct the employee's share from salary every month.
- You pay employee and employer contributions according to the fund's schedule.
- You report new hires, leavers and salary changes promptly.
For the full payroll picture, see Hiring Your First Employee in Switzerland: The AHV Setup to Do Before Payday One. For keeping the paperwork tidy, see The Month-End Pack Your Treuhänder Actually Wants.
5 BVG mistakes small employers make
- Waiting for the first employee to ask. Affiliate before the first salary above the threshold.
- Forgetting yourself. Founder-directors with a salary are covered too.
- Budgeting gross salary only. Your BVG share is a real cost. See 7 Money Mistakes Swiss Founders Make in Year One.
- Not reporting changes. Salary raises, part-time changes and leavers all affect contributions.
- Picking on price alone. A cheap plan with poor service or weak finances isn't cheap.
Bottom line
BVG looks complicated because of the vocabulary. The logic is simple: above CHF 22,680, insure the coordinated salary, pay at least half, and do it every month.
Choose your pension fund before you need it.
FAQ
What is the BVG entry threshold in 2026?
CHF 22,680 annual salary. Employees earning at least that amount must be insured under the mandatory BVG.
What is the coordination deduction in 2026?
CHF 26,460. The coordinated salary is the annual salary (up to CHF 90,720) minus this amount, with a minimum of CHF 3,780 and a maximum of CHF 64,260.
How much does the employer pay into BVG?
At least half of the total contributions. Many plans split 50/50, and some employers pay more.
Do I need a pension fund if I'm the only employee of my GmbH?
If you pay yourself a salary of at least CHF 22,680 a year, the mandatory BVG generally applies to you too, even as the sole owner.
Did the BVG reform change the 2026 rules?
No. The 2026 limits are the same as in 2025. Separately, voters rejected the BVG reform on 22 September 2024, so the existing rules still apply.
Pay pension contributions from the same account
When your pension fund's bill arrives, email the QR-bill to Firma or snap a photo, approve with one click, and it's paid by Swiss QR-bill or SIC. It comes from the same multi-currency account you use to pay salaries (SIC or SEPA), suppliers and everything else. Plus is Fr. 499 a month, money in is free, and outgoing payments cost 25 bps, with the fee shown before you send.
Getting set up? See How to Open a Swiss Business Account in Days, Not Weeks.
This article is general information, not legal, tax, or investment advice. Talk to a qualified adviser about your situation.
Firma is a regulated financial technology company, not a bank. Banking services are provided through banking partners. Balances are digital stablecoin tokens, not bank deposits, and are not covered by esisuisse.
Sources: Federal Social Insurance Office, amounts valid from 1 January 2026; Federal Act on Occupational Retirement, Survivors' and Disability Pension Plans (BVG); Substitute Occupational Benefit Institution; Firma.
