Changes in occupational benefits as of 2026
The Federal Council has defined the updated figures for occupational benefits. They apply from 1 January 2026. Below are the most important adjustments:
| Category | 2026 | Comment |
|---|---|---|
| Entry threshold for minimum income | CHF 22’680 | Minimum annual salary required to join the pension fund |
| Coordination deduction | CHF 26’460 | Corresponds to 7/8 of the maximum AHV annual pension |
| Minimum coordinated salary | CHF 3’780 | |
| Maximum coordinated salary | CHF 64’260 | Portion of salary that can be insured at most in the pension fund |
| Maximum insurable salary (BVG) | CHF 90’720 | Upper limit of the insured annual salary |
| AHV/IV/EO contributions | 10.60 % | Contribution rate for employers and employees remains stable |
What is the coordination deduction?
The coordination deduction is a central element of occupational benefits (BVG) in Switzerland. It determines which part of the gross salary is insured in the pension fund. The aim is to avoid overlaps with the state pension scheme (AHV) in order to prevent double insurance benefits.
The coordination deduction is adjusted annually and corresponds to 7/8 of the maximum AHV annual pension. This amount is deducted from the gross salary to calculate the so‑called coordinated salary – the portion of salary that is actually insured in occupational benefits.
Relationship between AHV and pension fund
Occupational benefits (2nd pillar) and the state pension (1st pillar) are closely linked. While the 1st pillar guarantees a basic pension to cover living expenses, the 2nd pillar is designed to maintain the accustomed standard of living in retirement.
The coordination deduction ensures that salary components already covered by the AHV are not additionally insured by the pension fund.
Calculation example for the coordinated salary
Here is an example for illustration:
An employee has a gross annual salary of CHF 70'000. The coordination deduction of CHF 26'460 (2026) is subtracted from this, resulting in a coordinated salary of CHF 43'540.
This coordinated salary serves as the basis for calculating contributions and later pension benefits in the pension fund.
Why is the coordination deduction needed?
The coordination deduction plays an important role in the Swiss pension system, as it aligns the benefits of the state pension (Old-Age and Survivors’ Insurance [AHV]) and occupational benefits (Occupational Pensions Act [BVG]). Without the coordination deduction, parts of the salary could be insured twice, which would not only be inefficient but also lead to unnecessary costs.
Ensuring aligned benefits
The Swiss pension system is based on the 3‑pillar principle, with the first and second pillars intended to secure the accustomed standard of living in retirement together. The coordination deduction ensures that the two pillars complement each other sensibly:
- First pillar (AHV/IV): Covers basic needs in old age, in case of disability or death. (IV = disability insurance)
- Second pillar (BVG): Provides supplementary coverage that maintains the previous standard of living.
By deducting the coordination amount, the portion of salary already covered by the AHV is not taken into account a second time by the pension fund. This enables an efficient distribution of pension benefits.
BVG coordination deduction 2024
On 22 September 2024, a federal referendum was held on the reform of occupational benefits (BVG). The aim of this reform was to secure the financial stability of the second pillar, maintain the level of benefits and improve the coverage of part‑time employees.
Objectives of the BVG reform
The BVG reform pursued several key objectives:
- Secure financing: In view of demographic developments, the second pillar was to be stabilised in the long term.
- Maintain benefit levels: Despite adjustments to the conversion rate, pension benefits were to remain at the previous level.
- Eliminate disadvantages for part‑time employees: In particular, women and people with several employers were to benefit from a more flexible model, as they had often been inadequately covered due to the fixed coordination deduction.
The Swiss population rejected the BVG reform in the referendum. The reasons for this were varied:
Consequences of the rejection
As a result of the rejection, the fixed coordination deduction of CHF 26'460 (2026) will remain in place for the time being. However, it is expected that the issue will be revisited in the future, in particular to close pension gaps for part‑time employees and people with multiple incomes.
Impact of the coordination deduction on Switzerland
The coordination deduction has a significant impact on occupational benefits in Switzerland, especially for certain groups of employees. While it ensures coordination between the first and second pillars, in practice it often leads to pension gaps – particularly for part‑time employees, people with multiple jobs and high‑income earners.
Part‑time employees
Part‑time employees are often disadvantaged because the coordination deduction is applied regardless of the level of employment. This means that, with a lower income, a relatively large portion of the gross salary is deducted before the coordinated salary is calculated.
- Example: A person working 50% with a gross salary of CHF 40'000 has only CHF 13'540 as coordinated salary after deduction of the coordination amount (CHF 26'460 in 2026). This amount forms the basis for pension fund contributions and pension entitlements.
- Solution: In the mandatory BVG scheme, a fixed coordination deduction applies, regardless of the level of employment. However, in the supplementary (non‑mandatory) part, some pension funds offer the option of adjusting the coordination deduction proportionally to the employment level. This can make pension calculations fairer for part‑time employees.
Multiple jobs
Employees with multiple jobs face the challenge that the coordination deduction is applied to each individual income. As a result, a significant part of their total income is not insured in a pension fund.
- Example: A person earns CHF 30'000 in job 1 and CHF 25'000 in job 2. After deducting the coordination amount in both jobs, only a small part is insured.
- Solution: There is the option of insuring the total income via a single pension fund. However, only a few pension schemes offer this option.
High‑income earners
For high‑income earners, the coordination deduction is less problematic because a large share of their gross salary exceeds the maximum insurable salary (CHF 90'720 in 2026). These income components fall into the supplementary (non‑mandatory) area and can be covered voluntarily through higher contributions.
- Example: A person with an annual salary of CHF 150'000 has a coordinated salary of CHF 64'260 (maximum insurable). The remaining salary of CHF 85'740 can be covered through voluntary solutions in the pension fund.
Can employers change the coordination deduction?
Employers and pension funds can, under certain conditions, adjust or even abolish the coordination deduction. This can help improve employees’ pension entitlements, especially for part‑time staff and people with multiple jobs.
Options for adjustment or abolition
- Reduction of the coordination deduction:
Some pension funds offer the option of reducing the coordination deduction proportionally to the level of employment. This means a larger share of income is insured, which is particularly beneficial for part‑time employees. - Complete abolition:
Employers can waive the coordination deduction in their pension plans. This means that the entire gross salary (up to the maximum insurable salary) is taken into account. This solution is particularly attractive for employees with low incomes or multiple jobs. - Supplementary (non‑mandatory) benefits:
In the supplementary area, additional contributions and benefits can be agreed that go beyond the statutory minimum requirements. This allows higher salary components to be insured.
Impact on the insured salary
- Positive:
A higher insured salary leads to better old‑age, disability and death benefits for employees. This can increase the company’s attractiveness as an employer. - Negative:
Pension fund contributions increase for both employers and employees, leading to additional costs.
Examples of progressive pension fund solutions
Some companies and pension funds have introduced innovative approaches to minimise the disadvantages of the coordination deduction:
- Proportional adjustment to the level of employment.
- Option to use the entire gross salary as the insured salary.
Flexible pension plans tailored to employees’ individual needs.
Private pension provision as a complement
The benefits of the 1st and 2nd pillars are often not sufficient to fully maintain the accustomed standard of living in retirement. Private pension provision in the form of the 3rd pillar can be an important complement, especially for part‑time employees, people with multiple incomes and high‑income earners.
Importance of the 3rd pillar
The 3rd pillar is a voluntary pension arrangement that can close pension gaps in the AHV and pension fund. It not only provides financial security in old age but also offers tax advantages, as contributions to pillar 3a can be deducted from taxable income.
Tax advantages and maximum contributions
- Employees:
Employees who are insured in a pension fund can pay up to CHF 7'258 per year (as of 2026) into pillar 3a and deduct this amount from their taxable income. - Self‑employed persons:
Those who are not insured in a pension fund may pay up to 20 % of their earned income into pillar 3a, up to a maximum of CHF 36'288.
Tips for building up retirement assets early
- Start early:
The earlier you start saving in pillar 3a, the greater the compound interest effect. - Make regular payments:
Regular contributions help to continuously increase retirement savings and make full use of the tax advantages. - Diversification:
Pension assets can be invested in different products such as pension accounts or pension funds to spread risk and improve return prospects.