What is the Swiss 2nd Pillar (LPP) and Why It Matters for Travailleurs Frontaliers
The Swiss pension system is built on three parts: the 1st pillar (AVS), the 2nd pillar (LPP), and the 3rd pillar (private savings). For travailleurs frontaliers, the 2nd pillar is often the most important part of retirement planning, because it represents a significant share of future income once professional life ends.
If you work in Switzerland but live in a neighbouring country, you are automatically included in the LPP as long as your annual salary exceeds a certain threshold. This means that even as a cross-border worker, you are building up retirement rights in Switzerland that will directly impact your financial security later.
Key Figures Every Frontalier Should Know
What is the minimum salary to contribute to the 2nd pillar?
The entry threshold in 2025 is CHF 22,680 per year. If your salary is lower, you are not automatically covered. Once you earn more than that, you are insured, starting with risk coverage (death and disability) from age 17, and retirement savings from age 25.
How is the coordinated salary calculated?
The LPP doesn’t insure your entire salary. Each year, a coordination deduction of CHF 26,460 is applied. This means only the portion above that is insured, up to a maximum of CHF 64,260. Even if your income is just above the entry threshold, a minimum coordinated salary of CHF 3,780 is guaranteed, so that everyone who qualifies builds some savings.
How much do contributions increase with age?
Contributions grow as you get older. Between ages 25 and 34, around 7% of your salary is contributed. From 35 to 44 it’s 10%, from 45 to 54 it’s 15%, and from 55 to 65 it rises to 18%. Half is paid by your employer, half by you, though some employers cover more than the minimum required.
How is the Pension Calculated for Travailleurs Frontaliers?
The pension you receive depends on the savings accumulated and the conversion rate. The legal conversion rate for the mandatory part of your savings is 6.8%. For example, if you have CHF 200,000 saved in the mandatory portion, this would give you CHF 13,600 per year (around CHF 1,133 per month).
However, many frontaliers also have an extra-mandatory part, which depends on your employer’s pension plan. Conversion rates for this part are often lower, but they still increase your total pension. That’s why it is essential to check both your mandatory and extra-mandatory entitlements when planning your retirement.
What Are My Options When I Retire?
Can I take my pension as a lump sum?
Yes, you can choose between a monthly pension (rente), a one-time lump sum, or a mix of both. A pension provides lifelong security, while a lump sum offers flexibility and can be useful for big projects or inheritance planning.
What are the tax consequences?
For frontaliers, taxation depends on your country of residence. In France, for example, lump sums are subject to a fixed tax rate, while pensions are taxed as income. The best choice depends on your family situation, income level, and long-term goals.
What if I move or change jobs?
If you change employers, your LPP savings move to the new pension fund. If you leave Switzerland without immediately joining another employer, your savings are transferred to a vested benefits account. If you become self-employed, you are not automatically covered but can choose to continue with voluntary insurance.
Can I Withdraw My 2nd Pillar Before Retirement?
Yes, in certain cases:
Buying a primary residence: you can withdraw or pledge your 2nd pillar to finance your main home.
Becoming self-employed: you may withdraw your accumulated capital if you can prove you’ve officially started your business.
Leaving Switzerland permanently: if you move to a country outside the EU/EFTA, you can withdraw the full amount. If you move to an EU/EFTA country, you can withdraw only the extra-mandatory part; the mandatory part stays blocked until retirement.
What Happens to My 2nd Pillar in Case of Death?
If you pass away, your spouse or registered partner is entitled to a survivor’s pension under certain conditions, such as having a dependent child, being over 45, or having lived together for at least 5 years. If these conditions are not met, a lump sum may be paid instead. These rules aim to protect families, but it is always recommended to check your own pension fund’s regulations for clarity.
How mybestfx.ch Supports Travailleurs Frontaliers
Understanding the Swiss pension system can be overwhelming, especially with cross-border rules and taxation differences. This is where mybestfx.ch helps:
Personalised simulations: get a clear picture of what your retirement income could look like.
Currency conversion strategies: as a frontalier, you’ll need to convert your Swiss francs into euros. mybestfx.ch offers competitive exchange rates and transparent solutions to save you money every month.
Tax and withdrawal planning: by anticipating your options early, you can reduce tax burdens and maximise your retirement savings.
Frequently Asked Questions by Travailleurs Frontaliers
When do I start contributing? Risk insurance (death and disability) starts at age 17, retirement savings contributions begin at age 25.
Can I withdraw my full 2nd pillar if I return home? If you move to an EU/EFTA country, only the extra-mandatory part can be withdrawn early. The mandatory part remains until retirement. If you move outside the EU/EFTA, you may withdraw everything.
How do I know my exact savings? Every year, your employer and pension fund send you a certificate with your accumulated retirement assets. Keep these documents, as they are key to planning your future pension.
What happens if my salary is above the LPP ceiling? The mandatory part is capped, but your employer may contribute to the extra-mandatory part. This portion follows different rules and is often a valuable supplement.
Conclusion
For travailleurs frontaliers, the Swiss 2nd pillar is more than just a retirement plan: it is a cornerstone of financial stability across borders. Understanding how it works, when you can access it, and how to optimise it can make a major difference to your future.
With guidance and tools from mybestfx.ch, you can take control of your retirement planning, secure better exchange rates, and ensure that every franc you contribute today turns into peace of mind tomorrow.