Pillar 2a

In Switzerland, the term pillar 2a denotes mandatory occupational retirement saving and financial risk management. While the term is most widely used to denote mandatory occupational pension fund benefits, it also encompasses mandatory occupational accident insurance and disability insurance.

All employees of Swiss companies are required to participate in occupational pension funds and accident insurance. Employers must cover half of employee contributions, with the other half typically being deducted from employee salaries. Pillar 2a retirement benefits are blocked until 5 years before their holder reaches legal retirement age, at which point they may be withdrawn as a lump-sum or left in the pension fund in exchange for a lifelong annual pension paid out at a government-dictated conversion rate.

Pillar 2a assets can be withdrawn ahead of the legal retirement age for the purpose of purchasing real estate for use as a primary residence. They can also be withdrawn when their holder moves their residence outside of Switzerland (and European Union member countries) permanently.

When a previously-employed individual becomes self-employed or unemployed, their pillar 2a assets must be transferred from their occupational pension fund to one or two vested benefits accounts or vested benefits life insurance policies. If they choose When the individual becomes employed again, their vested benefits must be transferred to their new occupational pension fund.

Individuals who are unemployed when they reach retirement age must withdraw their vested benefits as a lump sum.

See also: Pillar 2b

More on this topic:
Swiss 3a retirement account comparison
Swiss vested benefits account comparison

Editor Daniel Dreier
Daniel Dreier is editor and personal finance expert at moneyland.ch.