Pension provision isn't a topic reserved for people who start worrying about it seriously at 45. It's something that concerns you from your very first paycheck, even if retirement itself seems to belong to a very distant future.
What Many Young Professionals Don't Know
What the Basic System Actually Covers
On a payslip, OASI (AVS) and pension fund contributions often look like two abstract lines, percentages deducted without really knowing what they correspond to in practice. OASI, the first pillar, aims to cover basic living needs in retirement. The pension fund, the second pillar or occupational pension (LPP/BVG), adds to this to bring you closer to the standard of living you had while working.
The system built on the first and second pillars is designed to maintain around 60% of the income earned before retirement (official portal of the Swiss administration). In reality, however, this rate can vary considerably depending on your salary, your career path and your pension fund. The gap with the income earned during your working life can therefore be significant, which is why it's worth looking into early enough.
Pension Gaps Start Building From the Beginning
Pension gaps don't all take the same form. A career break, for example, can reduce the savings built up in the second pillar. On the OASI side, a genuine gap appears when no contribution has been paid during a year when you were subject to the contribution obligation. Studies, time abroad, part-time work or a career break can therefore have different consequences depending on your situation.
We already touched on this mechanism in our article on the 7 financial mistakes holding you back: many of these mistakes aren't bad decisions, they're decisions never made, simply because no one thought about them at the right time.
Why Starting Early Really Changes Things
The Logic of Compound Interest Applied to Pension Provision
This is probably the most underestimated argument among young professionals. Take a purely illustrative example. Someone who pays in CHF 5,000 per year for 40 years, with a hypothetical average return of 4% per year, could build up capital of around CHF 475,000 by age 65. Starting ten years later, with the same CHF 5,000 per year for 30 years, the capital would reach around CHF 280,000.
The gap is therefore close to CHF 195,000, while the difference in personal contributions is only CHF 50,000. The rest comes essentially from the extra time during which the capital was able to generate returns: the longer capital stays invested, the more the gains from previous years generate gains of their own. A ten year head start at the beginning is worth, over time, far more than ten years of extra effort at the end.
This example is purely illustrative: a 4% return is neither guaranteed nor constant over time.
The Tax Advantage From the Early Years
Contributions paid into Pillar 3a can be deducted from taxable income up to the legal ceiling in force. The tax saving obtained, however, depends on income, place of residence and personal tax situation. It can therefore vary considerably from one person to another.
The payment reduces your taxable income and can thus generate a tax saving. Over several years of contributions, these tax savings can become significant, even though their amount depends entirely on your personal situation. This is an advantage that exists from the very first payment, even with a modest starting salary.
If you're still hesitating between Pillar 3a and Pillar 3b to structure your savings, we go into the differences between the two in our article Pillar 3a or 3b: what are the differences and how to choose?
The First Concrete Steps for a Young Professional
Understanding Your Second Pillar
Before even thinking about the third pillar, the first step is to look at what you already have. The pension certificate, sent every year by your pension fund, shows the capital already accumulated and an estimate of your future pension. Most young professionals have never opened it, or have skimmed it without really understanding it. Taking ten minutes to read it gives you a concrete basis to reason from, rather than moving forward in the dark. Start by identifying four pieces of information: your current retirement savings, the contributions paid, the projected benefits at retirement, and the coverage provided in case of disability or death.
Opening a Pillar 3a as Soon as Possible
Many young professionals put off opening a Pillar 3a, telling themselves they'll start once they can pay in the maximum amount. It's a fairly common reflex, even though there's no need to wait until you can pay the maximum before starting to think about your pension provision.
Starting early allows every franc invested to work longer. This doesn't mean that a small amount paid in throughout an entire career will systematically produce more than a much larger amount paid in later: the result depends on time, the amounts invested and the return obtained, all at once. The benefit of starting early is mainly to benefit longer from compound interest and to gradually build a savings habit.
But before locking away part of your savings for the long term, it remains important to keep enough liquidity for your everyday expenses, short-term plans and unexpected costs.
Thinking About Pension Provision Even During Atypical Periods
An extended trip, a part-time job, a move to self-employment: these periods all have consequences for your pension provision, consequences it's better to anticipate rather than discover after the fact. This doesn't mean giving up on these plans, but rather factoring them into a broader reflection on your financial situation.
Have you never really taken stock of your OASI, your second pillar or your savings? Start with Fondations, our free programme designed to help you understand where you stand and lay the first foundations of your financial organisation.
Conclusion
At 25 or 30, retirement seems to belong to a distant, almost abstract future. But the decisions made now, even modest ones, are the foundations on which your future financial security is built. Every year counts, in one direction or the other. And if you'd like to go further, discover our different support solutions.
FAQ
At what age should you start contributing to Pillar 3a?
You can open a Pillar 3a as soon as you have income subject to OASI contributions, which can be the case from an apprenticeship or a holiday job onward. The earlier you start, the more the effect of compound interest works in your favour.
What happens if you don't contribute to the third pillar when you're young?
Not contributing when young reduces the time during which your savings can benefit from compound interest. Since 2026, however, it has become possible, under certain conditions, to make up for certain missing Pillar 3a contributions starting from the year 2025 and up to ten years later. A financial buy-in cannot, however, recreate the investment time that was lost.
Can you contribute to Pillar 3a as a student or intern?
Yes, provided you receive earned income subject to OASI contributions in Switzerland. Depending on your situation, it's therefore possible to contribute to Pillar 3a during an apprenticeship, a paid internship or a student job.
How do you read your pension certificate?
The pension certificate shows the capital already accumulated in your pension fund, an estimate of your pension at retirement, and sometimes the amount available in case of disability or death. If you're unsure about a figure, your pension fund or an advisor can help you interpret it.
Is the Swiss pension system enough to live comfortably?
The system built on the first and second pillars aims overall to maintain around 60% of previous income. This level remains indicative, however: the income actually received at retirement depends notably on career path, salary, contribution periods and pension fund regulations. The third pillar allows you to complement this pension provision according to your goals and personal situation.
Disclaimer
The information presented in this article is provided for purely informational and educational purposes. It does not constitute personalised advice, investment or pension advice, nor an offer or solicitation regarding any financial product. Any financial or pension decision should take into account your personal situation, objectives and needs. Investments carry risks and future returns are not guaranteed.