Your Pension Fund (BVG): Buy-Ins, Conversion Rates and Choices

How the second pillar works, why conversion rates matter and when a voluntary purchase pays off.

7 min read · Retirement & Pensions

Life situations: Planning for retirement

For most employees, the pension fund (Pensionskasse) is the biggest asset after their home.

How it is built

Contributions are a share of the insured salary, which is your salary minus a coordination deduction (CHF 26,460 in 2025/26) up to an upper limit. Rates rise with age (7 %, 10 %, 15 %, 18 % of insured salary in the legal minimum), split between you and your employer. Your balance earns interest set by the fund (the legal minimum interest was 1.25 % in 2025).

Pension or lump sum?

The conversion rate turns capital into a yearly pension. The legal 6.8 % applies only to the mandatory portion; many funds offer far less on the rest. Withdrawing capital gives flexibility and can reduce tax if staggered, but you take on longevity and investment risk. Ask your fund for the rules and the deadline for announcing a capital withdrawal.

Buying in

If you have gaps (late career start, divorce, part-time work) you can buy back into the fund. The amount is fully tax-deductible, but:

• Capital withdrawal is blocked for three years after a purchase.
• The best time is in years with high income, ideally spread over several years to reduce progression.
• Check the fund's financial health and interest rate first.

Try the buy-in calculator to quantify your tax benefit.