Guide
Understanding the Swiss 2nd pillar (LPP/BVG)
A clear overview of the Swiss 2nd pillar: how it’s funded, what the conversion rate means, and how to think about capital vs annuity.
Not financial or tax advice.
How the 2nd pillar pays you
At retirement, your accumulated capital can be converted into an annuity using a conversion rate, or taken partially/fully as a lump sum depending on your pension fund rules.
Quick formula
Indicative annuity per year ≈ capital × conversion rate.
Conversion rate: why it matters
Small changes in conversion rate have a big impact on the monthly pension. Test multiple rates in the calculator to see sensitivity.
Capital vs annuity
Annuity (rente)
- Predictable monthly cashflow
- Longevity risk partly pooled
Capital (lump sum)
- Flexibility & inheritance potential
- Investment discipline required