Pensions & Insurance

The second pillar is Switzerland's occupational pension system, governed by the Federal Act on Occupational Retirement, Survivors' and Disability Pension Plans (BVG/LPP). Employers and employees fund it through contributions to pension funds (Pensionskassen). It sits between the state pension (AHV/AVS, first pillar) and voluntary private savings (third pillar).

The investment ordinance BVV 2 makes the board responsible for the investment strategy (art. 49a) and sets category limits (art. 55): 50% for equities, 30% for real estate, 15% for alternative investments, 10% for infrastructure and 30% for foreign currency without hedging. A fund may exceed a limit if it justifies conclusively in its annual report that security and risk diversification are maintained (art. 50 para. 4).

According to Complementa's Risiko Check-up 2026, equities reached 34.1% of average portfolios at the end of 2025, bonds fell to a historic low of 29.3%, real estate stood at around 22.6% and alternative investments at 9.8%. Swisscanto's Pensionskassenstudie 2026 shows a similar picture, with 34.5% in equities and 27.3% in bonds.

The funding ratio compares a pension fund's available assets with the capital required to meet its obligations to insured members and pensioners. A ratio below 100% means underfunding, which requires recovery measures. Complementa reports a capital-weighted funding ratio of 114.4% at the end of 2025, with only around 2% of funds underfunded.

Swiss insurers are supervised by FINMA and must hold risk-based capital under the Swiss Solvency Test (SST), which shapes how much market risk they can carry. Pension funds are overseen by cantonal and regional supervisory authorities under the Occupational Pension Supervisory Commission (OAK BV) and invest within the BVV 2 framework. Both are long-horizon investors with liability-driven portfolios.