Three pillars of retirement planning

The 3-pillar system is a social security concept. It consists of three pillars covering different facets of financial security. The first pillar includes the national old-age and survivors’ insurance (AHV) and the disability insurance (IV), which provides basic subsistence security in old age and for surviving dependents. The second pillar comprises the occupational pension plan (BVG), a mandatory insurance that provides employees with additional pension benefits and risk protection. The third pillar stands for the voluntary/private form of pension provision and includes both tied pension provision (pillar 3a) and free pension provision (pillar 3b), which serve to supplement retirement provision and asset accumulation.