Pension fund and payslip: How the BVG deduction and the coordination deduction are calculated
The LPP/BVG deduction on the payslip is the monthly occupational pension scheme contribution calculated on the coordinated salary – i.e. the portion of the OASI/AHV salary that remains after the coordination deduction is subtracted. The Federal Act on Occupational Old Age, Survivors' and Invalidity Pension Provision (LPP/BVG) stipulates that employers must contribute at least as much in total as their employees combined.
Key points:
What is the BVG deduction?
Monthly occupational pension contribution on the coordinated salary
What is the coordination deduction?
Amount deducted from the AHV salary before the BVG contribution is calculated (2026: CHF 26,460)
Who pays the BVG contribution?
Employees and employers; the employer pays at least half of the total
From when am I subject to BVG?
From an annual salary of CHF 22,680 with the same employer (2026); savings contributions from 1 January following the 24th birthday
How high are the contribution rates?
Graduated according to age; statutory age credits 7% to 18% of the coordinated salary, many pension funds are higher
Where does the deduction appear on the payslip?
As "PK/BVG" or "Pensionskasse" in the deductions section
What is the BVG deduction on the payslip?
The BVG deduction on your payslip is the contribution you pay monthly into the pension fund. According to Art. 66 BVG, employers must contribute at least as much in total as all their employees combined; in practice, most pension funds split the contributions half and half, and many employers voluntarily pay more. The pension fund forms the 2nd pillar of the Swiss three-pillar system and, together with the AHV, is intended to secure the accustomed standard of living after retirement, in the event of disability or death.
The Federal Office for Social Insurance (FSI) is responsible for legislation and also publishes the applicable limit amounts. Pension funds are supervised by the cantonal and regional BVG supervisory authorities as well as the Occupational Pension Supervisory Commission (OAK BV). The Federal Council generally adjusts the limit amounts every two years, parallel to the increase in AHV pensions; the values for 2026 have applied unchanged since 1 January 2025.
The deduction appears on the payslip as "PK/BVG". The calculation is not based on the full gross salary, but on the coordinated salary. In principle, the AHV salary is decisive (Art. 7 para. 2 BVG). The regulations of the pension fund may deviate from this and exclude certain salary components:
Expenses: Are not AHV salary and are therefore never subject to BVG.
Occasional salary components: Overtime compensation or one-off bonuses belong to the AHV salary, but the regulations can exclude them from the insured salary (Art. 3 BVV 2).
Salary above the upper limit: Under the statutory mandatory scheme, salary is only insured up to CHF 90,720 (2026). Extra-mandatory plans also insure higher salaries.
A concrete practical example (extra-mandatory plan, 2026 values): With a coordinated annual salary of CHF 80,920 and an employee rate of 7.0%, the monthly PK/BVG deduction is CHF 472.05. This rate corresponds to an extra-mandatory pension plan and is above the statutory minimum rates. For an overview of other deductions on the payslip and the basics of accounting for SMEs, an additional look at the connections between payroll accounting and financial accounting is worthwhile.
What is the coordination deduction and why does it exist?
The coordination deduction prevents you from insuring the same part of your salary twice: once in the AHV and again in the pension fund. Both social security systems cover part of the old-age pension, and without this mechanism, the lower salary range would be double-insured. The BVG deduction is therefore smaller than many employees expect based on their gross salary.
The coordinated salary is determined by a simple subtraction: AHV annual salary minus coordination deduction. This remaining amount is the basis on which pension fund contributions are incurred.
Entry threshold: CHF 22,680 annual salary with the same employer; below this, no BVG obligation
AHV annual salary: Relevant salary according to the AHV statement
Coordination deduction: Fixed amount of CHF 26,460, which is deducted before the BVG calculation
Coordinated salary: AHV annual salary minus coordination deduction; at least CHF 3,780, maximum CHF 64,260 in the mandatory scheme
Upper limit: CHF 90,720 annual salary; salary above this can only be insured on an extra-mandatory basis
The statutory coordination deduction has been CHF 26,460 since 2025. You can find the currently valid value on bsv.admin.ch. In the statutory mandatory BVG, this amount applies regardless of the degree of employment, which affects part-time employees structurally harder than full-time employees with high salaries: someone earning CHF 30,000 only has a coordinated salary of CHF 3,540, which is rounded up to the minimum of CHF 3,780. This effect was one of the central points in the discussion about the BVG reform.
Some pension funds mitigate this effect by adjusting the coordination deduction proportionally to the level of employment for part-time work. The BVG Substitute Pension Plan (Stiftung Auffangeinrichtung BVG), which catches employers without their own pension fund solution, applies the statutory limit amounts. The BVG reform, which was rejected at the ballot box on 22 September 2024, would have replaced the fixed coordination deduction with 20 percent of the AHV salary and lowered the entry threshold to CHF 19,845, which would have better insured part-time employees and people with low incomes in particular.
How are BVG contribution rates graduated by age?
How much you and your employers pay into the pension fund depends on your age: the older, the higher the rate. The BVG defines the age credits in Art. 16, i.e. the savings portion credited to the retirement assets:
Age group | Age credit according to Art. 16 BVG (in % of coordinated salary) |
|---|---|
25 to 34 years | 7% |
35 to 44 years | 10% |
45 to 54 years | 15% |
55 to 65 years | 18% |
The actual contribution is higher than the retirement credit because the risk benefits in the event of death and disability, administration costs, and the contribution to the guarantee fund are also financed. In the extra-mandatory area, pension funds may also provide for higher savings contributions. The following example shows the contribution rates of an extra-mandatory pension scheme, not the statutory minimum:
Age group | Employees | Employers |
|---|---|---|
25 to 34 years | 7.0% | 7.0% |
35 to 44 years | 10.0% | 10.0% |
45 to 54 years | 16.0% | 16.0% |
55 to 65 years | 19.0% | 19.0% |
Example of an extra-mandatory pension scheme, not the statutory minimum. The total contribution (both sides combined) here is 14% to 38% of the insured salary.
For SME HR, this means that a 55-year-old team member causes significantly higher ancillary wage costs in percentage terms than a 28-year-old person under the same pension fund rules, because Art. 16 BVG prescribes the age graduation and extra-mandatory plans usually maintain or strengthen this graduation.
Calculation example: Calculating the BVG deduction on the payslip
To calculate your BVG deduction yourself, you need three pieces of information: your annual AHV salary, the current coordination deduction, and your contribution rate according to age from the pension fund regulations. The annual contribution is calculated by multiplying the coordinated annual salary by the contribution rate and dividing the result by 12. The following example is based on an extra-mandatory plan and the 2026 limit amounts.
Step 1: Determine the annual AHV salary
What you do: Determine the relevant annual AHV salary, i.e. the gross salary without expenses and without components that the regulations exclude from the insured salary.
Example value: CHF 107,380 gross salary; no excluded components, so CHF 107,380 annual AHV salary (simplified). Because the plan is extra-mandatory, the full salary is insured; in the purely mandatory scheme, it would stop at CHF 90,720.
Step 2: Deduct the coordination deduction
What you do: Subtract the current coordination deduction from the annual AHV salary. You can find the currently valid amount on bsv.admin.ch; in 2026 it is CHF 26,460.
Example value: CHF 107,380 minus CHF 26,460 results in a coordinated annual salary of CHF 80,920.
Step 3: Determine age category and contribution rate
What you do: Determine your own age group and read off the contribution rate from the pension fund regulations. The statutory age credits (7% to 18%) are the minimum; many plans are higher.
Example value: Age group 25 to 34 years, employee rate 7.0%, employer rate 7.0% (extra-mandatory plan).
Step 4: Calculate annual and monthly contribution
What you do: Multiply the coordinated annual salary by the employee rate, then divide by 12. This gives the monthly deduction on your payslip. The employer's contribution is added separately and does not appear as a deduction.
Example value: CHF 80,920 × 7.0% = CHF 5,664.40 annual contribution for employees; CHF 5,664.40 ÷ 12 = CHF 472.05 monthly deduction. The employers pay an additional CHF 472.05, the total contribution is CHF 944.10 per month.
Automatically record BVG deductions in payroll accounting
Anyone who prepares the payroll for several employees must check the coordination deduction, age categories, and the split between employees and employers at every turn of the year and every time the limit amounts are adjusted. nextesy's payroll accounting covers AHV, ALV, BVG, and withholding tax and automatically calculates social security contributions like AHV. For SMEs without their own payroll department, this means fewer manual forms and less calculation.
