Strategic Retirement Planning: Leveraging BVG 1e for enhanced Flexibility and Growth

For private clients and entrepreneurs in Switzerland, effectively integrating pension planning into a comprehensive wealth strategy is essential. This article, featured in the Neue Zürcher Zeitung (NZZ), examines how BVG 1e plans offer tailored solutions for optimising retirement assets. Discover the advantages and considerations of integrating these specialised pension solutions.

Using 1e Plans to Integrate Pension Provision into Wealth Strategy

Neue Zürcher Zeitung
18.05.2025

For high earners and entrepreneurs, retirement planning is not just a legal obligation — it also requires foresight and precision. BVG 1e solutions provide an effective answer to this challenge.

Switzerland’s pension system is considered solid—but standardized models quickly reach their limits. For entrepreneurs and employees with high incomes, individualized and long-term concepts are needed—ones that consider all existing wealth components comprehensively in order to manage assets effectively. The need for flexibility in retirement planning is particularly addressed by the so-called 1e pension plans. As part of the occupational pension system (BVG), 1e solutions—together with the first pillar—offer basic coverage in retirement, as well as in cases of disability or death.

This specific type of pension plan allows high earners to invest the non-mandatory portion of their retirement capital with greater flexibility, thereby expanding their individual scope in retirement planning.

How 1e Plans Work – An Overview

BVG 1e solutions are a form of occupational pension aimed at individuals with annual incomes above CHF 136,080. The term “1e” is derived from Article 1e of the Ordinance on Occupational Retirement, Survivors’ and Disability Pension Plans (BVV2), which defines the conditions for this specific pension solution. This income threshold corresponds to the upper limit of insured earnings, up to which the BVG security fund guarantees mandatory benefits. Above this threshold, the insured individual assumes their own investment risk.

What sets 1e plans apart is the freedom of choice for policyholders: unlike traditional BVG plans, where the pension fund dictates the investment strategy, 1e solutions allow insured individuals to choose how their retirement capital is invested.

The Growing Importance of BVG 1e Plans

Occupational pensions—and 1e plans in particular—are becoming increasingly relevant in light of Switzerland’s demographic trends. According to a 2023 study by the Federal Statistical Office (FSO), the proportion of people over 65 in the Swiss population will rise to nearly 30% by 2050. This means fewer workers supporting more retirees. In recent years, overly generous and guaranteed retirement conditions have led to a redistribution of pension fund returns—despite the original intention of the pension system being based on individual savings (the capital-funded method).

Currently, a portion of capital market returns is being used to finance retirees’ pensions. In 2021, the Swiss Pension Fund Association (ASIP) estimated this redistribution at around CHF 7 billion. The opportunity costs for policyholders due to overly conservative pension fund investment strategies are not even included in this figure. A 1e plan can help counteract this disadvantageous redistribution within occupational pension schemes.

Benefits for Employees

It is the employer—not the individual employee—who decides whether to join a BVG 1e pension foundation. When well-designed, these plans offer numerous benefits to employees: for example, they can choose from up to ten investment strategies for their 1e plan. This enables them to align their pension capital with their broader wealth strategy, in accordance with their personal risk capacity and risk appetite.

Naturally, these advantages are accompanied by potential risks, which require personalized planning, clear risk disclosure, and professional advice and support.

Another advantage of occupational pensions is the potential for tax optimization through voluntary contributions to the second pillar. In Switzerland, such contributions can be deducted from taxable income, thereby strengthening individual pension provision and significantly reducing tax burdens. While this benefit is not exclusive to 1e plans, policyholders in these plans fully benefit from long-term investment performance. For business owners in particular, attractive withdrawal strategies can be developed within the interplay between salary, dividends, and BVG contributions.

Advantages of 1e Plans for Employers

A 2022 pension study by Swiss Life shows that an increasing number of companies are adopting 1e solutions to attract and retain talented employees. Since not only the investment opportunities but also the risks are transferred to the employees, the financial risk for the employer is reduced.

Depending on the accounting standard—especially under IFRS or US GAAP—BVG 1e solutions can help shift pension liabilities off the balance sheet. This can improve key financial indicators, which is particularly relevant for internationally active companies with strict reporting requirements.

1e solutions have been available in Switzerland since 2006. They gained popularity after the mandatory minimum guarantee for vested benefits was abolished in 2017. According to a 2023 analysis by PricewaterhouseCoopers, more than 45,600 individuals were already enrolled in a 1e plan.

Holistic Wealth Strategies

From a financial planning perspective, a solid and holistic investment strategy is the foundation for successful long-term wealth allocation. It is crucial to consider not only existing liquid and illiquid assets as well as pension assets, but also to include future “cash events” in the planning process.

One often underestimated aspect of wealth planning is the strategic use of debt capital—particularly in the context of succession planning. Early involvement of all stakeholders and a comprehensive needs analysis are essential to carefully assess all options in this complex process. This reduces the risk of unexpected developments and increases the chances of long-term success. This way, intergenerational financing strategies can be optimally aligned, and assets transferred in a planned manner into individual wealth structures.

BNP Paribas is one of Europe’s most solid banks—with regard to both size and balance sheet quality. This enables the bank to support and manage very large and complex financing projects, both in Switzerland and internationally. By focusing on innovative, high-growth companies, BNP Paribas can foster synergies between entrepreneurial growth and private wealth management.

When implementing the defined investment strategy, customizable wealth management must be complemented by robust platforms for structured products and FX trading. This ensures that market opportunities can be seized quickly and precisely. A key asset class is private markets: with exposure to private equity, private debt, or real assets, they not only provide diversification but also access to attractive return sources. BNP Paribas offers clients selective access to leading funds and direct investments—embedded in a strategically coordinated wealth allocation.