What is a life annuity in Switzerland?
A life annuity in Switzerland is insurance that pays you a regular income for life in exchange for capital paid to an insurer. Payments continue even if the original capital is used up. In Geneva and French-speaking Switzerland people also say pension viagère for the same idea: turning a lump sum into lifetime payments.
The amount depends on capital, age, sex, mortality tables and options (return of capital to heirs, spouse’s reversion). You are not keeping ownership of the capital: you trade liquidity for a payment until death.
Life annuity in Switzerland: calculation
A Swiss life-annuity calculation is not a simple percentage of capital. The insurer estimates life expectancy, applies a technical rate, deducts costs, then converts the capital into monthly or yearly payments. The later you start, the higher the annual annuity usually is, for the same capital, because the expected payment period is shorter.
Indicative example only: a 65-year-old who pays in CHF 100,000 might receive around CHF 3,800 a year, depending on the insurer, sex and options (with or without return of capital). For a personal calculation, several quotes must be compared: scales differ.
Options weigh heavily. Return of capital to heirs, a spouse’s reversion or an annuity-certain (guaranteed period) generally reduces the life-annuity amount, in exchange for better family protection.
Is a life annuity a good investment?
Points to weigh before converting capital into a life annuity.
Advantages:
- Income for life: the annuity tops up AHV and occupational pensions until death.
- Simple to run: once in place, you do not manage markets yourself.
- Spouse protection: a reversion can keep a lifetime pension for the survivor.
Drawbacks:
- Less liquidity: you generally cannot take the capital back, unless a return option is included.
- Tax: part of the annuity remains taxable. See Swiss life-annuity taxation below.
- Return: if you die early with no return of capital, total payments may stay below the sum paid in.
Before you commit, look at cash needs, health, your spouse and the rest of your pension. Insurance advice from Finwise compares annuity, lump sum and a mix, rather than signing the first scale.
What types of life annuity exist in Switzerland?
The main forms:
1. Immediate life annuity: you pay a single premium and start receiving a lifetime income at once. Useful if the capital is already there (property sale, pension assets, inheritance).
2. Deferred life annuity: you build the capital with regular or single premiums, and payments start later, often at retirement.
3. Life annuity with return of capital: on death, unused capital goes to the beneficiaries, after deducting annuities already paid.
4. Life annuity without return: nothing is paid back to heirs; the annuity is usually higher.
5. Joint life annuity: paid on two lives, often a couple. When the first person dies, the survivor keeps all or part of the annuity.
Each option has a cost in the calculation. To choose, talk to Finwise Assurances: we compare scales and options, not only the headline amount.
Annuity-certain or life annuity?
An annuity-certain is not the same as a life annuity. A life annuity stops at death (unless there is a reversion). An annuity-certain is paid for a guaranteed period, for example 10 or 15 years: if you die before that period ends, payments continue to the beneficiaries until the agreed date.
The two are often combined: a life annuity with a certain period. You receive income for life, and your family is covered in the early years. That option affects the calculation: the monthly amount is lower than a pure life annuity with no guaranteed period.
The right choice depends on the spouse’s age, heirs and what you want to protect. It is not a contract footnote: it is the core of the product.
Life annuity in Geneva and French-speaking Switzerland
In Geneva, many people look for a lifetime pension to secure extra retirement income after taking the 2nd pillar as capital or selling property. The contract and tax rules are federal; cantonal income tax then applies to the taxable share of the annuity.
A life annuity in French-speaking Switzerland (Geneva, Vaud, Valais, Fribourg, Neuchâtel, Jura) is taken out with the same types of insurers as elsewhere in Switzerland. What changes is your local situation: cantonal tax, cost of living, and having a contact in Geneva to compare quotes and options (return of capital, joint lives, annuity-certain).
Finwise Assurances, based in Geneva, helps households in the region review a life-annuity quote before they sign. See also preparing for retirement.
Life annuity and 3rd pillar
You can build the capital in pillar 3a or pillar 3b, then convert it into a life annuity at retirement. 3a contributions are deductible within legal limits; 3b is more flexible, with different tax treatment on the way in and out.
Life annuities from the 3rd pillar remain partly taxable in principle. The detail depends on the pillar, the contract date and the 2025 reform below. Combining 3rd-pillar savings and a life annuity aims at lifetime extra income, not maximum return.
Taxation of a life annuity in Switzerland
Swiss tax on a life annuity is not 100% of the amount paid. For pillar 3b life annuities, until the end of 2024, 40% of the annuity was in principle taxable as income. Since 1 January 2025, the taxable share depends on the technical interest rate set when the contract was concluded, not on a single 40% lump.
In practice, for a recent 3b policy only a small share of the guaranteed annuity may be taxable (an example often given is around 1% for a contract taken out in a low-rate context). Older contracts may stay under the previous regime, depending on transitional rules. Always check with your insurer and your canton. (Source: Confederation)
The reform aligns 3b annuity tax with investment conditions. It does not replace comparing the product itself: calculation, annuity-certain, return of capital and your cash needs still decide.
If you are looking at a life annuity in Geneva, contact Finwise for a comparison before you convert your capital.