How to cover non-mandatory 2nd pillar benefits

A friend of mine recently found out (through me…) that her employer only covers the mandatory part of her second pillar.

She’s asked her employer who said they will upgrade her second pillar coverage to include the non-mandatory part. Apparently, nobody in the company has the non-mandatory part covered but they want this option to be available for those who want it. However, they don’t know how long this will take.

Now she’s freaking out and wants to know what she can do in the meantime. Are there insurance policies to improve e.g. disability insurance? How much does it make sense to cover these gaps?

Pension fund plans must always be implemented on a company-wide basis. It is not possible for employee to pick and choose what they want. However, if all employees want an insurance, are willing to pay for it, and it is offered by the company’s pension fund, then they can submit a petition to their employer. Employees, as a group, can also petition their employer to change pension funds if they want a plan that is not covered by the company’s current pension fund.

It is perfectly possible to close most of the gaps using personal insurance solutions from insurance companies instead of the pillar 2. The cost may be slightly higher though.

The risks that can be insured through a pension fund (pillar 2) include:

1. Disabilities resulting from illness. This is the most important voluntary coverage you can get from the pillar 2, because the compulsory insurance (DI and pillar 2 combined) is very poor, as it is based on contributions paid up until the point that you become disabled. The voluntary insurance you can within the scope of your pension fund closes the gap between the compulsory disability pension, which may be peanuts, and your actual (insured) income. Alternatively, you can get personal disability insurance within the pillar 3a or pillar 3b to close gaps, but it will likely be more expensive.

2. Disabilities resulting from accidents. Employer-based accident insurance adquately covers disabilities resulting from accidents, so your pension fund’s disability insurance plays a secondary role. Here too, you can close gaps with personal pillar 3a or pillar 3b disability insurance.

3. Death. As with disability insurance, the compulsory survivor’s insurance included in your pension fund is poor, as it is based only on your existing pension benefits at the time of your death. The voluntary survivor’s insurance offered by some pension funds within the pillar 2 closes the gap so that your dependents receive survivor’s pensions that match your real income, and not just your pension benefits. Alternatively, you can insure this risk using personal term life insurance.

4. High incomes. Some pension funds have the option of employers and employees making pension fund contributions that are bigger than the compulsory contributions. This results in your pension benefits accumulating faster and more accurately representing your actual income. Alternatively, you can save privately on a tax-privileged basis using the pillar 3a.

All of these non-compulsory extras are beneficial, but the risks they cover can also be insured using personal solutions within the pillar 3a. Of course, having them covered by the pillar 2 is more ideal, because then they do not negate from your pillar 3a tax deduction.

It is important to understand that more voluntary insurances means higher deductions from employee salaries to cover insurance premiums and voluntary contributions.


While pension plans can indeed not be customized for an individual employee, a company may offer employees a choice from multiple pension plans. And there can be different pension plans for different categories of employees (e.g., a pension plan for managers). What pension plans a company can offer will also depend on the pension fund.


What are the best options to close this gap?

That’s what I understood. They want to offer additional 2nd pillar coverage for those employees who would want it, and then they would all have the same coverage plan.

Take another job. Honestly, the impact on the savings part of pillar 2 could be huge. Maybe this employer also has the lower contribution