--- title: "LPP and Foreign Workers: Employer Obligations Upon Affiliation" url: https://www.ibani.com/en/guides/lpp-employers-foreign-workers lang: en date_modified: 2026-09-30 author: "Brice DELHOME" --- ![Human resources LPP foreign workers](https://www.ibani.com/images/ibani-frontalier.jpg) # LPP and Foreign Workers: Employer Obligations Upon Affiliation Reading time: 9 minutes | **Updated: 30 September 2026** By [Brice DELHOME](https://www.ibani.com/en/author/brice-delhome), Financial Strategy Expert 📌 In short: LPP and foreign workers - **The LPP applies to foreign workers just as it does to Swiss nationals:** nationality and place of residence do not matter. Any employee subject to OASI (AVS) who meets the salary and age conditions is affiliated with the employer's pension fund, cross-border workers (G permit) included. - **The 2026 thresholds:** an annual salary of more than 22,680 CHF; cover for death and disability from 1 January following the 17th birthday, retirement savings from 1 January following the 24th birthday. - **On hiring:** the employer reports the employee to its pension fund from the first day; if they have already worked in Switzerland, their vested benefits are transferred to that fund, and HR asks them for the statement. - **Seconded workers:** an employee seconded to Switzerland by an EU or EFTA company can remain insured in their home country, in principle for 24 months, with possible extensions. The exemption is proven by Form A1. - **A cross-border worker leaving for good:** if they remain insured in an EU or EFTA country, the mandatory part of their assets in principle cannot be paid out in cash, except to buy their main residence. It is placed in a vested benefits account; only the extra-mandatory part can be withdrawn. The Swiss labor market is deeply interconnected. In border cantons like Geneva, Vaud, Basel, or Neuchâtel, cross-border workers and expatriates make up an essential part of the workforce for SMEs and large companies alike. Given this volume of international talent, **affiliation to the 2nd pillar (LPP)** regularly raises complex questions for human resources departments and fiduciaries. What are the employer's legal obligations during onboarding? Can a seconded European worker be exempted? How should the vested benefits of a cross-border worker permanently leaving Switzerland be managed? This practical 2026 guide decodes your obligations. ## 1\. When does LPP affiliation become mandatory in Switzerland? Before looking at the specific status of the foreign workforce, it is worth recalling the foundations of the Federal Law on Occupational Old-age, Survivors' and Invalidity Pension Provision (LPP). The affiliation of your employee, whether Swiss or foreign, becomes **legal and mandatory** as soon as three cumulative criteria are met: - **OASI (AVS) Liability:** The employee must already be subject to the Old-Age and Survivors' Insurance (1st pillar), which is automatically the case when signing a local Swiss employment contract. - **The Relevant Salary (Entry Threshold):** For the year 2026, the employee must earn from the same employer an annual gross salary of more than **22,680 CHF** (if the employment lasts less than a year, the salary the employee would earn over a full year is used, art. 2 para. 2 LPP). - **Age Conditions:** From January 1st following their 17th birthday, the worker is [covered by the LPP](https://www.fedlex.admin.ch/eli/cc/1983/797_797_797/fr#art_7) for death and disability risks. From January 1st following their 24th birthday, they must begin contributing to retirement savings (old-age component). For 2026, the [Federal Social Insurance Office (FSIO)](https://www.bsv.admin.ch/dam/fr/sd-web/sAgdISSXenMT/f_Betr%C3%A4ge%202026.pdf) confirms that the threshold amounts for mandatory occupational pensions remain those of 2025, despite the introduction of the 13th AVS/AHV old-age pension. The table below summarises them. | LPP threshold amount (2026) | Annual value | What it means for the employer | | --- | --- | --- | | Minimum salary (entry threshold) | 22,680 CHF | Above it, and provided the age and length-of-employment conditions are met, the employee is affiliated to the pension fund, cross-border worker or not | | Coordination deduction | 26,460 CHF | Amount deducted from the annual salary to obtain the insured coordinated salary | | Minimum coordinated salary | 3,780 CHF | Minimum insured salary when the calculation gives a lower amount | | Upper limit of the annual salary | 90,720 CHF | Above it, the salary is no longer covered by the mandatory scheme (the extra-mandatory part depends on the fund's regulations) | *The employer has a legal obligation to report any employee meeting these criteria to their pension fund from the first day of employment. An omission can result in the direct financial liability of the company in the event of a claim (disability/death).* ## 2\. Are cross-border workers (G permit) subject to the LPP? With many cross-border workers recruited in Greater Geneva, the Annecy basin, Thonon, the Ain region (Pays de Gex, Valserhône), or the Doubs region (Pontarlier, Morteau), managing G Permits is a daily task for HR departments in French-speaking Switzerland. ### Cross-border workers are 100% subject to the LPP There is **no distinction** for cross-border workers: Swiss legislation applies by the principle of territoriality. A cross-border worker whose salary exceeds the threshold is compulsorily affiliated with your pension fund, regardless of whether they choose to be insured under the cross-border LAMal scheme or French health insurance, the PUMa (right of option). **Vested Benefits During Onboarding:** When a cross-border worker is hired, the employer reports them to its pension fund. If they have previously worked in Switzerland, they have funds in their former employer's fund, or on a vested benefits account, which must be transferred to your company's fund: the insured person must allow your fund to consult the statements of their **vested benefits** (art. 11 LFLP/FZG), and the former institution or the vested benefits institution pays the funds to your fund (art. 3 and 4 para. 2bis LFLP/FZG). In practice, HR (or the fiduciary responsible for personnel administration) asks them for this statement. ### Leaving Switzerland: Informing the Cross-Border Worker HR departments are often highly solicited when a cross-border worker who decides never to work in Switzerland again is dismissed or resigns. It is crucial to inform them correctly about the destiny of their 2nd pillar to avoid post-contract disputes: - **Cash withdrawal of the mandatory part is in principle excluded:** As Switzerland has signed bilateral agreements with the EU/EFTA, a cross-border worker returning to work in France remains compulsorily subject to state social insurance. Therefore, they cannot [request the cash withdrawal](https://www.fedlex.admin.ch/eli/cc/1994/2386_2386_2386/fr#art_25_f) of the "mandatory LPP" part of their assets, unless they use these funds to purchase their main residence in France. - **Freezing of assets:** Your former employee's mandatory funds will be paid into a vested benefits account or policy in their name, where they remain in principle until retirement (payment possible at the earliest 5 years before the reference age). - **The extra-mandatory part:** Only the so-called excess (extra-mandatory) part of the accumulated savings can, if applicable, be paid to them in cash into a bank account if they permanently leave Switzerland. ## 3\. Are expatriates and seconded workers (B, C, L permits) subject to the LPP? Beyond daily cross-border labor, Swiss companies massively recruit specialists internationally who physically settle in Switzerland. ### Expatriates with a Local Swiss Employment Contract (B Permit) If you recruit a developer, an engineer, or a senior executive in Europe and offer them a contract under Swiss law along with establishing their residence in Switzerland (obtaining a standard B Permit), they are treated exactly like a Swiss citizen. **They are fully subject and contribute to the LPP.** ### LPP Exemption for International Seconded Workers One of the rare legal exceptions to LPP liability concerns "seconded" workers. These are employees sent by a foreign company to work temporarily in a branch or subsidiary based in Switzerland (intra-group employment contracts, or specific assignments). Thanks to the Agreement on the Free Movement of Persons (AFMP), a worker seconded to Switzerland by an EU/EFTA company **can remain insured exclusively in their home country's pension system** for 24 months in principle (Regulation (EC) No 883/2004, art. 12, applicable to Switzerland through the AFMP), with extensions possible by agreement between the two States. In this case, they are exempt from LPP affiliation. **The HR Obligation:** To prove this exemption in the event of an audit, your company must mandatorily obtain **Form A1**, issued by the home country's social security fund, justifying that the seconded employee remains affiliated there. ## 4\. How can you pay a cross-border worker's salary in euros? Once the LPP affiliation obligations have been settled, the physical payment of the net salary poses a final technical and financial challenge for Swiss companies hiring numerous cross-border workers. ### Paying Payroll in Euros (EUR): A Competitive Advantage To retain a cross-border worker who lives and spends in euros (French mortgage, daily bills), more and more Swiss SMEs and fiduciaries propose **paying the salary directly in euros**, to guarantee them income stability against the foreign exchange market. However, if the company's accounting and payslip (including AVS and LPP contributions) are established in CHF, paying its cross-border employee into their French (FR) IBAN via the traditional SWIFT banking system will generate massive costs for both parties: - The employer or employee will pay **international (non-SEPA) transfer fees**. - The bank (Swiss or French) will apply a **hidden exchange rate markup** (potentially exceeding 1.5%), penalizing the employee's actual bottom-line net salary. #### The ibani Solution for Cross-Border Payroll To get around this problem, ibani offers Swiss fiduciaries and SMEs a transfer infrastructure suited to salaries: 1. **No SWIFT transfer:** the company pays its CHF by domestic transfer to each employee's Swiss ibani IBAN, then ibani pays the converted salary to the cross-border worker by SEPA transfer. 2. **Real interbank rate plus a sliding margin:** the conversion starts from the real market rate, plus a transparent margin of 0.40% to 0.15% depending on the amount, i.e. 0.40% for a monthly salary under CHF 10,000. 3. **HR retention:** by directing your cross-border employees to ibani, you offer them a salary repatriation tool with a transparent margin, while reducing your bank transfer costs. [Open a Corporate Account](https://www.ibani.com/en/app) Fast compliance process for SMEs and self-employed professionals. ## FAQ: Employers & Cross-Border Pensions Yes, absolutely. The Swiss occupational pension system (LPP) makes no distinction based on nationality or place of residence. As soon as a cross-border worker works for a Swiss employer, exceeds the annual access threshold (22,680 CHF), and meets the age conditions, they are compulsorily subject to it. If they permanently leave Switzerland, the mandatory part of the LPP in principle cannot be paid out in cash (except for purchasing a main residence) since they remain subject to the social insurance of an EU/EFTA country (France). The funds must be paid into a vested benefits account or policy in Switzerland, where they remain in principle until retirement (payment possible at the earliest 5 years before the reference age). The extra-mandatory part, however, can be withdrawn as a lump sum. Foreign residents holding a local Swiss employment contract (B or C Permit), as well as those recruited for a short period (L Permit) if their contract exceeds 3 months, are subject to the same LPP obligations as Swiss citizens. Only "seconded" workers who remain covered by the social security of their home country can be exempted (via an A1 certificate). The law does not place the transfer of vested benefits on the employer. The employer must report the new employee, whether Swiss or foreign, to its pension fund. The transfer is then settled between the insured person and the institutions: the insured person must allow the new fund to consult the statements of their previous exit benefit (art. 11 para. 1 LFLP/FZG), the former institution pays this benefit to the new one (art. 3 LFLP/FZG), and the new fund may claim it (art. 11 para. 2 LFLP/FZG). In practice, HR asks the employee where their vested benefits are held. ## Official sources - [Federal Act on Occupational Old Age, Survivors' and Invalidity Pension Provision (LPP/BVG), art. 2 and 7 (in French)](https://www.fedlex.admin.ch/eli/cc/1983/797_797_797/fr#art_7) — Fedlex, accessed 29 September 2026 - [Ordinance on Occupational Old Age, Survivors' and Invalidity Pension Provision (OPP 2/BVV 2), art. 5 (threshold amounts, including 22,680 CHF) and art. 1j (contracts of three months or less) (in French)](https://www.fedlex.admin.ch/eli/cc/1984/543_543_543/fr#art_5) — Fedlex, accessed 29 September 2026 - [Vested Benefits Act (LFLP/FZG), art. 3, 4, 11 and 25f (transfer of the exit benefit; restrictions on cash payment in the EU, Iceland, Norway and Liechtenstein) (in French)](https://www.fedlex.admin.ch/eli/cc/1994/2386_2386_2386/fr#art_25_f) — Fedlex, accessed 30 September 2026 - [Regulation (EC) No 883/2004 on the coordination of social security systems (SR 0.831.109.268.1), art. 12 (posting) and 16 (exceptions) (in French)](https://www.fedlex.admin.ch/eli/cc/2012/323/fr) — Fedlex, accessed 30 September 2026 - [Amounts valid from 1 January 2026 (threshold amounts for mandatory occupational pensions)](https://www.bsv.admin.ch/dam/fr/sd-web/sAgdISSXenMT/f_Betr%C3%A4ge%202026.pdf) — Federal Social Insurance Office (FSIO), document in French, accessed 30 September 2026 - [Vested Benefits Ordinance (OLP/FZV), art. 16 (payment of retirement benefits) (in French)](https://www.fedlex.admin.ch/eli/cc/1994/2399_2399_2399/fr#art_16) — Fedlex, accessed 30 September 2026 **HR Legal Disclaimer:** The tax, social information, and thresholds of the Occupational Pension Plan (LPP) mentioned in this article are based on data in effect for the year 2026. They are provided as an informational benchmark for employers and human resources. As cross-border regulations are constantly evolving and subject to complex bilateral agreements, we recommend that companies and fiduciaries contact their compensation and pension fund to secure each affiliation.