If you regularly pay into your pillar 3a, you can save taxes as the amount paid can be deducted from your taxable income. Employees who are affiliated to a pension fund can deposit a maximum of CHF 7258 in 2025. For self-employed persons who are not affiliated to a second pillar, the maximum is CHF 36,288. But even a smaller amount is worthwhile. The maximum amount is usually adjusted every two years by the Federal Council in line with price and salary trends.
In contrast to income and other assets, 3a assets are not taxable until they are paid out at retirement age. You can also invest your 3a assets in a bank or fintech company. This allows the money to grow and benefit from the compound interest effect instead of earning hardly any interest in a savings account and losing value due to inflation.
From what income does the 3a bring tax advantages?
The Swiss median salary in 2023 was CHF 7041 per month. Only very few people can afford to pay the maximum amount into pillar 3a every year. That's around CHF 600 every month! However, if it is possible to set aside at least a partial amount each month (or year) for private pension provision, it is definitely worthwhile. Your tax bill can be significantly lower as a result. In addition, changes to the law from 2025 will bring further tax advantages.
How does the retroactive purchase into pillar 3a work?
If you were not able to pay the maximum CHF 7258 into pillar 3a as an employed person in 2025, you can make up for this for the first time in 2026 - i.e. make a retroactive purchase. This means that in addition to the maximum annual 3a deduction in 2026, you can also ‘top up’ the amount not fully paid in the previous year. To do this, you must have earned income subject to AHV contributions in Switzerland in both years. Currently, a minimum income of CHF 2,300 per year is subject to AHV contributions.
These are the requirements for a retroactive purchase into pillar 3a:
- In the year of the retroactive purchase, you must have already paid the maximum annual contribution for pillar 3a. The maximum 3a contribution is also expected to be CHF 7258 in 2026. You must therefore pay in this amount first so that the retroactive purchase for 2025 is possible. You can deduct both the retroactive purchase and the regular annual contribution from your taxable income.
- You can also fill the contribution gaps of several years in one purchase year. For example, in 2030 you can close contribution gaps for 2026 and 2027 at the same time. However, you may not make the full deduction twice.
- When making a purchase, you do not have to pay in up to the maximum amount. Lower purchases are also possible. For example, if you only paid CHF 2,000 into the 3a in 2025 instead of the CHF 7,258, you can only pay in a further CHF 4,000 when you make a subsequent purchase. You do not have to top up the full CHF 5258.
3a contribution gaps can only arise from 2025 onwards because the change in the law will apply from then onwards. This means that back payments for earlier years are not possible. From 2035, purchases can be made retroactively for up to ten years.
The additional purchase into the 3a is certified by the 3a institution and must be declared by the taxpayer in the tax return for the year of purchase. The certificate must then be enclosed with the tax return. Implementation is carried out by the respective cantonal tax authorities. They ensure that the maximum amounts are not exceeded in the respective purchase years.
Even in wealthy Switzerland, poverty in old age is not a marginal phenomenon: around 20 per cent of people of retirement age living here are poor or at risk of poverty. Those most affected are people with a low level of education, those without Swiss citizenship - and women. The latter often have gaps in the 2nd pillar because they often work part-time and have career breaks due to maternity, for example. This is why private pension provision is important.
Depending on your standard of living, it may be difficult to finance this at retirement age with the first and second pillars alone, i.e. the AHV and pension fund. This can be remedied with pillar 3a, private pension provision. The state even rewards private pension provision by allowing payments into pillar 3a to be deducted from taxable income. (mbo)
Other current developments in pension provision
The Federal Council and Parliament are currently discussing various changes to the pension scheme. These relate to the withdrawal of retirement capital. In October 2024, the Federal Council announced that the taxation of withdrawals from pillars 2 and 3a would be harmonised with the taxation of pension withdrawals. Here is a fictional example to illustrate this:
Sarah (65), married, retired, lives in the city of Zurich
When Sarah retires, the situation is as follows: She will receive her AHV pension from the first pillar. In the second pillar, the law stipulates that retirement capital of 25 per cent can be withdrawn. However, the pension fund can stipulate that half or all of the retirement assets can be withdrawn as a one-off payment. Depending on the pension fund regulations, you can therefore choose whether to have part or all of the retirement capital paid out or alternatively withdraw it as a periodic pension. It is more attractive from a tax perspective to withdraw the entire retirement capital at once, as the withdrawal is taxed at a reduced income tax rate. Pensions, on the other hand, are taxed at the standard rate.
With pillar 3a, there is no option for a pension. The entire capital from a 3a account must be withdrawn at once. Under the current legal situation, withdrawals from pillar 3a, as with the second pillar, are taxed separately from other income at a reduced rate.
Last year, the Federal Council had savings measures for the federal budget drawn up. One of these measures is to tax withdrawals of the entire capital of the second and pillar 3a in future at the same rate as periodic pensions from the second pillar.
As mentioned above, the motto for pillar 3a is all or nothing. If the Federal Council's planned measure were to come into force, the cancellation of the pillar 3a on Sarah's retirement would also be subject to the ordinary tax rate. However, this measure is still under discussion. It is still unclear whether it will come into force.
Staggered withdrawals for pillar 3a
There is also another proposal in the legislative pipeline. As mentioned above, pillar 3a assets can currently only be withdrawn in full on retirement. If Sarah has CHF 80,000 in her 3a account when she retires, she must withdraw this amount in full.
While partial withdrawals are possible with the second pillar, this flexibility is lacking with pillar 3a. Parliament is therefore discussing the proposal to allow staggered withdrawals for pillar 3a as well. If this motion comes into force, Sarah would not have to withdraw her pillar 3a account all at once when she retires. This would be more advantageous due to tax progression in Switzerland. However, it is still unclear how this will be organised.
You have to pay income and wealth tax on the money you withdraw from the third pillar. As you can only close a 3a account as a whole, ellexx recommends that you spread the assets you have saved over several accounts. The money you pay into your pillar 3a can be withdrawn at the earliest five years before normal retirement age. If you work beyond retirement age, you can keep your 3a accounts for a maximum of five years. It is generally advisable to only close one account per year. You can find out how to make sensible provisions, especially as a woman, here. (red.)
About the author: Guest author Bojana Mirkovic is a lawyer and works as a withholding tax auditor for special cases of abuse at the Swiss Federal Tax Administration.
