Pillar 3a of the pension system
With Pillar 3a of the retirement, invalidity and survivors' pension scheme, the state promotes private pension provision through tax advantages. This private provision is primarily aimed at those who wish to close the pension gap between their employment income and the pension provided by the first two pillars. In addition, pillar 3a also includes comprehensive safeguarding against risks such as death or occupational disability.
Use pillar 3a to minimize your pension gap
The 3-pillar pension scheme ensures that pension payments from the first two pillars – the state and occupational pensions – cover about 60% of your final salary, or up to 75 per cent in the case of couples. The pension gap can increase further if you decide to retire early before the statutory retirement age.
And furthermore, the pension gap also grows larger as your salary income increases. Pillar 3a is therefore a very relevant consideration for both middle and higher-income groups. It provides a means to maintain both your existing standard of living and your financial options during retirement, as well as providing insurance protection against risk. If you want to arrange a pillar 3a pension, you should be clear about the retirement income you require and set up a long-term financing plan. Besides pillar 3a pension provision, there is also a pillar 3b. You can find information about pillar 3b on our pillar 3b page.
The tax concession available is subject to conditions. The 3rd pillar is primarily intended to provide for a retirement pension and insurance against risk. Any accumulated credit balance can usually be withdrawn five years before statutory retirement age at the earliest, or at the latest, up to five years afterwards. You will find all the information about how to withdraw a credit balance on our pillar 3a reference page. Early withdrawal is also possible in the following specific circumstances:
- When purchasing pillar 2 pension fund benefits
- When changing employment
- Leaving Switzerland for good (immigration)
- For property purchase, or to finance a real estate mortgage
How pillar 3a works
First and foremost, anyone who pays AHV contributions can access pillar 3a. And in addition, those who are self-employed and not members of a pension fund are also eligible to use pillar 3a. The statutory allowance under pillar 3a stipulates that a participant’s pension contributions are tax-deductible from their income up to a payment ceiling, which is adjusted annually. You can find more information on our pages about contributions, and contributions under pillar 3a.
In 2023, the maximum amount for an employed person with an occupational pension was 7’056 francs and up to 20% of their income for those without an occupational pension (subject to a maximum of 35’280 francs). Further information can be found on our page about pillar 3a maximum allowances.
Both investment products such as pension accounts, and insurance products such as life insurance and disability insurance are accepted. Interest income earned under pillar 3a is not subject to income tax. When a person who has made pillar 3a contributions dies, the law defines precisely who can benefit from the accumulated savings capital. In addition to the surviving spouse or partner, this includes parents, siblings, descendants, any remaining heirs, and persons who had been living with the deceased person in a domestic partnership during the last five years prior to the death. For more information, please visit our pillar 3 page.
MoneyPark advice on pillar 3a provision
We can help you create a well thought-out pension plan which is tailored to your life, family and financial circumstances. Our pillar 3a comparison will give you a comprehensive overview of the types of investment and insurance which can be profitably introduced under pillar 3a, so you can choose the optimum product that meets your risk protection and retirement pension requirements.
Use our pillar 3a calculator to make a preliminary calculation of savings and interest rates.
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