Pillar 3a. Tied pension provision.
Why is the third pillar important?
Even if you have always paid your OASI contributions in full and always been insured in a pension fund through your employer, you can expect to receive only 60% of your final salary as pension income. That means the third pillar is an essential way of supplementing your OASI and pension fund benefits in line with your needs.
What is pillar 3a?
Pillar 3a, also referred to as tied pension provision, is part of Switzerland’s system of private pension provision. Its main purpose is to provide for old age, and it supplements the benefits paid by the state pension schemes (OASI/IV) and occupational pension schemes (pension funds).
Pillar 3a is subject to clear statutory conditions. Among other things, the federal government sets a maximum annual amount that can be invested.
Payments to pillar 3a are voluntary, but highly recommended. By contributing, you benefit from tax incentives, in that your annual payments can be deducted from your taxable income.
What are the advantages of pillar 3a?
Who can pay into pillar 3a?
Anyone gainfully employed in Switzerland with income subject to OASI contributions (employees and the self-employed) can make provision for their retirement via pillar 3a.
When can I make payments to pillar 3a?
Any time you like. However, your annual contribution must reach the recipient by no later than 31 December of any year in order to qualify for deduction from your income tax the following year.
How much tax can I save each year?
The amount you pay into a pillar-3a product in any year can be deducted from your taxable income (3a tax deduction) in the tax return you lodge the following year. Calculate your tax savings right now.
When are pillar-3a funds disbursed?
You can draw your retirement benefits at the earliest five years before reaching OASI retirement age.
What taxes are levied on payouts?
Capital payments are taxed once only, separately from your other income and at a reduced rate that differs from canton to canton. Please consult the tax office in the canton where you reside.
What others wanted to know
Our customer advisors can provide answers to selected FAQs. Just tell us what you want to know. We will be happy to help you.
Melina S. (25), Aarau
Does it make sense to have several 3a pension solutions or accounts?
Absolutely! Because you can already receive a payout five years before you reach OASI retirement age. However, a 3a pension solution or account must always be paid out in full. To avoid moving into a higher tax bracket and paying more tax, it makes sense not to have several different 3a solutions paid out at once. That way you won’t have to tax the entire amount in one go. Although most tax jurisdictions allow you to have several 3a pension solutions, it is worth checking with your cantonal tax office so that you can plan your payouts better.
Pascal T. (61), Kloten
Can I continue using pillar 3a after I retire?
As long as you are working and earning income that is subject to OASI contributions, you can continue to make annual payments into pillar 3a after reaching OASI retirement age and thus continue to save tax. Many 3a pension solutions and 3a accounts allow you to do this easily. But 70 is the cut-off age. Once you reach that age, you can no longer make any pillar-3a payments. Remember, too, to draw your 3a assets successively to avoid being placed in a higher tax bracket.
Melina S. (25), Aarau
Does it make sense to have several 3a pension solutions or accounts?
Absolutely! Because you can already receive a payout five years before you reach OASI retirement age. However, a 3a pension solution or account must always be paid out in full. To avoid moving into a higher tax bracket and paying more tax, it makes sense not to have several different 3a solutions paid out at once. That way you won’t have to tax the entire amount in one go. Although most tax jurisdictions allow you to have several 3a pension solutions, it is worth checking with your cantonal tax office so that you can plan your payouts better.
Pascal T. (61), Kloten
Can I continue using pillar 3a after I retire?
As long as you are working and earning income that is subject to OASI contributions, you can continue to make annual payments into pillar 3a after reaching OASI retirement age and thus continue to save tax. Many 3a pension solutions and 3a accounts allow you to do this easily. But 70 is the cut-off age. Once you reach that age, you can no longer make any pillar-3a payments. Remember, too, to draw your 3a assets successively to avoid being placed in a higher tax bracket.
