Purpose of the third pillar
If you want to supplement the 1st and 2nd pillars and secure additional money for your retirement, you can voluntarily pay into a 3rd pillar pension plan. There are two types of 3rd pillar: the restricted private pension plan (3a) and the unrestricted pension plan (3b).
The restricted private pension plan (3a)
These are savings that you can accumulate during your working life until retirement at a bank or with an insurance company.
Features include:
There is a maximum amount that you can pay into your account each year.
More advantageous interest rates than in a savings account.
The contributions you make are tax-deductible.
The withdrawal of Pillar 3a savings is subject to strict conditions.
When withdrawing Pillar 3a savings, you must pay a one-off tax based on your income at the time of withdrawal.
The unrestricted pension plan (3b)
These are savings that can take the form of cash, savings accounts, life insurance and investments.
Features include:
You can make unlimited annual contributions each year.
You must declare your accumulated capital to the tax authorities each year
The capital is generally taxed annually.
You can withdraw the capital at any time.
You are not subject to additional tax when you withdraw your savings.
You can participate in a 3a restricted private pension plan if:
You already pay contributions to a 2nd pillar (generally employees).
You do not have OPA pension plan (generally self-employed persons).
You live abroad but work in Switzerland (e.g. cross-border workers).
You receive a daily allowance from Swiss unemployment insurance.
You are a partially disabled insured person with an income on which you pay OASI (AHV, AVS).
If you have reached retirement age but are still working, you can continue to pay contributions until five years after the age of 65 (men) and 64 (women).
You can continue to pay contributions even if you temporarily stop working (during civil or military service, unemployment, illness, etc.).
There are no special requirements for the 3b unrestricted pension plan.
The pension plan providers can provide you with detailed information about taking out a 3rd pillar.
There is a maximum amount that you can pay each year into Pillar 3a.
That amount in 2022 for employees is CHF 6,883.
Self-employed persons without a 2nd pillar can pay 20% of their income, but no more than CHF 34,416.
There are no annual limits on contributions to the Pillar 3b.
Paying into Pillar 3a gives you tax advantages. You can deduct the contributions paid in each year in your annual tax return.
Employees can deduct the maximum contribution allowed per year (for 2022 this is CHF 6,883).
Self-employed persons without a 2nd pillar can deduct contributions amounting to 20% of their income, but no more than CHF 34,416 (for 2022).
Please note that you will be subject to a single flat-rate tax when you withdraw money from Pillar 3a.
Pillar 3b, on the other hand, does not generally provide any tax advantages. However, unlike for Pillar 3a, you do not have to pay any tax once you decide to withdraw your accumulated capital.
For more information, contact your pension plan or the tax authority in your canton (web page available in German, French and Italian).
In general, you can withdraw your 3rd pillar savings on retirement or no earlier than five years before reaching retirement age (64 for women, 65 for men).
You have the option of withdrawing your savings early if:
You want to buy or build your own home.
You are leaving Switzerland for good.
You intend to become self-employed.
You decide to change your self-employed activity.
You want to buy back years of lost contributions to a 2nd pillar pension fund.
You are receiving a full invalidity (IV) pension and the risk of invalidity is not insured
If you decide to continue working after retirement age, you can continue to pay contributions and postpone withdrawing your savings for up to 5 years.
When you withdraw your Pillar 3a savings, you must withdraw the entire amount.
On the other hand, a withdrawal of Pillar 3b savings is not subject to any conditions. 3b savings can be withdrawn at any time.
For more information on the conditions and procedures for withdrawing your 3rd pillar savings, contact you pension plan provider.
The page about the pension system describes the workings of the three pillars that make up the Swiss pension system.
For more information, have a look at the website of the Federal Social Insurance Office, including the page on the restricted private pension plan (web page available in German, French and Italian) or download the brochure on Switzerland’s old-age insurance system.
For more information on the tax advantages of a Pillar 3a or 3b account, contact your pension provider or the tax authority in your canton (web page available in German, French and Italian).