Private provision in Switzerland - the 3rd pillar

The OASI (1st pillar) and occupational pensions (2nd pillar) are mandatory for employees. However, the payment of contributions to private pensions (3rd pillar) is voluntary.

Contributions to the 3rd pillar are voluntary

The legislature promotes individual savings for retirement. Therefore, contributions to the 3rd pillar, that is to pillar 3a, are tax-free up to a certain amount. This amount varies depending on whether a person belongs to a pension fund or not.‍

For those who belong to a pension fund: A maximum contribution of CHF 6739 per year is possible

‍For those without a pension fund: 20% of the annual earned income, however, a maximum of CHF 33'696

‍The two monetary amounts are adjusted for inflation each year and thus generally increase slightly each year.

Every employed person has access to pillar 3a, which represents tied self-provision. For self-employed individuals, pillar 3a is a good opportunity to build their personal pension plan. However, it does not cover risks such as disability or death, and these must be insured separately.

Accessing funds from pillar 3a is only possible in certain cases:

• Taking up self-employment
• Ceasing current self-employment and starting new self-employment
• Purchasing residential property
• Leaving Switzerland
• Receiving a full disability pension
• After reaching the age of 60

Drawing funds from the third pillar is taxable. The tied provision 3a can only occur in a recognized pension form. Two options are provided by law for this: a pension account at a banking foundation or a pension insurance policy at an insurance company.

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