Retroactive payments into Pillar 3a: What changes from 2025?

The Federal Council has recently decided on a groundbreaking innovation for retirement planning: starting next year, it will be possible to make up for missed payments into pillar 3a retrospectively for up to ten years.

This decision is based on a motion introduced by Council of States member Erich Ettlin and approved by the parliament. But what does this actually mean for insured individuals, and what impact will this change have on tax revenues?

Back payments into pillar 3a: An opportunity for self-provision

Until now, the annual maximum amount that could be paid into pillar 3a could not be compensated for retrospectively. If this amount was not fully utilized for a particular year, the opportunity to make the payment was lost. However, from the year 2025, this will change: insured individuals will be able to make missed payments retrospectively up to ten years.

Pillar 3a is an important component of private retirement provision in Switzerland. It enables employed persons to provide additional provisions for retirement, alongside AHV (old-age and survivors' insurance) and the pension fund (BVG). For the year 2025, the maximum amount for employed persons with a pension fund is 7258 Swiss Francs. These contributions can be deducted from taxes, resulting in a reduction of taxable income.

Who benefits from the new regulation?

The possibility of making retrospective payments is generally open to all individuals who engage in AHV-liable employment in Switzerland – both in the year of payment and for the year for which the back payment is made. The advantage: even payments made retrospectively for past years are fully deductible from taxes.

However, this innovation is not without criticism. Some parties, including the SP (Social Democratic Party), see it primarily as a benefit for higher-income individuals. SP National Council member Mattea Meyer emphasized that primarily high earners would benefit from the new regulation as they have the necessary financial means to make contributions at this level. For households with medium or low incomes, however, the benefit is limited.

Impact on tax revenues

With the introduction of this regulation, the federal government expects significant reductions in tax revenues. Initial estimations suggest that direct federal taxes could decrease by 100 to 150 million Swiss Francs annually. On the cantonal and communal levels, even a decrease of 200 to 450 million Swiss Francs is expected.

Despite these potential reductions in revenue, the Federal Council sees the advantages in strengthening private retirement provision. Furthermore, the government plans to make further adjustments in the tax privileges of the second and third pillars from 2025. These reforms are intended to contribute to the long-term security of the pension system and adjust it to current economic conditions.

Conclusion

The opportunity to make retrospective payments into pillar 3a offers particularly for high earners an attractive chance to optimize their retirement planning and simultaneously benefit from tax advantages. Nevertheless, it remains to be seen how this change will affect tax revenues and social justice. What is certain is that the discussion on the best configuration of retirement provision in Switzerland continues to be engaging.

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