What are the tax advantages of a 3rd pillar?

There are various advantages when you contribute to a 3rd pillar pension in Switzerland.

Attention, there are several types of 3rd pillar:

- 3a

- 3b (not deductible)

- Insurance

- Bank

- fixed interest

- Investment in securities / investment funds

Pilier 3a ?

The 3a is colloquially called the 3rd pillar. This situation is much more frequent than the 3b pillar.

It is intensively promoted by the State, with tax advantages.

3a is called tied pension. This means that the money saved can only be withdrawn under the following conditions:

- From 5 years before retirement age (65/64).

- Permanent departure from Switzerland

- Start of a new independent main activity

- For the purchase of an owner-occupied residential property, renovations or amortization of a mortgage

- Total disability

Tax advantages in 3a :

- Savings contributions can be deducted from taxable income up to a certain amount (see below).

- The assets saved are tax-free

- Interest and income are tax-free

- The final payment is taxed, but at a reduced rate.

Pilier 3b ?

We call Pillar 3b a free pension plan. This means that the money you have saved can be withdrawn freely at any time.

Pillar 3b insurance:

When you save in a 3b insurance plan, the interest and earnings do not have to be taxed. Depending on your situation, Pillar 3b may be more advantageous than Pillar 3a.

Employees and self-employed persons who contribute to recognized forms of pension provision can deduct the amounts paid in, in certain cases:

- The taxpayer can deduct his or her 3rd pillar contributions, even in the event of a temporary interruption in gainful employment (military service, unemployment, illness, etc.)

- The deduction cannot be granted if the taxpayer is not gainfully employed and does not contribute to the AVS.

- No deduction can be made if a loss is incurred as a result of the gainful activity.

- Retired taxpayers who continue to be gainfully employed may make contributions to recognized forms of pension provision up to five years after reaching the statutory AHV retirement age.

Taxpayers insured under the 2nd pillar (employees and self-employed) can deduct the amounts paid during the year, but at most CHF 6,883 for the year 2021.

Taxpayers who are not insured with the 2nd pillar (employees and self-employed) can deduct the amounts paid, but they are limited:

Up to 20% of net income from gainful employment but maximum CHF 34,416 for the year 2021.

Our specialists are at your disposal for any advice concerning the best 3rd pillar adapted to your situation. Do not hesitate to make an online appointment.