Save Taxes with Pillar 3a: Double the Benefits

Save taxes with contributions to Pillar 3a

Pillar 3a offers you an excellent opportunity to build long-term capital for your retirement while saving taxes at the same time. As part of the Swiss pension system, it is particularly attractive for anyone who wants to take personal responsibility for shaping their financial future. Below, you’ll learn how it works and what benefits it offers.

💡 What is Pillar 3a?

Pillar 3a is part of private pension provision and is aimed at all taxable individuals with earned income in Switzerland. Each year, you can make contributions to a Pillar 3a solution, such as a bank account or an insurance product. For the year 2025, the following maximum contributions apply:

• CHF 7,258 for individuals who are affiliated with a pension fund (2nd pillar)
• Up to 20% of net income, maximum CHF 36,288, for individuals without a pension fund

Why is Pillar 3a tax-efficient?

✅ Deduct contributions from your taxable income

Contributions paid into Pillar 3a can be deducted from your taxable income. This reduces your tax burden at federal, cantonal, and municipal level. The actual tax savings depend on your income and place of residence. With an average income tax rate of 29.3% in Switzerland, the annual tax saving per person amounts to:

CHF 7,258 × 29.3% = CHF 2,126.60 per year

🌱 Capital grows tax-free

Your accumulated assets remain tax-free throughout the entire investment period. This means no income tax, wealth tax, or withholding tax on interest and investment returns. This is particularly attractive for dividend-heavy investments held within a Pillar 3a portfolio.

🏁 Reduced taxation at payout

When your Pillar 3a assets are paid out, they are taxed separately from your regular income at a reduced tax rate. Withdrawals are possible at the earliest five years before reaching the regular AHV retirement age. Early withdrawals are only permitted in specific cases, such as financing owner-occupied residential property or emigrating abroad.

Tips to get the most out of Pillar 3a

💰 Make the maximum contribution

By contributing the maximum allowed amount each year, you maximize your tax savings and increase your retirement capital.

🗂️ Open multiple accounts

For payout planning, it is advisable to spread your contributions across several Pillar 3a accounts. This allows you to stagger withdrawals over multiple years and reduce the impact of tax progression.

📊 Choose an investment strategy

Decide between a traditional savings account and a securities-based solution. While investments in securities offer higher return potential, they also involve higher risk.

🔁 Review regularly

Regularly review your Pillar 3a solution and adjust it to reflect changes in your personal circumstances, financial situation, and long-term goals.

Pillar 3a is a flexible and effective tool for retirement planning while optimizing your tax situation. With the right strategy, you can strengthen your pension provision and build long-term financial security. Explore the available options and take advantage of the benefits Pillar 3a offers over the long term.