How to Use the Pillar 3a to Pay Less Taxes

Using the tax-privileged pillar 3a to save for retirement is very popular in Switzerland. More than half of employees and 40 percent of self-employed residents contribute to the pillar 3a, according to a report from the Federal Tax Administration. Apart from saving for retirement, tax savings are the most important benefit of using the pillar 3a.

This guide answers the most important questions about how using the pillar 3a affects your taxes.

Which third-pillar products are eligible for tax deductions?

All third pillar solutions that are denominated by the pillar 3a are eligible for tax deductions.

That is the case with these products:

• Pillar 3a accounts from banks, retirement foundations, asset management services, and insurance providers.
• Pillar 3a retirement funds and pillar 3a investment accounts at banks, retirement foundations, asset management services, and insurance providers.
• Pillar 3a term life insurance.
• Pillar 3a loss-of-income insurance.
• Pillar 3a disability insurance.
• Pillar 3a mixed life insurance (life insurance with cash value)
• Pillar 3a savings insurance (life insurance with cash value)

Important: Some of the third pillar solutions listed above are also offered as pillar 3b products. Money you spend on or contribute to pillar 3b solutions is not tax deductible, and cannot be included in the pillar 3a tax deduction.

How much can I pay into the pillar 3a each year?

In order to contribute to the pillar 3a, you have to earn an income that is eligible for OASI contributions. That is true whether you earn that income as an employee or through self-employment.

The limit on how much you can pay into the pillar 3a varies depending on whether or not you have a Swiss pillar 2 occupational pension fund:

• With an occupational pension fund: In 2024, you can contribute up to 7056 francs to the pillar 3a (2025: 7258 francs). This limit applies to both employees who are eligible for an occupational pension fund, and to self-employed people who participate in a pillar 2 pension fund.
• Without an occupational pension fund: You can contribute an amount equal to as much as 20 percent of your annual income, up to a yearly limit. In 2024, the limit is 35,280 francs (2025: 36,288 francs). This applies to both self-employed people without a pillar 2 pension fund, and to employees who are not eligible for an occupational pension fund.

You can find detailed information in the moneyland.ch guide to pillar 3a contribution limits.

How can I claim the pillar 3a tax deduction?

You can declare pillar 3a contributions made that year on the third page of your Swiss tax return under the tax deductions section. You then subtract that amount from your taxable income along with other deductions. You must submit the tax statements from your pillar 3a service providers along with your tax return to verify the contributions.

How much can I save on taxes by using the pillar 3a?

You can deduct the amount you contribute to the pillar 3a from your taxable income so that you pay less income tax. How much you will save depends on individual factors, including how high your income is, how much you contributed to the pillar 3a, and where in Switzerland you live.

As a general rule, the more income you earn and the higher the taxes are in your municipality, the more money you can save by contributing to the pillar 3a.

moneyland.ch calculated the potential tax savings for residents of three different municipalities:

• City of Zug: This is one of the lowest-tax municipalities in Switzerland.
• City of Zurich: This is the most populous city in Switzerland.
• La Chaux-de-Fonds: This city in the canton of Neuchâtel is known for watchmaking and is also one of the highest-tax municipalities in Switzerland.

* Taxable income without any pillar 3a contributions.
The tax savings calculations are for a person who matches this profile: Unmarried, no children, not a member of a state-recognized church. Based on an annual pillar 3a contribution of 6000 francs. Tax savings are rounded to the nearest whole franc.

The examples above make it clear that the tax savings vary depending on your personal situation. For the profile used in the example, contributing 6000 francs to the pillar 3a could lower the tax bill by between 601 and 2136 francs, depending on the income and place of residence.

Do I have to pay taxes when I withdraw money from the pillar 3a?

Assets remain tax free until they are withdrawn from the pillar 3a. They do not count towards your taxable wealth for wealth tax purposes, and interest and dividends earned on pillar 3a assets do not count towards your taxable income.

When you withdraw assets from the pillar 3a, you pay a retirement capital withdrawal tax. This tax applies to both standard withdrawals when you reach the required age (60 years old) and to early withdrawals.

All lump-sum withdrawals made from both the pillar 3a and from pillar 2 pension funds and vested benefits accounts in that tax year are accounted for in capital withdrawal tax calculations. Capital withdrawal tax rates are lower than income tax rates. It can be beneficial to space out withdrawals of pillar 3a assets across several different tax years. The withdrawn assets do not count as income for income tax purposes.

How much retirement capital withdrawal tax you will pay on withdrawals from the pillar 3a depends on where you live. According to the Federal Tax Administration, withdrawals of 100,000 francs in one tax year would generate the least tax in the municipalities of Wollerau and Freienbach in the canton of Schwyz (1640 francs in capital withdrawal taxes). A resident of Zurich city would pay 4920 francs in tax for the same withdrawal. Residents of municipalities in Appenzell Ausserrhoden would pay the most tax (8560 francs).

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Retirement funds: Key tips
Pillar 3a contribution limits explained