Pillar 3a: maximum amount for 2024

For 2024, the maximum amount for employed persons insured in a pension fund is CHF 7,056.

Employed persons who are not insured in a pension fund because they are self-employed or earn less than CHF 22,050 per year may pay up to 20 percent of their relevant income into pillar 3 but no more than CHF 35,280. For employees, the relevant income is the gross salary after deducting OASI/IV/EO/ALV contributions. For self-employed persons, the relevant income is the balance of the profit and loss account after deducting AHV/IV/EO contributions and tax adjustments.

You can deduct pillar 3 payments from your income in your tax return. In general, you can save CHF 200 to CHF 400 for every CHF 1,000 you pay in, depending on your taxable income and place of residence. The best way to calculate exactly how much you’ll save is to use our pillar 3a tax calculator. It’s quick and easy.

To the pillar 3a tax calculator (in German)

The differences in interest rates between providers can be quite large. Even a relatively small difference will result in your pillar 3a assets being significantly higher when you retire, due to the compound interest effect over the years. You should therefore compare interest rates regularly and switch to a better provider if necessary.

You can usually transfer your pillar 3a assets from one provider to another free of charge. At some banks, however, this is only possible up to five years before OASI retirement age. From then on, the only option available to you is to withdraw your assets early. You can find the current best providers in our pillar 3a interest rate comparison (in German).

Many banks offer two different pillar 3a savings options: interest-bearing accounts and securities solutions. In the case of securities solutions, the assets are invested in shares, bonds and other securities. A share component of 50 percent is permitted by law. At some providers, pension savers who are sufficiently risk tolerant can choose an investment strategy with a significantly higher share component. For example, the share component can be up to 97 percent for pillar 3a solutions with ETFs at VZ.

Securities generally generate higher long-term returns than interest-bearing accounts. Take, for example, a pension saver who has paid the maximum statutory amount permissible for employees with a pension fund into a pillar 3a account every year for the last 30 years. In 1992, this amount was CHF 5,184, and in 2023 it was CHF 7,056.

If the saver paid these annual contributions into an interest-bearing account, they’ll now have a balance of around CHF 238,000. If they paid into a 3a securities solution with a 40 percent share component, their assets will be almost CHF 58,000 higher, assuming that the annual fees, including the management fees for the ETF used, are only 0.8 percent. This is the case at VZ.

Pension fund buy-ins can be deducted from taxable income in the same way as payments into pillar 3.

Employed people should not consider making voluntary buy-ins until they’ve paid the maximum amount into pillar 3. Pillar 3a is more flexible, for example in paying benefits to beneficiaries in the case of death or in investing the money. With the pillar 3a with ETFs, for example, you can invest up to 97 percent of your assets in shares and change your investment strategy at any time.

It may make sense to withdraw your pillar 3a assets in stages when you retire. This means you generally pay less tax on the payouts than if you withdrew all your assets in the same year. For example, if you make a pillar 3a withdrawal of CHF 150,000, you pay tax of CHF 9,912 in Basel (see table below). If, on the other hand, you receive CHF 75,000 in different years, you save over CHF 3,000 at the current tax rates. If you withdraw three instalments of CHF 50,000, you even save around CHF 4,500.

If you dissolve a pillar 3a account, you have to withdraw all the assets in the account. Partial withdrawals are only permitted to finance residential property. For example, you can make partial withdrawals to pay off the mortgage on your home, provided that they are at least five years apart.

So you’d be best distributing your pillar 3 payment each year across various accounts or opening additional accounts after some time to pay your annual contributions into. Or you could open an additional pillar 3a account as soon as you’ve saved CHF 50,000, for example, and make your future annual payments into the additional account. You can also open several accounts at the same bank.

Note: If you have a normal pillar 3a account and a pillar 3a securities account at the same bank, the bank will generally credit the proceeds from the sale of the securities to the normal 3a account when the payment is made. This means that it is no longer possible to stagger the withdrawal of the two balances.

If you pay into pillar 3 at the start of the year, you can benefit more from the compound interest effect. This pays off in particular with securities solutions. For the sake of a comparison, let’s assume that you always pay in the current maximum amount at the start of the year. Thanks to the compound interest effect, you’ll have around CHF 10,000 more in your pillar 3 after 30 years with an annual return of 3 percent than if you didn’t pay in your annual savings contributions until the end of the year.

You can still pay in contributions in the year of retirement. However, you must pay them in before your retirement date. If you remain in gainful employment after retirement, you can continue to pay into pillar 3a until you’re 70 at the latest. In the year of your retirement, you can even make two payments: the “small” maximum amount for gainfully employed persons of CHF 7,056 for the months up to your retirement and 20 percent of any earned income for the remaining months of the year.

Nonetheless, total payments must not exceed the maximum amount of CHF 35,280 per year. Note that the general insurance deduction in tax returns in some cantons is higher after retirement if you don’t make any more contributions to your pension provision.