The 3rd pillar: essential for your financial future in Switzerland
The Swiss pension system is based on three complementary pillars: the first pillar (AVS/AI), the second pillar (LPP) and the third pillar (private pension provision).
Private pension provision, or the third pillar, is a voluntary choice, unlike the first two pillars. However, it remains essential for maintaining a comfortable standard of living in retirement.
The three-pillar system in Switzerland
1st Pillar
The State Pillar (AHV/IV)
Funded by a pay-as-you-go system, this pillar offers basic protection in case of retirement, disability, or death. It guarantees the minimum living wage, regardless of income level. It forms the foundation of social security in Switzerland.
2nd Pillar
Occupational Pension Scheme (BVG)
Based on capitalization, it complements the first pillar to maintain the standard of living in retirement. Mandatory for employees above a certain income, it remains optional for the self-employed, who can join to build up savings with tax advantages.
3rd Pillar
Private Pension
Optional but strategic, it helps cover the gaps in the first two pillars. It serves to save, optimize one's taxation, protect loved ones, or finance a real estate project. It is a tailor-made pension and wealth planning tool.
Tax-advantaged tied pension plans
Pillar 3a is a regulated pension product reserved for persons domiciled in Switzerland with income subject to AHV.
Cross-border commuters may also be eligible, subject to a thorough assessment. Quasi-resident status is required in order to benefit from the tax advantage.
The choice of health insurance system (LAMal/CMU) also has an impact on taxation when the contract expires.
Repurchase of Contributions in Pillar 3a – New for 2026
From 2026, you will be able to repurchase non-contributed years for 2025 and subsequent years.
Conditions: not having contributed the maximum amount for the year to be repurchased, having contributed the maximum for the current year, not having already repurchased this year, and not having received a 3a benefit.
The request must be in writing and addressed to your 3a provider with the following information: year concerned, AHV income, amount already paid.
This measure strengthens your retirement capital while creating an immediate additional tax deduction.
Tax Advantage
Each amount paid is deductible from taxable income. In 2025, the ceiling is set at CHF 7,258 for BVG affiliates and CHF 36,288 (or 20% of income) for self-employed individuals without a 2nd pillar.
Depending on your income, canton, and family situation, you can significantly reduce your taxes.
For example, a taxpayer taxed at 30% who pays CHF 7,258 saves more than CHF 2,000 per year.
Upon withdrawal, the capital is taxed separately at a reduced rate. By planning your withdrawals, you can smooth the tax impact and improve your net return.
Withdrawal of regulated capital
Capital may be withdrawn before retirement age in certain situations: purchase or construction of a main residence, repayment of a mortgage, permanent departure from Switzerland, commencement of self-employment or disability.
Subscription conditions
- Be a natural person domiciled in Switzerland
- Engage in gainful employment subject to AHV
- Be of contribution age (up to the AHV reference age)
- Comply with legal contribution limits
- The contract must be personal and nominative
Free and flexible pension provision
Pillar 3b is a voluntary pension scheme that is not regulated at federal level but can sometimes be advantageous in certain cantons such as Geneva or Fribourg. It allows for a more personalised approach to wealth management.
It includes free life insurance, long-term savings products, and disability or death cover. It is remarkably flexible: there are no payment limits, access to capital is flexible (unless otherwise specified), and it is very useful in wealth transfer or distribution strategies.
To finance a property
The third pillar is a recognised lever for purchasing your home. There are two options available:
Option 1: early withdrawal allows you to build up your personal contribution or repay a mortgage. However, this method reduces your future retirement capital.
Option 2: pledging allows you to keep your savings in the 3a account while using them as collateral to obtain mortgage financing. This allows you to benefit from the returns on the contract while optimising your borrowing capacity.
Why choose when you can enjoy their complementary benefits?
The third pillar banking option is flexible, with guaranteed capital and no exit fees, but does not cover death or disability. The third pillar insurance option is more binding, offers these protections, but imposes fees in the event of early redemption. Returns vary depending on the investments chosen.
In both cases, the returns on your savings may vary depending on the investment solutions chosen. The right choice depends on your investment horizon, your protection needs, your family situation and your risk tolerance.
Tailored support is recommended here.
You can choose both solutions to combine the advantages!
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