Pillar 3a – Save on taxes and compare solutions

Pillar 3a is a voluntary private pension plan in Switzerland. It complements the state pension (1st pillar, AHV) and the occupational pension (2nd pillar).

With Pillar 3a, you save specifically for your retirement, while also benefiting from tax advantages.

The money is managed either in an interest-bearing account solution or in an investment solution. You decide yourself how much you wish to contribute each year – up to the legally defined maximum (more on this below).

All persons who have income subject to AHV (Swiss social security) contributions in Switzerland are allowed to pay into Pillar 3a, regardless of nationality.

This means: foreign employees with a B or C residence permit can also contribute, as long as they work here and pay AHV contributions.

If you live in Switzerland but work abroad (e.g. as a cross-border commuter), your eligibility depends on your individual tax status.

The maximum amount is set each year by the federal government. For the year 2025, the following limits apply:

• If you are employed and insured with a pension fund: a maximum of CHF 7,258 per year.

• If you do not have a pension fund (e.g. self-employed): up to 20% of your annual earned income, with a maximum of CHF 36,288.

You can freely decide whether to pay the amount in one lump sum or in instalments over the year. Many people make their payment towards the end of the year to claim the tax deduction.

The biggest advantage is the tax benefit:

• You can deduct your annual payments from your taxable income.

• The assets in Pillar 3a are not taxed during the term (no wealth or capital gains tax).

• Only when you withdraw the funds do you pay a reduced one-off tax, which is calculated separately from your other income.

In addition, Pillar 3a helps you secure a better financial future: you build up savings specifically for retirement, but can also use them for certain life goals (e.g. buying a home or becoming self-employed).

There are basically two types of solutions:

• Interest-bearing account: Your money earns a fixed rate of interest. It is safe, but the return is usually lower in the long term than with an investment solution.

• Investment solution: Your money is invested in securities (e.g. funds or ETFs). Here, the potential returns are higher in the long term.

You can easily open a Pillar 3a account with Tellco via the online platform ePlix.

To open the account, you only need:

• Your ID card or residence permit

• Your AHV number

• A residence or workplace in Switzerland

Via ePlix, you can make your payments directly online and view your 3a solution at any time in your personal dashboard.

You decide whether you prefer to save traditionally or invest your balance in securities.

Yes, that is allowed and even advisable. If you hold several accounts, you can spread your withdrawals over several years.

This reduces the tax burden upon withdrawal, as each payout is taxed separately and at a lower rate.

The funds are generally tied up until five years before your retirement (i.e. from age 60 if you retire at 65).

However, early withdrawal is possible in certain cases:

• Purchase or construction of owner-occupied residential property

• Starting self-employment

• Permanent departure from Switzerland (emigration)

• Disability or death (in these cases, the money goes to the beneficiaries)

If you leave Switzerland permanently, you may withdraw your Pillar 3a assets early.

In this case, the money is subject to a one-off withholding tax. The amount depends on the canton in which your pension account is held.

Tip: Some cantons (e.g. Schwyz) have lower tax rates – so it can be worthwhile to consider where your pension is located. At Tellco, you benefit from one of the lowest tax rates in Switzerland (maximum 4.8%), as the foundation is based in Schwyz.