Third pillar: private pension provision in Switzerland
With life insurance policies in the third pillar of retirement provision, you can increase your financial security in retirement and at the same time profit from attractive tax benefits. This page tells you everything you need to know about the various options for private pension provision.
What is the third pillar?
The third pillar is part of the Swiss pension system, which is divided into three parts. These parts are referred to as “pillars”. Find out what each pillar means here.
The first pillar is state pension provision. In principle, all persons living or working in Switzerland are covered by old-age and survivors’ insurance (OASI). OASI covers the basic needs of all pensioners. Supplementary benefits are available if the pension is not sufficient to secure a livelihood.
The second pillar is occupational benefits provision. Together with OASI, it aims to enable insured persons to continue their accustomed standard of living after retirement. To this end, employees save personal retirement assets in their pension fund with their monthly salary contributions and employer contributions. These are invested by the pension funds and are subsequently used to finance the pension from the fund.
Private pension provision, also known as the third pillar of the Swiss pension system, is an essential component of financial security in old age. Employees can voluntarily pay a certain amount into a special bank account or into a life insurance policy. The third pillar enables you to shape your own financial future and to maintain your standard of living in retirement.
It consists of two parts – the restricted pillar 3a and the non tax-qualified pillar 3b.
Why is the third pillar important?
The benefits from the first and second pillar in old age usually only cover around 60 to 70% of your income during employment. Private pension provision with the third pillar is therefore highly recommended.
|
Pillar 3a |
Pillar 3b |
|
Savings target |
|
| Retirement provision (tax-privileged) or to buy your own home | Freely selectable |
| Who can pay in? | |
| All persons working in Switzerland with income subject to OASI contributions (employed or self-employed) | All persons, irrespective of their occupation and place of residence |
| Contract term | |
| As a rule, until the OASI retirement age is reached | Freely selectable |
| Maximum amount for 2025 | |
| Employed persons with a pension fund: max. CHF 7,258 Employed persons without a pension fund: max. CHF 36,288, but max. 20% of net income |
Amount of contributions is not limited |
| Tax advantages when paying in | |
| Contribution can be deducted from taxable income | Generally non-deductible |
| Taxation during the term of the contract | |
| None | Current surrender value |
| Tax benefits on payouts | |
| Payouts are taxed at a reduced tax rate | Payouts are tax-free under certain conditions |
| Pledge possible? | |
| Only for financing your own home | Yes |
| Payout | |
| Five years before reaching OASI retirement age at the earliest | Possible at any time |
| Surrender | |
|
Possible in the following cases:
|
Possible at any time |
| Beneficiaries in the event of death | |
|
Intestate succession must be observed:
|
Freely selectable |
What we offer: free pension advice
Identify pension gaps at an early stage. Our advisors will be happy to help you.
Questions and answers: life insurance and third pillar
Endowment life insurance combines financial protection in the event of death or incapacity to work with a savings component. It therefore combines the protection of a life insurance policy with the opportunity to save capital.
With endowment life insurance, you pay regular premiums that are used both for insurance cover and for capital accumulation. You will receive the capital you have saved at the end of the contract term. If you die before the end of the contract period, a pre-determined amount will be paid out to the beneficiaries.
The three-pillar principle is the concept for retirement provision in Switzerland. It consists of the first pillar, state old-age and survivors’ insurance (OASI), the second pillar, occupational benefits provision (BVG) and the third pillar, private pension provision. OASI is a compulsory insurance scheme that provides basic care in old age and in the event of disability. BVG is an occupational benefits provision that is financed by employers and employees and provides supplementary old-age, survivors’ and invalidity capital. The third pillar comprises voluntary private forms of pension provision such as pillar 3a (restricted pension provision) and pillar 3b (non tax-qualified pension provision).
In accordance with current Swiss tax regulations, you can pay up to a certain amount into pillar 3a. For 2025, the maximum amount for pillar 3a is CHF 7,258 for employed persons and a maximum of CHF 36,288 (but max. 20% of net income from employment) for self-employed persons.
There is no limit to the amount of contributions to pillar 3b.
Benefits from pillar 3a may only be paid out at the earliest five years before reaching the normal OASI retirement age. If you continue to work beyond retirement age, you can defer the payout for up to five years.
The following conditions must be met for a tax-free payout of pillar 3b:
- A contract term of at least five years
- A payout will only be made after the age of 60
- You were less than 66 years of age when you entered into the contract.