Swiss Pensions: What Expats Need to Know About Pillar 3A Amendments

‍Switzerland’s pension system is evolving, and recent changes to Pillar 3A are set to provide more flexibility for expats in Switzerland looking to enhance their retirement savings. With a new amendment coming into effect from January 1, 2025, individuals will be able to make up for missed or incomplete contributions from 2025 onwards. This offers a new opportunity for long-term pension planning with key tax advantages.

‍Carla Smart, Group Head of Pensions and Chartered Financial Adviser in Switzerland, and an expat herself, explains how, in the future, you may be able to benefit from the recent amendments to the Swiss pension system.

What is the Pillar 3A Amendment?

Under the new amendment, individuals will be able to make retroactive contributions to their Pillar 3A pension for up to 10 years, but only for contributions missed from 2025 onwards. This means that if you were unable to contribute in 2025, you will be able to make up for that missed contribution in 2026, but not for any years before 2025.

Who Can Benefit from Retroactive Contributions?

To take advantage of this update, you must meet the following criteria:

• Have earned income subject to OASI (Old Age and Survivors Insurance) contributions in Switzerland during the relevant years.
• Be actively contributing to a Pillar 3A pension plan.
• Before making a retroactive payment, the current year’s maximum Pillar 3a contribution must be fully utilised.

If you’re unsure of your potential eligibility, consulting a financial adviser in Switzerland can help clarify your position.

‍How Much Can You Contribute to Pillar 3A?

‍For 2025, the annual Pillar 3A contribution limits are:

• CHF 7,258 for individuals with a pension fund.
• Up to 20% of net income, capped at CHF 36,288, for those without a pension fund.

Retroactive contributions will be subject to the same annual limits, meaning you cannot exceed the contribution cap in any given year. Before making retroactive contributions, there is a requirement to first maximise your current-year contributions.

‍Tax Benefits of Investing in Switzerland Through Pillar 3A

‍One of the biggest advantages of Pillar 3A is its tax efficiency.

• Contributions are tax-deductible, reducing your taxable income and potentially lowering your overall tax liability.
• Funds within your Pillar 3A account grow tax-free, allowing your investments to compound more effectively.
• When you withdraw your Pillar 3A pension, it is taxed at a reduced rate, offering further long-term savings.

By spreading retroactive contributions over multiple years, you can optimise these tax benefits while ensuring steady financial growth.

‍Strategic Planning for Expats in Switzerland

‍If you’re an expat in Switzerland considering investing in Switzerland, planning your pension contributions wisely can make a huge difference. Carla Smart, a seasoned financial adviser in Switzerland, is considering how this amendment could fit into long-term pension planning strategies for Skybound Wealth clients. From 2026, for those who have gaps in their contributions, this change could be a perfect opportunity to catch up and make the most of Switzerland’s tax-efficient pension system.

‍Frequently Asked Questions (FAQs)

What is the Pillar 3A pension in Switzerland?

‍Pillar 3A is a voluntary private pension that allows individuals working in Switzerland to save for retirement in a tax-efficient way. Contributions are deductible from taxable income, and the funds grow tax-free until withdrawal.

‍Can expats contribute to Pillar 3A?

‍Yes, expats in Switzerland can contribute to Pillar 3A if they have Swiss-earned income subject to OASI (Old Age and Survivors Insurance) contributions.

Making The Most of Your Swiss Pension Provision

‍For expats in Switzerland, the latest Pillar 3A amendment offers a great opportunity to invest in Switzerland while maximising tax advantages. Whether you're catching up on missed contributions or planning ahead for retirement, working with a financial adviser in Switzerland can help you make the most of these changes.