What you need to know about pillar 3a

Pillar 3a in Switzerland: Save on taxes and close the pension gap. Pillar 3a is one of the most effective ways to plan for retirement in Switzerland while saving on taxes. Here is how the system works and how you can use it to your advantage.

Why is Pillar 3a important?

Together, AHV and your pension fund guarantee you an income in retirement of around 60 percent of your previous income. That sounds like a solid foundation – but for many, it isn’t. As a rule of thumb, AHV and your pension fund together cover only about 60 percent of your final salary. According to a study by the VZ Wealth Center, however, the actual replacement rate is only around 51 percent for an income of 100'000 CHF, and as low as around 42 percent for 150'000 CHF. This means: The more you earn, the wider the gap between your current standard of living and your future pension.

The target figure for adequate retirement planning is 80 percent of regular income. You can close this gap with Pillar 3a. The Swiss retirement system is based on three pillars: AHV (Pillar 1), pension fund (Pillar 2), and private retirement planning (Pillar 3). Since 1972, individual retirement planning has been enshrined in the Federal Constitution as the third pillar of the Swiss three-pillar concept. The first two pillars are mandatory – the third pillar supplements them on a voluntary basis, but with tangible tax benefits. You can read more about the overall system in our article on the Swiss Three-Pillar System.

The tax benefits of Pillar 3a

Pillar 3a enjoys tax privileges in two ways: The assets accumulated in Pillar 3a are exempt from wealth tax for the duration of the plan. Interest and capital gains are exempt from income tax. You can deduct your contributions directly from your taxable income. Depending on your place of residence and the amount contributed, you can save several hundred francs in taxes. Those who contribute the maximum amount each year can save around 1'000 to 2'000 CHF in taxes per year, depending on their place of residence.

How much you can contribute: Maximum amounts for 2025 and 2026

In 2025, the maximum deduction for employees with a pension fund is 7'258 CHF. Those not affiliated with a pension fund can contribute 20% of their earned income, up to a maximum of 36'288 CHF. According to the Federal Office of Social Insurance , the same amount applies for 2026. You can start contributing at age 18 and if you continue working beyond the standard retirement age, you may continue making contributions for up to five additional years.

Who is eligible to contribute?

Pillar 3a is open to individuals who are self-employed or employed and whose income is subject to OASI (AHV) contributions. People residing abroad who work in Switzerland and are subject to Swiss social insurance can also build up a balance.

When can you withdraw your 3a funds?

The money in Pillar 3a generally remains tied up until retirement – hence the term «restricted pension savings». Early withdrawal is possible in the following situations:

• you purchase a home

• you become self-employed

• you permanently relocate your residence abroad

• you become disabled

• you transfer your 3a assets to a pension fund

In the event of death, your 3a assets go to contractually designated beneficiaries, such as your spouse or children.

Tax tip:

If you withdraw your 3a assets in installments, you can keep your tax rate lower. Therefore, consider opening multiple 3a accounts to ensure flexibility upon retirement. At neon, you can open up to 5 accounts.

Investing in Pillar 3a: Returns through funds

You can hold your 3a balance in a traditional savings account or invest it in funds. The difference is significant: Securities generally yield higher returns over the long term than interest-bearing accounts.

Let’s look at an example: Someone who contributed the statutory maximum amount every year over the past 30 years (1992: 5'184 CHF, 2024: 7'056 CHF) and placed the money in an interest-bearing account would have a balance of around 235'700 CHF today. With a securities portfolio comprising of 40 percent equities, the balance would be approximately 90'000 CHF higher.

The driving force behind this is the power of compound interest: your invested money generates returns that, in turn, generate further returns. Long-term investing also helps offset market volatility. Start early and stick to a consistent strategy – it pays off.

At neon, you can choose from five investment strategies:

With our neon 3a calculator, you can easily see what your contributions could grow into over the years.

New starting in 2026: Make up missed contributions

This is one of the most important recent changes in Swiss private pension plans recently.People working in Switzerland who have not paid the maximum allowable contributions every year since January 1, 2025, can now make these contributions retroactively for up to ten years and deduct them from their taxes. According to the Federal Office of Social Insurance and BDO Switzerland, the following rules apply:

• Gaps from years prior to January 1, 2025, cannot be made up. A buy-in is possible at the earliest in the 2026 contribution year, retroactively for the year 2025.

• Retroactive payments can only be made in addition to the regular contribution for the current year. This means: The maximum contribution for the respective year must first be fully utilised before you close a gap from a previous year.

• Important: Additional contributions to Pillar 3a are only possible as long as no retirement benefits have been drawn. Once you have started drawing benefits, the right to make additional contributions is forfeited.

• Contribution gaps can only be made up within the following ten years. A gap from the year 2025 can therefore be closed by 2035 at the latest.

In short: With Pillar 3a, you can make tax-advantaged contributions of up to 7'258 CHF per year, close your pension gap, and build long-term wealth. Starting in 2026, you can even make up for missed contributions retroactively.

neon Pillar 3a: Retirement planning in your app

With neon's Pillar 3a, you invest directly in your neon app. You choose your investment strategy, track your growth in real time, and pay fees from 0.39%. Compare for yourself: All info about neon Pillar 3a and neon in the 3a provider comparison.