While the Swiss are worried about the future of their retirement, the 3rd pillar is an indispensable solution to fill the gaps in the Swiss pension system.
With its attractive tax advantages, the 3rd pillar offers the possibility of building up comfortable capital for retirement while significantly reducing your taxation. Understand The differences between pillars 3A and 3B and possible tax deductions is essential to optimize your contributions and take full advantage of your 3rd pillar.
3rd Pillar 3A taxation
The 3rd pillar 3A offers advantageous taxation that is valid for all persons residing and working in Switzerland.
Payments are deductible from your taxable income
The payments you make into a 3rd pillar 3A are deductible from your taxable income up to:
- CHF 7'258.- if you are an employee
- CHF 36'288.- if you are self-employed (and that you do not contribute to the LPP), but a maximum of 20% of your net operating income
Please note that these tax deductions are also valid for cross-border employees and self-employed workers working in the canton of Geneva and having the status of semi-resident.
Capital is not included in taxable wealth
Capital from 3rd Pillar 3A does not form part of your taxable assets and income (interest and surpluses) is exempt from tax for the duration of the contract.
The withdrawal of capital is taxed
A tax is applied when withdrawing Pillar 3a capital. This tax depends on the canton in which you live at the time of the withdrawal and the amount you withdraw, the more capital you withdraw the higher the tax will be. Fortunately, the tax amount is much lower than the tax savings you save during the entire life of your pillar 3a contribution, so it remains advantageous in any case.
Our table below shows the tax amounts valid in 2024 for a person who makes a 3a capital withdrawal.
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3rd Pillar 3B taxation
The 3rd pillar 3B offers deductions from taxable income only for persons residing in the cantons of Geneva and Fribourg, outside these cantons it is not possible to deduct 3B contributions.
Please note that it is possible to combine 3rd pillar 3B and 3rd pillar 3A deductions for a person residing in one of the two cantons mentioned above.
Tax deductions for Geneva
Amount deductible per year, for people who are single, widowed, divorced, legally separated or in fact:
- 2'232.- for employees
- 4'464.- for people who do not contribute to a 2nd or 3rd pillar 3A
Deductible amount per year for married persons/registered partners living in a joint household:
- 3'348.- for an employed couple,
- 5'022.- if one of the two does not contribute to a 2nd or 3rd pillar 3A
- 6'696.- if both partners do not contribute to a 2nd or 3rd pillar 3A
Tax deductions that add up per child (counted as dependants) that you have on your tax return and that are:
- 913.- additional for employed parents
- 1'370.- if one of the two parents does not contribute to a 2nd or 3rd pillar 3A
- 1'826.- if both parents do not contribute to a 2nd or 3rd pillar 3A
For cross-border workers working in Geneva, it is necessary to have the status of semi-resident and to carry out a subsequent ordinary taxation (TOU) in order to benefit from the tax deductions of the 3rd pillar 3B.
Tax deductions for Fribourg
- For single people: CHF 750.-
- For married persons/registered partners living in a joint household: CHF 1'500.-
Capital is included in taxable wealth
The capital you have on a free 3rd pillar 3B falls into your taxable wealth, regardless of the canton in which you live.
The withdrawal of capital is not taxed
Unlike a 3rd pillar 3A, no tax will be levied on you when you withdraw the capital from a 3rd pillar 3B, regardless of the canton in which you live.
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