What is the maximum ceiling for Pillar 3a?

Since the first two pillars of the Swiss pension system only manage to cover around 60% of our retirement needs, it seems necessary, if not essential, to save through individual 3rd pillar pension provision. This also enables you to benefit from highly advantageous tax deductions. However, there are limits to how much you can contribute. Would you like to know more about the maximum amounts for Pillar 3A? Then this article is for you.

The 3rd pillar is part of the Swiss pension system, which also includes the AHV and occupational pension schemes. As these two pillars are not sufficient to maintain a comfortable standard of living in retirement, individual private pension provision helps to fill the gaps and save for the future. You can then choose between a tied or untied 3rd pillar. A tied pension contract covers the period up to retirement. It allows the insured to benefit from tax advantages, among other things. The linked 3rd pillar - or 3A - is for anyone working in Switzerland, whether salaried, self-employed or even cross-border.

It seems more attractive to open a 3rd pillar at the start of your professional career, with a bank or insurance company. A 3rd pillar 3A with a bank allows you to choose the amount and frequency of your payments, as long as they do not exceed the authorized ceilings. What's more, a linked bank pension plan allows you to withdraw your capital early, before retirement. The reasons may be a move to another country or the purchase of a property, for example.

The linked 3rd pillar taken out with an insurance company, meanwhile, provides greater security but is less attractive if you wish to use the capital before the end of the contract.

Linked individual pension provision, or 3rd Pillar 3A, offers many advantages for building up a good retirement, but also when it comes to making payments: interest rates are generally higher than with a traditional savings account, and it's possible to take advantage of a tax deduction on contributions made. For this reason, maximum amounts have been set each year for contributions to your 3rd pillar 3A. These amounts can change approximately every two years.

Thus, for the year 2024 it is possible to pay up to a maximum of 7,056 francs into a 3A pillar if you are a working person and affiliated to a pension fund. On the other hand, if you are self-employed and do not have an occupational pension plan (or 2nd pillar), you can contribute up to 20% of your net income, with a maximum of CHF 35,280 per year. The terms "small" pillar and "large" pillar are sometimes used to refer to these maximum amounts. However, this does not mean that a self-employed person can pay more into his or her 3rd pillar than a salaried employee.

Once you know exactly how much you can pay into your 3rd pillar retirement capital, it makes sense to find out when is the best time to do so. Generally speaking, we recommend that you make payments into your retirement account before the festive season. It's also possible to make a lump-sum payment up to the legal maximum for Pillar 3A.

You can continue to make payments in the year you retire, as long as the maximum amount has not been reached. However, payments must be made before you reach the age of 64 for women and 65 for men. This is when your Pillar 3A must be withdrawn. After this date, no further payments may be made into your retirement account, unless you continue to work after the legal retirement age. In this case, payments can still be made over a maximum period of five years.

You now know what the maximum amount is for Pillar 3A in 2024, and until when money can be paid into your retirement account. With a 3rd pillar 3A, you'll be able to save for your retirement or for projects that are close to your heart. If you feel you need further information before taking the plunge, please do not hesitate to contact your financial advisor, who will be happy to help.