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3rd pillar: Everything you need to know

The advantages and limits of your private pension fund

The 3rd pillar is Switzerland's third pension component, designed to complement state social security benefits (1st pillar) and occupational pension schemes (2nd pillar).

3rd pillar A and B: What is the difference?

The 3rd pillar is divided into two parts:

  • 3rd Pillar A - Tied pension provision (retirement‑focused:
    Pillar 3a corresponds to individual savings for retirement. It offers significant tax advantages: contributions are deductible from taxable income up to legally defined annual limits. Withdrawals are taxed at a preferential rate. Individuals affiliated with an occupational pension fund may contribute up to CHF 7,258 per year. Individuals without a pension fund may contribute up to 20% of their net income, capped at CHF 36,288 per year. Only persons earning income subject to OASI/AHV may contribute to Pillar 3a. The assets held within a Pillar 3a plan are not taxed during the accumulation phase.​‌
  • 3rd Pillar B – Flexible private provision:
    Pillar 3b covers all other forms of private savings not tied to retirement. Unlike Pillar 3a, contributions are not tax‑deductible (except in certain cantons such as Geneva or Fribourg). Withdrawals, however, are generally tax‑free, while the surrender value may be taxed over the lifetime of the product. This solution is more flexible in terms of contributions, withdrawals and choice of beneficiaries.

Why choose a 3rd pillar?

The 3rd pillar provides an effective way to supplement your retirement income and protect yourself against life’s uncertainties. Because benefits, conditions and investment options vary between providers, it is advisable to compare offers before choosing a solution. 

Limits and restrictions

Pillar 3a assets are generally locked until five years before the statutory OASI/AHV retirement age, unless an early withdrawal is permitted for specific reasons: purchase or construction of a primary residence, starting a recognised self‑employed activity, permanent departure from Switzerland, disability, or mortgage repayment. In addition, the designation of beneficiaries is regulated by law, offering limited flexibility compared to Pillar 3b​‌.