Pillar 3a. The tied pension provision.

What is pillar 3a?

Pillar 3a – also known as tied pension provision – is part of the third pillar of the Swiss pension system. Its main purpose is retirement provision and it is normally paid out when you reach retirement age. It can only be paid out early under certain conditions. As pillar 3a is an important component of private retirement provision, the federal government gives tax relief on payments made into pillar 3a schemes.

Paying into pillar 3a

Each year, you can deduct contributions to tied pension provision (pillar 3a) from your taxable income. So by paying into a pillar 3a account, you not only provide for your future, but also benefit from a tax advantage. However, you cannot pay in as much as you like: tied pension provision is limited to a statutory maximum amount set by the Federal Council.

Pay-outs from pillar 3a

With the additional capital from your private pension provision, you can maintain your accustomed standard of living in retirement and enjoy life without having to worry. You can normally have your third-pillar savings paid out up to five years before reaching ordinary retirement age or up to five years after that age. So if you take early retirement you can generally take your pillar 3a savings earlier too.