The third and final pillar of the Swiss pension system are the third pillar or private pension plans, typically known as Pillar 3a or Pillar 3b pensions. They are designed to help top up monthly pension payments and increase overall retirement savings. The plans, while optional, provide extra peace of mind for retirees and offer a number of benefits when it comes to filing your Swiss taxes.
What are Swiss private pensions?
Unlike first (OASI/AHV) and second (BVG) pillar pensions, third pillar private pensions are non-compulsory plans that are designed to supplement the retirement income provided by mandatory schemes. Private plans generally offer higher interest rates than savings accounts provided by Swiss banks.
Third-pillar plans are also often combined with life insurance, allowing you to combine a risk life insurance policy with a long-term savings policy, allowing you to save for retirement while providing a safety net for your dependents should you die. You can find out more about taking out life insurance in Switzerland on our dedicated page.
Who can start a private pension in Switzerland?
All people who are employed and contribute to BVG pension plans are able to start a third-pillar pension, including those who hold Swiss cross-border residence permits. Self-employed, unemployed, disabled and retired residents of Switzerland are also eligible to apply.
Types of private pension plan in Switzerland: 3a & 3b
Private pension plans in Switzerland are divided into two types:
- Restricted pension plans (Pillar 3a)
- Unrestricted pension plans (Pillar 3b)
It is important to carefully consider which type of private pension you choose, as each one has key differences when it comes to taxation, choosing beneficiaries, and cashing in your plan. It’s worth discussing this with an insurance company or a financial advisor, as they will be able to help you decide which plan is right for you.
Pillar 3a (restricted pension plans)
Restricted pension plans or Pillar 3a are private plans that have been supported by the Swiss government as a supplement to OASI and BVG pensions since 1972. As a result, contributions to these plans are fully tax-deductible, allowing you to save money on your annual tax return.
As of 2025, contributions to Pillar 3a plans are capped at 7.258 Swiss francs per year for employed people, and 20 percent of net income for self-employed people, up to a maximum of 36.288 Swiss francs per year.
The downside to these tax advantages is that Pillar 3a plans come with some restrictions:
- You cannot freely choose a beneficiary of your plan in the event of your death.
- You can only cash in the plan a maximum of five years before you reach statutory retirement age (with some exceptions - see below).
- You cannot extend a 3a plan beyond retirement age.
During the savings phase, you pay no income or wealth tax on the balance of your 3a plan, but you will pay taxes when you withdraw the money; pillar 3a plans are taxed as income if you draw a regular benefit, or are subject to a one-time capital benefit tax if taken out as a lump sum.
Pillar 3b (unrestricted pension plans)
Pillar 3b or unrestricted pension plans are not supported by the government. This means that they come with fewer tax advantages, but do have the plus of being more flexible: there is no maximum amount you can pay in, and you can decide how long the policy should last and which benefits are included.
You can deduct your Pillar 3b contributions from your taxable income, but for most people the tax benefits are minimal. This is because 3b contributions must be deducted together with other insurance premiums like those for health insurance and disability insurance in one section on the tax form, which comes with a maximum deduction threshold.
Other key differences include:
- You can freely choose who you select as the beneficiary of your plan.
- You can decide when you want your plan to mature - whether that’s before or after you reach statutory retirement age.
During the savings phase, all money held in a 3b policy must be declared as assets when filing taxes. However, money paid out as part of the policy upon retirement is only taxed as an asset, not income.
Pension income from a Swiss private pension
The pension income you can expect to receive from a Swiss private pension is determined by the amount you have paid into the plan and the agreed-upon annuity from your provider. If an annual annuity has not been agreed upon, then all assets must be cashed out upon retirement.
Claiming a Swiss private pension
To cash in your Swiss private pension, you’ll need to contact your chosen provider. There are different rules for cashing in a private pension, depending on whether is is type 3a or type 3b:
- You can claim a Pillar 3a private pension up to five years before and five years after the statutory retirement age - 65 years for men and 64 years for women (65 years for women from 2028).
- You can claim a Pillar 3b private pension on the date you chose for your plan to mature. Note that you may incur a penalty if you choose to cash in your policy early.
Who inherits my Swiss private pension?
Again, inheritance rules for private pensions in Switzerland differ depending on whether the plan is Pillar 3a or Pillar 3b.
Pillar 3a private pensions are paid out following Swiss inheritance laws, meaning the payout usually goes to your spouse (if you are married), partner, or direct descendants. Those with Pillar 3b plans are able to choose who specifically will receive the remainder of the pension upon their death.
Drawing private Swiss pensions abroad
Swiss private pensions do not have to be withdrawn if you move abroad and can be maintained in Switzerland from wherever you choose to live.