Pillar 3a for early retirees: tax saver now, bridge later

Pillar 3a is a tax-advantaged savings account. It saves you tax every year you contribute, and it becomes useful for an early retirement from about age 60. It is also locked, which is the catch.

The limits

For employees who belong to a pension fund, the limit is CHF 7,258 a year (2025 and 2026 figure, to be checked each year). Self-employed people without a pension fund can pay in up to 20% of their net income, with a ceiling of CHF 36,288.

What it saves you

Contributions come off your taxable income. At a marginal tax rate of 25%, CHF 7,258 saves about CHF 1,815 in tax a year. Your own rate depends on canton, income and civil status.

Invested for 30 years at a 3.5% real return, CHF 7,258 a year grows to about CHF 381,000 from CHF 217,000 deposited. Part of that gain is tax saved, part is the market return. These figures are illustrations.

When you can withdraw

• From five years before the ordinary retirement age, so from 60.
• When you leave Switzerland permanently.
• To buy a primary residence or repay its mortgage.
• When you start a self-employed business.
• In case of disability.

Withdrawals are taxed separately from other income, at a reduced rate. Progressive rates mean that splitting the withdrawals over several tax years usually costs less than taking one large sum.

Use several accounts

The common method is to open several accounts, for example four or five, and close one per year from age 60. Each withdrawal falls in a different tax year, which keeps the rate lower. Rules on how many accounts you may close per year vary by canton, so check with yours.

Invest it

A Pillar 3a account at a bank can hold cash or securities. Over decades, a securities solution with low fees and broad funds usually beats a savings account, though it can fall in value. Compare fees carefully. See investing in Switzerland: ETFs, domicile and fees.

How it fits an early retirement

Pillar 3a does not help at 50, because you cannot reach it. It helps from 60, and it saves tax in the meantime. If your bridge pot is on track, fill the account each year. If you are short of free savings, weigh the tax saving against the lock-in. This is a trade-off, and the calculator shows both buckets: see the three pillars.

The next questions are what to do with the pension fund, in your pension fund before 65, and how all the withdrawals are taxed, in taxes in early retirement. Pensions also depend on AHV contribution years.

Next step

Put your balance and a target age in the calculator and read the result.