Pillar 3a (“restricted pension provision”), an important element of the Swiss 3-pillar principle, provides for the possibility of tax-privileged personal pension provision. A draft bill, which went through the consultation process at the beginning of March 2024 and is expected to come into force on 1 January 2025, should make it possible in future to close any gaps in contributions retroactively by making subsequent purchases, thereby strengthening individual pension provision.
Retroactive tax-effective payment of contributions
According to the Federal Council’s proposed amendment to the ordinance, the following conditions must be met for a retroactive buy-in:
Anyone who does not pay the maximum permissible contribution into Pillar 3a in a given year, or does not pay it in full, will in future be able to do so retroactively for up to ten years and make a buy-in. However, only gaps that have arisen since the bill came into force can be closed.
The maximum annual purchase is limited to the amount of the “small pillar 3a”, which is currently CHF 7056. This limit also applies to retroactive buy-ins for years of self-employment without a pension fund within the scope of the “large pillar 3a”. This means that a maximum of CHF 14,112 can currently be paid into pillar 3a in one year.
A buy-in is only possible in addition to the regular maximum permissible contributions. The ordinary maximum contribution limit must therefore first be fully exhausted. Furthermore, an annual contribution gap can only be closed by a single buy-in and may therefore not be spread over several annual buy-ins. On the other hand, several annual gaps may be closed with one annual buy-in, provided the maximum amount of currently CHF 7056 is not exceeded.
Subsequent buy-ins of contributions are only possible for years in which the requirements for paying contributions into pillar 3a were met. Retroactive payment of contributions is therefore completely excluded for years without income subject to AHV contributions. Furthermore, only those who are entitled to make contributions in the year of contribution and therefore have earned income subject to AHV contributions are entitled to make buy-ins.
Focus
For many participants in the consultation, the proposal does not go far enough. In particular, it is criticised that the restriction of the admissibility of buy-ins to contribution gaps arising after the bill came into force, the requirement to earn income in the gap year and the limitation to the amount of the small pillar 3a runs counter to the strengthening of tax-privileged personal pension provision and therefore fails to achieve the actual purpose of the proposition. However, the opponents of the proposal unsurprisingly point to the financial impact as an argument, which according to estimates by the SFTA will amount to a loss of tax revenue of around CHF 100 – 150 million in direct federal tax and around CHF 200 – 450 million in cantonal and communal taxes.
It remains to be seen whether the Federal Council will take on board the criticism levelled at the proposals and hopefully implement a reform that does more justice to the promotion of tax-privileged personal pension provision.
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