New development in pension savings: retroactive contributions to Pillar 3a now possible

On November 6, 2024, the Swiss Federal Council approved the implementation of a reform aimed at enhancing individual pension savings in Switzerland. Starting January 1, 2025, individuals who made only partial contributions to Pillar 3a in previous years, or who made no contributions at all, will now be able to make retroactive payments for these missing years. The first retroactive contributions will be allowed in 2026 for the year 2025. In other words, years prior to 2025 will not be eligible under this reform.

The tax benefits associated with these retroactive contributions will be similar to those offered for the buyback of pension plan (Pillar 2). This measure allows active workers in Switzerland to optimize their pension savings and take advantage of new savings opportunities, while reducing their taxable income.

Conditions for retroactive contributions

Swiss taxpayers can make retroactive contributions for up to ten years of missed Pillar 3a contributions, with an annual cap of CHF 7,258 (2025 figure) per year in addition to their regular annual contribution. To be eligible for the buyback, individuals must meet the following conditions:

They must have been eligible to contribute to Pillar 3a during the year they wish to contribute retroactively, meaning they must have earned income subject to AHV (Swiss social security) contributions;
They must meet the same conditions for the year in which the retroactive payment is made;
They must have paid their full ordinary contribution for the current year.

Tax aspects

Initial estimates suggest that this reform will lead to a reduction in federal tax revenue by approximately CHF 100 to 150 million, and a loss of CHF 200 to 450 million for the cantons and municipalities. While the reform impacts public finances, it provides Swiss citizens with a new, attractive savings tool.

However, the advantages of this reform should be viewed in light of the Federal Council proposal (for more information, see our article "Federal Council proposal to increase taxation on lump-sum withdrawals from the 2nd and 3rd pillars"), which aims to levy higher taxes on capital withdrawals. It’s important to remember that, as of today, capital withdrawal remains the only way to access the funds in a Pillar 3a.