Closing pillar 3a

After sowing the seeds and enjoying a period of (return) growth (the length of which will of course vary), at some point the time comes to harvest – the point at which you can withdraw the money you have saved in pillar 3. But when are the earliest and latest possible dates for a payout? What types of early withdrawals are there? And what if you live abroad?

This article answers all your questions about drawing pillar 3a.

Ordinary withdrawal

In the third pillar of Swiss retirement provision, the standard case is for the savings to be withdrawn after retirement. As of 2023, the retirement age is 64 for women and 65 for men. From 1 January 2024, the retirement age for women will also be gradually increased to 65 years.

However, there is some leeway here, meaning that ordinary withdrawal is also already possible up to five years before retirement. This means that women can draw their third pillar assets from the age of 59, and men from the age of 60 – for example in the event of early retirement.

Deferring withdrawal

Retirement should not be understood as a fixed date: payment can also be deferred for up to five years, i.e. women can wait until 69 and men until 70 to withdraw their assets. The prerequisite for this, however, is that you remain in employment.

How are pillar 3 assets paid out after retirement?

Pillar 3 funds are drawn as a one-off lump-sum payment. This means that the entire balance of your pillar 3a account will be paid to you, i.e. transferred to your normal bank account, on a certain date. The relevant pillar 3a account will then be closed. Taxes are payable on the amount paid out.

Staggered withdrawal

It is possible to open multiple pillar 3a accounts and pay your retirement savings into them. And not all of these accounts have to be closed at the same time in the course of (upcoming) retirement. In fact, it is advisable not to withdraw the funds from all your pillar 3 accounts at once, as this usually entails tax disadvantages.

It is wiser to use the five or ten-year leeway period created by the legislator (in the case of continued employment) to spread the payout of the various pillar 3a accounts over several years. It is important to ensure that the total annual pension capital withdrawal is kept as low as possible in order to reduce the tax burden. This also includes withdrawals of capital from your pillar 2 pension fund.

Your canton of residence also plays a role in the calculation of taxes and may have a corresponding impact on the payout schedule – for example, you plan to move to a different canton after retirement. Additional benefits of staggered withdrawal include greater flexibility, which in turn makes it easier to plan your finances.

Early withdrawal: reasons for closing your pillar 3 account early

There are some circumstances in which it is permissible to withdraw money from pillar 3a even before retirement. This is also referred to as “early withdrawal”. The reasons for early withdrawal are set out in Art. 3 of the Ordinance on Tax Relief on Contributions to Recognised Pension Schemes (OPO 3). These are the early withdrawal options:

Purchase of residential property

If the account holder buys or builds residential property that will serve as their main residence, they can use money from pillar 3a to finance it as part of the promotion of home ownership (WEF) scheme.

An early withdrawal of this type is possible every five years and is subject to a few further restrictions, which can be found on the homepage of the Federal Social Insurance Office (FSIO). It is important to note that withdrawals from pillar 3a are taxable.

Renovation and refurbishment

It is also possible to withdraw money from pillar 3a early in order to carry out renovations or refurbishments on owner-occupied residential property, provided that this work contributes to maintaining or increasing the value of the residential property. As with withdrawals to buy a home or pay off your mortgage, these early withdrawals are possible every five years.

Mortgage amortisation

Direct mortgage repayment is another way of making early use of pillar 3 money in connection with home ownership. This means closing a pillar 3a account in order to use the money to (partially) repay a mortgage on the home you live in. This can also be done once every five years.

Switching to self-employment

If the account holder switches from an employment relationship to self-employment and is no longer subject to mandatory occupational pension cover (Occupational Pensions Act, OPA), an early withdrawal is possible in order to finance self-employment. The same applies in the event of a change of self-employed work.

Although it is not possible to make a general judgement here, it is generally not advisable to make use of this option, as the issue of retirement provision is essential for the self-employed in particular. For this reason, they also have the option of paying up to 20% of their net annual income (up to a maximum of CHF 35,280 as of 2023) into pillar 3a each year if they are not affiliated with a pension fund.

Emigrating from Switzerland

If you move abroad permanently, you can withdraw your pillar 3a assets early. The payout is subject to withholding tax, which depends on the canton in which the provider of the 3a solution has its registered office. See below for more on this topic.

Buying into a pension fund

Assets can also be withdrawn from pillar 3a in order to pay them into an occupational, pillar 2 pension fund. There are two prerequisites for this: the person concerned must be an employee who is already a member of a pension fund and an existing pension shortfall must have been identified.

If the pension solution to be wound up in pillar 3a contains less capital than the pension shortfall identified in the pension fund, the account or insurance policy concerned must be wound up in full and transferred. A partial transfer is only possible if the gap in the pension fund (pillar 2) can be closed in full and 3a funds remain.

The transfer of funds from pillar 3a to a pillar 2 pension fund is tax-neutral, so there is no tax saving and no tax is payable.


If a policyholder draws a full disability pension as approved by the Swiss Federal Invalidity Insurance (IV) for a degree of disability of 70% or more, early withdrawal from pillar 3 is also possible.

A prerequisite for this is that the risk of disability is not compensated by supplementary insurance under a restricted pillar 3a scheme. Disability must be proven by means of a medical certificate or an IV decision.

Payment in the event of death

If the policyholder dies before they are able to close their pillar 3 account and have the capital saved there paid out, the money is not lost. In this case, the money goes to other people.

In this context, it is important to bear in mind that pillar 3a assets held with an insurance company or a bank foundation are not part of the deceased’s estate.

As the lawyer and notary Claudia Stehli explains in a blog post on the topic, this is now clearly regulated in the inheritance law revision as of 1 January 2023, after it had been unclear for a long time whether the regulations laid down in the Federal Act on Occupational Old Age, Survivors’ and Invalidity Pension Provision (OPA) and in the Ordinance on Tax Relief on Contributions to Recognised Pension Schemes (OPO 3) only apply to funds held at insurance companies or also to funds held at banks.

It is now clear that pillar 3 pension assets do not form part of the estate, which means that the heirs are not per se entitled to be taken into account in the payout. Rather, Art. 2(1)(b) OPO 3 is authoritative in this case, where reference is made to “beneficiaries” and where it states:

After the death of the policyholder, “the following persons are [beneficiaries] in the following order”:

  1. the surviving spouse or registered partner
  2. the direct offspring and natural persons who were provided with substantial support by the deceased person or any person who has maintained a common household with the policyholder for an uninterrupted period of five years before his or her death or who is required to pay for the maintenance of one or more children for whom they were jointly responsible
  3. the parents
  4. the siblings
  5. the remaining heirs

The text of the ordinance also states:

  • Para. 2: The policyholder may designate one or more beneficiaries from among the beneficiaries referred to in paragraph 1(b)(2), and specify their entitlements.
  • Para. 3: The policyholder has the right to change the order of beneficiaries in accordance with paragraph 1(b) points 3–5 and to specify their entitlements in more detail.

Explanation of the legal situation

So it is clear here that – if they exist – the spouse or registered partner of the deceased is regarded as the first and only beneficiary. Direct offspring then leave empty-handed, although pillar 3 must be taken into account when calculating their statutory share of the inheritance. Lawyer and notary Stehli writes:

“However, pillar 3a assets are still relevant for calculating statutory entitlement rights. Art. 476 of the Swiss Civil Code, which comes into force on 1 January 2023, explicitly states that insurance claims are added to the testator’s assets at their surrender value at the time of his or her death.”

Furthermore, it is noteworthy with regard to the passage in the OPO that children and persons living in a cohabiting relationship are treated on an equal footing in order of priority and that the policyholder can determine which of them is considered and to what extent.

If no spouse or partner, direct descendants or other people from the group of persons listed in para. 1, b, 2 exist, parents, siblings and other heirs come into play. The order of the beneficiaries and the amount they are entitled to are up to the policyholder to determine themselves.

Payment in the event of divorce

If none of the reasons listed in Art. 2 OPO 3 for closing the pillar 3a account exists, a divorce will not result in payment of the capital. Instead, the pension scheme must split the money to which both persons are entitled and invest it again in pillar 3 retirement accounts – either within the same institution or with another bank foundation or insurance company.

Alternatively, the money can also be transferred to a pension fund, where it can be combined with the occupational pension (pillar 2). If the divorcing couple has agreed on a separation of property, the money is not divided up; instead, it simply remains in the person’s pension account.

Tax: things to bear in mind with regard to payouts

Funds withdrawn from pillar 3 are transferred to your private assets and several kinds of tax are payable – at a federal, cantonal and communal level.

Federal taxes

Two articles of the Federal Act on Direct Federal Taxation (DFTA) govern how capital withdrawals from pillar 3a are taxed at federal level:

Article 22

1 All income from old-age, survivors’ and invalidity insurance, from occupational pension schemes and from recognised forms of restricted private pension provision, including lump-sum settlements and repayments of deposits, premiums and contributions, are taxable.


Art. 38

1 Lump-sum benefits pursuant to Article 22 and payments in the event of death and for permanent physical or health disadvantages shall be taxed separately. They are always subject to a full annual tax.

1bis The tax is determined for the tax year in which the corresponding income accrued.

2 It shall be calculated at one-fifth of the rates set out in Article 36(1), (2) and (2bis), first sentence.

3 Social security deductions are not granted.


This rather difficult-to-understand official German conceals the following key points:

1) Calculation based on calendar years

Lump-sum withdrawals from pillar 3 are taxed on a calendar-year basis. This means, for example, that a staggered withdrawal only makes sense over several years and not over several weeks or months, because from the point of view of the tax office, this would be equivalent to a one-off withdrawal.

2) Separate taxation of other income

When you draw the capital from pillar 3, it is not taxed together with other income, but separately from it. In other words, with regard to the taxation of pillar 3a capital, it does not matter whether you use the margin of five years before reaching the reference age (see above) and withdraw the capital when you are still earning a regular income – or whether you only have the funds paid out after retirement.

The only decisive factor for the amount of tax is the amount of the capital paid out. The tax rates increase progressively and the funds from pillar 3 are added to other pension capital withdrawals in the same calendar year (see point 5).

The homepage of the Swiss Federal Tax Administration (FTA) provides a table with the currently applicable tax rates for direct federal tax. Please note that the rates are reduced for withdrawals of capital from pillar 3 (see point 4).

3) No social security deductions

Social security contributions are usually deducted when calculating taxable income. These include, for example, contributions for old-age and survivors’ insurance (OASI), disability insurance (IV) and deductions for children or married persons and the like. However, these costs cannot be deducted when calculating the taxable pension capital.

4) Reduced tax rates

Taxes on capital payments from pillar 3 are calculated at “one-fifth” of the normal income tax rates for the respective calendar year. This means that 80% less tax is incurred on a pension amount paid out than normal.

It is important to note that it is not the estimated taxable amount that is reduced by 80%, but the final tax amount. This is important because tax rates increase progressively, which, accordingly, also applies to the pension capital as the basis for calculation.

Here are two examples to illustrate this:

Person A draws CHF 29,000 from pillar 3 in 2022. According to the applicable tax rates, she would normally – if it were regular income – have to pay CHF 111.65 in direct federal tax (corresponding to a tax rate of 0.39%). However, as this is pension assets, only one-fifth of this amount, i.e. around 22 francs, is payable.

Person B had CHF 104,000 paid out from pillar 3 in 2022 and would have to pay CHF 3,146.80 in direct federal tax (tax rate of 3.03%). Due to the reduced tariff, however, the amount due is only 630 francs.

As you can see, the tax burden has risen sharply in percentage terms, despite the constantly applicable reduction to one-fifth of the full amount. As mentioned above, it is therefore advisable to withdraw from pillar 3a accounts in stages in order to avoid a strong progression in tax rates. However, it is also important to keep the next point in mind:

5) Aggregation of all lump-sum benefits

Lump-sum withdrawals from pillar 3 are taxed separately from other income, but not separately from other pension capital withdrawals that take place in the same calendar year. This includes, in particular, the disbursement of funds from the pillar 2 pension fund.

This means that if someone withdraws both the money from their pillar 3a account and the money saved in their pillar 2 pension fund in the year of their retirement, the amounts are aggregated and taxed together, with both the reduced rate of one-fifth and the progression defined in the rate table applying to the total amount.

Example: Person C had her pension of CHF 400,000 paid out in 2022 and closed a pillar 3a account with capital in the amount of CHF 80,000. As a result, pension capital of CHF 480,000 was drawn. At the reduced rate, around CHF 10,100 in federal tax will be payable.

If the two amounts did not have to be added together, the tax burden would be lower: The money from the pension fund would have incurred around CHF 7,990 and the money from pillar 3 around CHF 310 in federal tax, which together amounts to only CHF 8,300.

This example calculation shows how important it is to keep an eye on all pillars of retirement provision at the same time and to plan not only pillar 3 but above all also pillar 2 payouts. Depending on the time and type of payout (the pension may also be drawn as a pension, which entails normal taxation as income), there may be significant differences in the tax burden.

Cantonal and communal taxes

As if the situation were not difficult enough to understand, cantonal and communal taxes are added to the direct federal tax – and of course there is no uniformity among the cantons. Let’s look at the different models, starting with the simplest one.

Fixed tax rate

In this calculation model, the amount of capital drawn is irrelevant; the tax rate is always the same and there is no progression on the part of the canton.

Applies in:

Glarus (GL)
St.Gallen (SG)
Thurgau (TG)
Uri (UR)

Separate graduated tariff

Another way of calculating cantonal reference taxes is by means of a progressive rate, which differs from the other income tax rate.

Applies in:

Appenzell Ausserrhoden (AR)
Bern (BE)
Basel-Landschaft (BL)
Basel-Stadt (BS)
Fribourg (FR)
Jura (JU)
Zug (ZG)

Pro rata according to the applicable income tax rate

Under this model, which is also applied to direct federal taxation, the capital withdrawal is taxed according to a certain proportion of the normal income tax rate. In mathematical terms, it is irrelevant whether the tax rate or the tax amount is used as a numerator – the result is the same.

Example (fictitious): Let us assume that the tax burden on pension capital withdrawals is only one-tenth of the regular income tax. Tax is to be paid on a lump sum of CHF 100,000 and the regular tax rate is 10%. In this case, you can either divide the 10% by 10, which gives a tax rate of 1% and thus a tax amount of CHF 1,000. Alternatively, you first calculate the regular tax amount – CHF 10,000 – and then divide it by 10, which is also CHF 1,000.

Applies in:

Aargau (AG)
Appenzell Innerrhoden (AI)
Geneva (GE)
Lucerne (LU)
Neuchâtel (NE)
Nidwalden (NW)
Obwalden (OW)
Schaffhausen (SH)
Solothurn (SO)
Vaud (VD)
Zug (ZG)

Based on the pension rate

Some cantons take the level of complexity to the extreme and first calculate a theoretical pension for the fictitious event that the capital from the third pillar would be paid out in this way. Once this pension is calculated, they determine a tax rate as a proportion of the regular income tax rate and then multiply this percentage by the total pension capital drawn.

Gilt in:

Graubünden (GR)
Schwyz (SZ)
Tessin (TI)
Wallis (VS)
Zürich (ZH)

Restrictions and tax-free amounts

Some cantons have set minimum or maximum tax rates in addition to the regulations listed above. Some cantons also have tax-free amounts for withdrawals of pillar 3a capital, specifically Aargau, Bern, Basel-Stadt, Fribourg, Graubünden and Valais.

Communal taxes

In the same way as the cantons, the communes also levy taxes on the withdrawal of capital from pillar 3. And here, too, the individual locations differ in terms of the amount of taxes due.

Conclusion: moving home can save taxes

Due to the different calculation methods and tax rates in the cantons and communes, there are sometimes considerable differences in the amount of taxes that have to be paid when withdrawing pension capital from pillar 3a. Moving home before a third pillar withdrawal can therefore be of direct benefit to your wallet, although this is of course not so easy to implement.

Anyone wishing to check how much direct federal, cantonal and communal tax is payable for a certain pillar 3a payment amount in a certain commune can easily do so using the Federal Tax Administration’s tax calculator.

Withholding tax for payments abroad

If you emigrate abroad – for instance because you come from abroad and only lived and worked in Switzerland temporarily under a B residence permit – you have a choice.

You can withdraw your pillar 3a assets early or you can leave them in your pillar 3a account and only withdraw them at retirement age. In both cases, however, withholding tax is payable upon payment and not, as usual, the capital withdrawal tax described above (also: “capital payment tax”).

The reason for the withholding tax is that the Swiss authorities do not have access to people living abroad. Therefore, they cannot enforce the payment of taxes there and instead collect the taxes directly at source. In the case of pillar 3 accounts, this is the respective pension fund.

If you arrange for one of your third pillar accounts to be paid out, the pension scheme remits the withholding tax to the state and transfers the remaining net amount to you. Withholding tax is also retained if you use a Swiss account for the withdrawal.

N.B.: While capital payment tax is assessed in the canton in which the policyholder is domiciled, withholding tax is calculated at the registered office of the pension fund. For this reason, many pension funds are based in Schwyz, where withholding tax is lowest.

If you are planning to move abroad or are already living abroad and are planning to have your pillar 3 account paid out, it may therefore make sense to transfer your pension capital first to another pension fund based in Schwyz or another canton with a low withholding tax rate.

Double taxation or reimbursement

As you are withdrawing capital from your pillar 3 account, you will normally have to declare this in your tax return in the country of your (new) residence (reporting obligation) – and most likely you will also be subject to tax there.

However, there are double taxation treaties (DTAs) between Switzerland and many other countries, which usually stipulate that only the country in which the (new) place of residence is located is permitted to tax the pension assets paid out (for more on this, see the website of the State Secretariat for International Finance (SIF)).

Anyone who lives in a country that has signed a DTA with Switzerland with regard to lump-sum benefits from pillar 3a can therefore reclaim the withholding tax paid by the pension scheme from the Swiss tax authorities. The prerequisite for a refund is that you have declared the lump-sum benefit in your new country of residence and can present a corresponding certificate. In some cases, even effective taxation of the pension assets in the country of residence is necessary for reimbursement.

Here are some countries for which there is a DTA with Switzerland for lump-sum benefits from pillar 3a:


As you can see, all countries neighbouring Switzerland, as well as many other countries that are popular locations for people to retire to, are covered (a complete list is available as a downloadable information sheet on the homepage of the cantonal tax office in Zurich).

However, one cannot say as a blanket rule that there are DTAs for lump-sum benefits from pillar 3a with all EU countries and all other countries that are important for Switzerland. For example, there are no corresponding agreements with:

Great Britain
New Zealand
The Netherlands

Anyone moving to a country without a DTA will therefore be interested in what was already explained above: look for a pension fund (before emigrating) that has its registered office in a canton with low withholding taxes, so that the tax burden is minimised in the event of double taxation.

Currency risk

As pillar 3a savings are in Swiss francs, currency risks may arise when withdrawing from abroad. Exchange rates are always subject to fluctuations that affect the value of your payout – either positively or negatively.

Here, too, it may be advantageous to have several pillar 3a accounts in order to withdraw funds in stages. Suppose you have emigrated to a country whose currency appreciates just as you approach retirement age, meaning that you will receive relatively little money in the local currency for your Swiss francs.

In this case, staggered withdrawal gives you the opportunity to close just one account first and to speculate on the local currency falling again until you (have to) close another account. Of course, there is always a risk here, and the value of the national currency might rise even further. Either way, at least you have a choice and don’t have to withdraw all the money at once.

Instructions: reporting payment of your pillar 3 account in your tax return

As with any type of income, the payout of a third pillar account must of course be correctly stated in your tax return. The exact procedure may vary depending on the canton and tax form, but in general the declaration is made as follows:

1) Receipt and verification of proof of withdrawal

Your financial institution or insurance company reports the payout of your pillar 3a retirement capital to the tax authorities. In this context, you will receive written proof with all relevant information about the payout, including the date of payment, the amount of the payment and tax deductions. Once you receive this type of certificate, please check that it is correct and keep it in a safe place, as you will need it for your next tax return (see next point).

2) Report the payment in your tax return

You can find out how and where exactly you have to declare your withdrawal of pension capital in the tax return guidelines issued annually by all cantons. The terms “pillar 3a” or “pension provision” do not always appear in the table of contents. For example, the guidance issued by the canton of Zurich for 2022 only refers to “Kapitalleistungen” (capital benefits). Pillar 3a is only mentioned in the relevant chapter.

3) Enter the amount paid out

In the tax return itself, you can tick “Pillar 3a” for the type of benefit under “Capital benefits” or similar and then enter the total amount for the tax period (corresponds to the last calendar year) in the corresponding box.

4) Enter tax deductions

If tax deductions are indicated on your payment certificate, please also enter these in the appropriate fields.

5) Enclose documents

Enclose a copy of the form that you received from your pension provider as proof of the payout with your tax return.