How can foreigners in Switzerland use the pillar 3a for tax-privileged retirement saving? Michael Frei-Otero, Head of 3a Pensions & Vested Benefits at Tellco Bank, explains the advantages of the pillar 3a for foreigners and introduces Tellco’s Pillar 3a solution.
When Carla, a software engineer from Berlin, first moved to Zurich three years ago, she had other things to think about than retirement planning. A new apartment, a new job, a new life. But when the dust settled, she discovered a letter in her mailbox. “Pillar 3a?” she asked a friend. The response was a clueless shrug of the shoulders. Both of them realized that it could be something important, but that neither of them understood it.
Many foreign residents of Switzerland have the same dilemma. Between the OASI, pension funds, and the pillar 3a, the Swiss retirement system can seem very confusing. But even if you will only stay in Switzerland for a time, the pillar 3a offers an attractive solution for lowering your taxes and saving up for retirement.
What is the pillar 3a?
When Carla began to research the topic, she quickly realized that the pillar 3a is not very complicated at all. It is simply a category of voluntary, private retirement savings that complements your basic government pension (OASI/DI/EO/ALV, pillar 1) and your occupational pension (pension fund, pillar 2). The pillar 3a enables you to save for retirement in a targeted way and pay less taxes at the same time.
In 2025, employees with a pension fund can place up to 7258 francs in pillar 3a accounts, and deduct that amount from their taxable income. In order to be included in the tax deduction, your contributions must be paid in by December 31, at the latest. Good to know: From 2026, it will be possible to make up for missed pillar 3a contributions for up to 10 years in arrears – but only for gaps that occur from 2025 onwards.
“Many people only realize how much they can save on taxes with the pillar 3a after making their first contributions,” says Michael Frei-Otero, Head of 3a Pensions & Vested Benefits at Tellco Bank AG.
Foreign residents can also enjoy tax advantages
When studying her salary statements, Carla sees that a withholding tax is deducted from her salary every month. She wonders how she can benefit from the pillar 3a tax deduction.
In practice, many foreign residents with B, L, or G residence permits pay taxes in Switzerland as a withholding tax. This withholding tax is deducted directly from your gross salary, and covers your Swiss income tax. What many people are not aware of is that payments into the pillar 3a are not automatically accounted for.
Tip: If you want to claim the pillar 3a tax deduction, you can apply for standard taxation in arrears up until March 31 of the following year. This enables you to submit a standard tax declaration on which you can account for payments you have made into the pillar 3a.
That can save you money in many cases. “Depending on your income, canton, and your eligibility for other tax deductions (e.g. occupational expenses), you can save up to several thousand francs on taxes each year,” explains Michael Frei-Otero.
Savings or investments?
Once Carla understood how the pillar 3a works, the next question was: How should I hold my money? There are two options:
“Investment solutions are usually more profitable over long terms, because they let you take advantage of growth in financial markets,” says Michael Frei-Otero.
A comparison helps to clarify the difference: The Tellco 3a calculator makes it easy to simulate the development of a savings account compared to an investment solution – and the possible effects that contributing to the pillar 3a can have on your personal tax burden.
You can use the online platform ePlix to easily select suitable funds and investment portfolios based on your individual risk profile. You are also welcome to contact Tellco’s retirement experts for a non-binding consultation (get in touch).
What happens when I leave Switzerland?
At some point, Carla began asking herself what would happen if she were to leave Switzerland again someday. When you leave Switzerland, you can withdraw your pillar 3a assets. A withholding tax for retirement assets is deducted from your savings when they are withdrawn, with the amount being determined by which canton the retirement foundation is located in. If the country you move to has a double-taxation agreement with Switzerland, you may be able to reclaim the Swiss withholding tax or credit it to your foreign taxes.
“Because the Tellco Vorsorge 3a retirement foundation is headquartered in the low-tax canton of Schwyz, our customers benefit from some of the lowest withholding taxes in Switzerland, with a maximum tax rate of 4.8 percent,” explains Michael Frei-Otero.
Why now is the best time to start
Carla finally understood that starting to use the pillar 3a as soon as possible brings a double benefit – lower taxes today, and more financial security tomorrow.
Pillar 3a checklist for foreign residents
Getting to know the most important deadlines and the steps to take – from making pillar 3a contributions to filing tax declarations – is particularly important for foreign residents. You can find a useful checklist and additional information here.
The Tellco advantage
Tellco customers profit from special advantages:
Interested? Tellco is happy to support you with personalized solutions, clear information, and consultation that can help clarify complicated topics related to retirement planning.
Find out more: Pillar 3a | Tellco Bank
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