Recently, plans to adjust the tax privileges of the second and third pillars upon capital withdrawal caused a significant stir. Now, the Federal Council is introducing a retroactive buy-in option for Pillar 3a, as announced in a statement on Wednesday.

Starting in 2025, individuals will be able to utilize contribution gaps from the past ten years to enhance their Pillar 3a accounts, thereby also saving on taxes. In addition to the standard annual contribution, it will be possible to make an extra buy-in at the level of the so-called «small contribution», with a maximum of 7,258 Swiss francs in 2025.

Certain conditions apply, however. For example, an individual must first have made the annual contribution before they can make any additional back payments. Additionally, the individual must have earned income subject to AHV contributions in both the current and the retroactive years.

Fully Deductible

The buy-in, like the standard annual contribution, is fully deductible from taxable income.

This measure is expected to result in estimated annual revenue losses in federal direct tax of 100–150 million francs. Of this, 21.2 percent will impact the cantons, while 78.8 percent will affect the federal government. For the cantonal and municipal income taxes, revenue losses are expected to range between 200 million francs and 450 million francs annually.

Independent of Capital Withdrawal Rules

These changes stem from the motion «Enabling Buy-Ins for Pillar 3a» proposed by Erich Ettlin.

The tax plans concerning capital withdrawals from the second and third pillars are separate from these measures. The Federal Council is expected to present the future modalities at the end of January as part of the consultation proposal on the task and subsidy review.