The tax treatment of occupational and private pension provision plays a central role in long-term financial planning. Both the pension fund (pillar 2) and the tied pension plan (pillar 3a) offer attractive opportunities to save tax when paying in and withdrawing later. An article by Rolf Knopfli Senior Broker Personal Insurance at Funk shows the most important advantages, pitfalls and upcoming reforms.
A personal purchase into the pension fund is doubly worthwhile from a tax perspective: the purchase amount can be deducted in full from taxable income, while the entire pension fund assets, including interest, remain tax-free until withdrawal. The retirement capital or the resulting pension is only taxed on retirement. This makes buy-ins an effective instrument for closing pension gaps and optimizing taxes at the same time.
Capital, pension or both? The tax consequences at a glance
There are three retirement models to choose from: lump-sum withdrawal, pension withdrawal or a mixed form. Lump-sum withdrawals are taxed separately from other income and at a reduced rate, but are subject to a progressive rate. The higher the amount, the greater the tax burden and it varies greatly depending on the canton of residence. Staggering over several years is possible, but requires partial retirement with a reduced workload. A change of residence or moving abroad can also bring tax advantages, although withholding tax is payable in the latter case and refunds are possible depending on the double taxation agreement.
The lifelong pension, on the other hand, is taxed like regular income, which generally leads to a higher tax burden. The mix of capital and pension is becoming increasingly popular as it creates flexibility and balances out tax effects.
Pillar 3a: Almost identical rules, more flexibility
In pillar 3a, capital is also taxed separately and at a reduced rate: also progressively and depending on the place of residence. If you have several 3a accounts, you can withdraw them in stages over several years and thus break the tax progression. Here too, a change of residence or a move abroad can have a significant impact on the tax burden.
Reform 2027: Higher taxes on large capital withdrawals
With the planned 2027 relief package, the tax rates on capital withdrawals are to increase significantly, particularly for very high amounts. However, cantonal tax autonomy will remain in place, meaning that the differences between the cantons will remain considerable. The first measures are due to come into force at the beginning of 2027.
Why strategic planning is becoming increasingly important
Capital withdrawals from the occupational pension plan may be made in a maximum of three stages; further stages must be withdrawn in the form of a pension. In addition, lump-sum payments from pillar 2 and pillar 3a made in the same year are taxed together, which increases progression. Early and well-coordinated pension planning is therefore becoming increasingly important for both companies and private individuals. Specialists can help to make the best possible use of individual options and precisely manage the tax implications.
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