On November 6 2024, the Federal Council introduced the option to buy back years in the 3rd pillar (private pension).
Option to buy back years of contributions in the 3rd pillar!
On reading that, I thought: “GREAT, extra tax savings for us Mustachians!”
Effectively, while it’s not really optimal to do buybacks in the 2nd pillar (except if close to age 65), it’s more advantageous to fill any gaps in retirement savings in the 3rd pillar, as you can:
- Invest these 3a buybacks in effective and efficient products such as VIAC or finpension
- Deduct these 3a pillar buybacks from your tax
Good news from the Federal Council, but…
It’s very good news for Mustachians, but more for the future generations who won’t have been lucky enough to come across my blog before 2025…
Why?
The first buyback will be possible during the 2026 tax year, for 2025.
So it’s impossible to buy back years for 2024 and earlier. Shame!
The other conditions for buying back 3rd pillar years
In order to be able to buy back years in a 3a pillar, a person will have to meet these conditions:
- Have earned income that is subject to AVS (social security) in Switzerland, during the year for which they want to make a retrospective payment of contributions AND during the year in which they are making the buyback
- Have paid the maximum 3a contribution deduction for the year in question (e.g. CHF 7'258 in 2025)
- Buy back 3a years only up to the maximum amount of the current 3a, in addition to the usual contribution (e.g. the maximum 3a amount in 2026 is CHF 7'258, so you’ll be able to put in your usual CHF 7'258 for the year 2026, and the maximum 3a years you can buy back is CHF 7'258)
- Buy back 3a contribution years only for the last ten years at most (and from 1.1.2025)
- Option to fill the gaps of a calendar year in one single buyback (e.g. it’s not possible to fill the 3a gaps for the 2025 year in 2026 and 2027, they need to be bought in one transaction maximum)
- Option to fill the gaps of several calendar years in one single 3rd pillar buyback (e.g. it’s possible to buy back 3a pension savings gaps from 2025 and 2026 in one go in 2027)
- 3rd pillar buyback years are no longer permitted if the pension plan member receives an old age benefit (meaning they have withdrawn their 3a)
Overall, the good news: the buyback amount will be fully deductible from taxable income, in the same way as the standard annual contribution.
Should I buy back 3a pillar years?
To future readers who will come across the Mustachian movement a little too late, the answer to this question is a big YES!
Why?
Because since 2017, there have been numerous 3rd pillar solutions that enable you to invest this private pension 100% in stocks AND deduct this investment for tax purposes. And obviously, you’ll invest all these tax savings directly into the stock market yourself.
Which is the best 3rd pillar to choose in Switzerland?
Every year around November-December, I update my comparison of the best 3rd pillars via this link.
In it, you’ll find out which is currently the best 3a. I also share my referral codes in it so that everyone gets a welcome bonus.
Conclusion
This development of the OPP 3 (the nickname for the 3rd pillar pension savings) is a good thing for us Mustachians. Or should I say, for the future generations of Mustachians.
Basically, as you can’t fill any 3a pension savings gaps before 1.1.2025, it’s not currently much use to us.
But it’s a very good tip to add to our Swiss frugalist’s toolbox.
FAQ
What has the Swiss government decided for the self-employed?
All the buyback rules for 3a pension funds for a private individual are valid for a self-employed person, except that the limit is obviously the limit that applies to self-employed people (and not private individuals).
