Optimising household income is a major topic for many young families. So it’s worth taking advantage of options for saving taxes – for example, through occupational provisions. Doing so will lower the household budget and provide parents with confidence about the family’s financial future.

Every year, taxpayers filing their tax return watch as their tax bill climbs higher and higher and ask themselves if there was anything they could have done to lower their tax burden. There are various options for keeping taxes low – such as occupational provisions. Especially for young families, it is worth taking advantage of the tax savings opportunities and reducing pressure on the household budget.

Save on taxes by paying into your pension fund

When it comes to saving on taxes through retirement savings, many people think about the 3rd Pillar. But the 2nd Pillar can be used to save on taxes as well – with a pension fund purchase.

Your pension certificate shows if you have already reached the maximum permitted retirement savings. If not, then you can make an additional pension fund purchase and lower your tax burden. The purchase sum can be deducted from your taxable
income. Doing so makes sense in particular if you have already reached the maximum Pillar 3a contribution amount. Such purchases may be made by anyone at any time.

The following points need to be considered:

  • Living expenses: Purchase amounts generally cannot be withdrawn until retirement age. Therefore, only money that is not needed for living expenses should be invested.
  • Upper limit: The full benefits as specified in the pension fund regulations represent the maximum purchase amount.
  • Advance withdrawal: If an advance withdrawal is made to finance a home purchase, this amount must be repaid first before making any tax-deductible purchases.
  • Pension fund situation: You should take a close look at your pension fund’s financial situation – and avoid paying into it if it does not have sufficient cover in order to avoid losses.  
Tip

Distribute larger purchase amounts over several years. This will reduce the progressive tax rate several times over, resulting in tax savings.

Make an appointment for a consultation

Pension fund purchases allow families to save on taxes and provide relief for their household budget. If you’d like to learn more about your saving opportunities, please contact one of our experts. They can provide you with support and advice so you can look forward to your financial future with confidence – and enjoy greater flexibility to lead a self-determined life.

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