Is optimising income also a major topic in your household? Then it pays to take advantage of the opportunities for tax savings – for example with occupational provisions. A pension fund purchase pays off twice: financial independence in old age, lower taxes now. This not only relieves your household budget, but also gives you confidence for your financial, self-determined 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 reduce it. There are various ways of keeping the tax burden low – for example with occupational provisions. Depending on the pension fund, your current pension solution and salary level, it can be worthwhile to take advantage of the tax savings opportunities and thus reduce pressure on your household budget.

If autumn is just around the corner, this is the perfect time to review your pension provision. What is your pension fund's level of benefits? Is it advantageous for you to pay additional money into the pension fund?

Save on taxes by paying into your pension fund

Many people think of the 3rd pillar when it comes to saving taxes through retirement provision. The 2nd pillar also offers an opportunity to save on taxes. A pension fund purchase can make sense, for example, if the maximum amount has already been paid into pillar 3a (for insured persons with a pension fund: CHF 6 826, without a pension fund: CHF 34 128 or max. 20% of net income).

The pension fund certificate shows whether you can already count on the maximum possible retirement savings. If this is not the case, you can make additional payments into the pension fund to reduce your tax burden. The purchase sum can be deducted from your taxable income. The purchase can be made at any time.

The following points need to be considered:

  • Living expenses: Purchase amounts generally cannot be withdrawn until retirement age. You can only withdraw the funds prior to retirement if you become self-employed, purchase owner-occupied property or move abroad permanently. 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 you financed your home with an advance withdrawal from the pension fund, this must first be repaid before any tax-deductible purchases can be made.
  • 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.

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

When is a voluntary purchase in the pension fund a good idea?

  • If you join the pension fund after the age of 25.
  • If you have received a salary increase.
  • If your pension plan has improved by increasing your savings contributions.
  • If you switch to a pension fund with higher benefits.
  • If you wish to compensate for missing insurance years due to a gap in employment, e.g. through pregnancy, study, unemployment or residence abroad.
  • If you are planning early retirement.
  • If (early) retirement is more than 3 years off.
  • If you want to close a pension gap as a result of divorce.
Image Source: iStock, Halfpoint

Make an appointment for a consultation

Together with our experts, you can find out whether a pension fund purchase makes sense in your individual situation. Request a consultation now and find out more about your savings options – either comfortably at your home, directly with us on site or conveniently via video chat. The decision is up to you.

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