Paying into your Swiss pension fund: how a 2nd pillar buy-in works
On top of the contributions deducted from your salary, you can pay extra money into your pension fund. This is known as a buy-in: it improves your retirement benefits and reduces your tax bill.
Your pension fund insures you under a plan set out in its regulations. If you have not contributed throughout your working life, or your salary has risen, your savings fall short of the plan. A buy-in closes that gap.
What is a 2nd pillar buy-in?
It is a voluntary payment from your own pocket into your employer’s pension fund (rachat de 2e pilier). The gap it fills is called a pension gap (lacune de prévoyance): years spent abroad, studies, part-time work, a pay rise.
The money is added to your retirement savings, increasing the pension or lump sum you will receive.
How much can you pay in?
The maximum is specific to you: your pension fund works it out according to its regulations, your age, your insured salary and your current savings. It will tell you on request.
You need not close the whole gap at once: several buy-ins over several years are possible.
How does a buy-in reduce your tax?
The amount you pay in is deducted from your taxable income for the year of payment. The statement issued by your pension fund must be enclosed with your tax return.
If you are taxed at source (imposé à la source), the rate applied to your salary does not take the buy-in into account: to have it deducted, you need to request a subsequent ordinary assessment (taxation ordinaire ultérieure).
Which year to pay in, and how to split the amount, are therefore worth calculating.
What rules apply?
- Three years without a lump-sum withdrawal: what you have bought in cannot be withdrawn as a lump sum for three years. A withdrawal within that period, even to buy a home, means losing the deduction.
- Home ownership: repay first: if you have drawn on your 2nd pillar to buy your home, that early withdrawal must be repaid before any new buy-in.
- Moving to Switzerland: if you had never belonged to a Swiss pension fund, your buy-ins are limited to 20% of your insured salary a year for the first five years after joining. After that, the limit no longer applies.
How we can help
New to Switzerland? Use our form to request a free arrival meeting: together we look at what a buy-in would mean for you. We prepare your tax return with you under our Premium or Confort package, second consultation included, and agree together on the right time for a buy-in.
A question about a 2nd pillar buy-in? Call us.
+41 26 303 36 69