Limits to the buy-in

During their first five years in Switzerland, insureds moving here from abroad and those insured with a Swiss pension fund for the first time may buy in a maximum of 20% of their insured salary each year.

All voluntary buy-ins are restricted, ie any funds held in restricted-access vested benefits accounts or policies in Switzerland must be deducted before making privately funded buy-ins to the Pension Plan and Capital Plan if these funds are not transferred to the Pension Fund.

The law requires that funds held in pillar 3a accounts or insurance policies must also be taken into account when making buy-ins, especially if these funds exceed a specific amount, which could be the case if you were previously self-employed in Switzerland.

With regard to occupational pensions (Pillar 2), the taxpayer's situation must always be considered as a whole ("consolidated view"). Any surpluses in the context of other pension plans or schemes to which the insured belongs (including other pension funds) must be taken into account in the buy-in calculation, and these reduce the coverage gap to be compensated by buy-ins (SGE 2011 no 11; BGer 2A_408/2002 of 13 February 2004).

Maximum possible 3a_pilar savings_2020

Ruling by Swiss Federal Supreme Court

The Swiss Federal Supreme Court ruling (BGE 2C_658/2009 of 12 March 2010) stipulates that a buy-in in a pension fund can only be tax-deductible provided no lump-sum settlement is made from an occupational pension plan in the following three years.

The tax authorities will therefore probably permit the deduction of a buy-in only if there is no lump-sum settlement made from an occupational pension plan in the following three years. Any breach of this three-year restriction would result in a retrospective correction to the individual's tax assessment and the deletion of the deduction in question. This also affects early withdrawals for the purchase of residential property.

The three-year period according to Art. 79b (3) FSOPP also applies if the buy-in and the lump-sum withdrawal do not concern the same pension scheme or pension fund. An individual's overall pension situation is used as the basis for consideration ("consolidated view"; cf BGer 2A.408/2002 of 13 February 2004). Any buy-in violating the three-year period shall not be eligible for tax deduction even if the subsequent lump-sum withdrawal comes from a different pension scheme and/or pension fund (cf the analysis by the Swiss Tax Conference [Schweizerische Steuerkonferenz] of the Federal Supreme Court ruling of 12 March 2010 (2C_658/2009), dated 3 November 2010, retrievable -only in German- at http://steuerkonferenz.ch/downloads/analyse_bge_bvg_d.pdf).

Insureds must clarify this matter themselves with their local tax authorities.