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Pillar 3a when to pay in to save on tax


Pillar 3a  when to pay in to save on tax
Pillar 3a when to pay in to save on tax

There are tax benefits to paying into a pillar 3a account. To ensure that the money arrives at the bank or insurance company in time to be deducted for tax purposes, you should make your payment before the holidays.

Private pensions (third pillar) are becoming increasingly important. They can be used to bridge any gaps left by the first two pillars, as well as to finance any additional needs that may arise.

Save on tax with the third pillar

As an incentive, the government allows you to deduct pillar 3a contributions from your taxable income. What’s more, these retirement savings are exempt from wealth tax. You do not have to pay income and withholding tax on interest and capital gains either. The negative side of these tax advantages is that pillar 3A savings are tied up to five years before the legal retirement age expires. And only withdrawn earlier under certain circumstances (for example, to buy a housing property).

What is the maximum I can pay into pillar 3a?

There are restrictions on how much you can pay into a pillar 3a account each year. For those belonging to an occupational pension fund, the annual contribution to pillar 3a in 2018 is limited to a maximum of 6,768 francs (6,826 francs in 2019). Those without an occupational pension may pay in a maximum of 33,840 francs (up to 20 per cent of their net income) (34,128 francs in 2019). Banks and insurance companies won’t accept any more than this. While some just return the excess amount, others send back the entire contribution.

So be aware: if you do not notice the returned payment. And then miss the deadline for the new payment. You will not be able to claim a tax deduction the following year.

What is the deadline for paying into pillar 3a?

You need to pay into your pillar 3a before the holidays. This ensures that the amount paid in arrives at the bank or insurance company in time for it to be deducted for tax purposes. That’s a good idea to check that the bank has processed the payment correctly in the retirement savings account. You will be on the safe side.



About Helene Odoms

Helene Odoms

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