Pension limits?

Is there any limit on how much voluntary pension contribution you can make in a given year? As I have been behind in my pension payments, the pension scheme allows me to make voluntary payments.

The amount of voluntary payements actually exceeds my annual income.

Now this: Fedlex

(Art. 1 Abs. 2 und 3 BVG)

1 Ein Vorsorgeplan gilt als angemessen, wenn die Bedingungen nach den Absätzen 2 und 3 erfüllt sind.

2 Gemäss Berechnungsmodell:

überschreiten die reglementarischen Leistungen nicht 70 Prozent des letzten versicherbaren AHV-pflichtigen Lohns oder Einkommens vor der Pensionierung; oder
betragen die gesamten reglementarischen Beiträge von Arbeitgeber und Arbeitnehmern, die der Finanzierung der Altersleistungen dienen, nicht mehr als 25 Prozent aller versicherbaren AHV-pflichtigen Löhne beziehungsweise die Beiträge der Selbständigerwerbenden nicht mehr als 25 Prozent des versicherbaren AHV-pflichtigen Einkommens pro Jahr.

Mentions certain limits, but my German isn’t good enough to understand it properly. Is the limit 25% of accumulated AHV-insurable salary (which should have been taken into account by the pension fund in calculating the maximum allowable voluntary payment) or is the 25% a per year limit based on the current year insurable salary? I assumed the former, but welcome advice from someone who has experience of this.

And the follow-up question is: even if there are no limits, are there limits on the tax deduction available on an outsize voluntary contribution?

I don’t know the exact legal details around this but I believe the pension fund makes the calculation for you regarding how much you can pay in? On the yearly Auszug (or an ad hoc one you can request at any time, there should be a line item indicating whether and how much you can pay in.

In my last two years at the small US search engine startup I doubled my funds in pillar 2 and the corresponding contributions were “outsized” (in terms of absolute numbers) and maybe half and a third for the corresponding salaries for those years. All went fine, tax authorities didn’t even blink.


Thanks. Next year I was planning on contributing 150% of salary and wondering if there will be any surprises.

Looks like this paragraph is not relevant at all.

Your pension fund should communicate how much can you pay in. I have never heard about other limitations about how much you can pay per year. For 3rd pillar it is maximum of 20%, I think, every year for self-employed.

Why would you do that? you’d be missing most of the tax benefits given that you can’t have negative taxes and rates are progressive (might even be a net negative if your marginal tax rate is below the withdrawal tax rate).

The limit where it makes sense is probably well before 100% of income given tax progression (there isn’t much tax on low income)


One pension provider (Baloise) does list one limit that I remember seeing.
If you have moved to Switzerland from abroad and have never previously belonged to a pension fund in Switzerland, then, during the first five years after joining a Swiss pension fund, your voluntary contributions are restricted to an annual maximum of 20% of your regulatory pensionable salary
Not sure if it’s law or a limitation of that one pension fund.

More than 100% individual’s salary might make sense if joint income as couple is higher, different earnings individually. But yes, 1.5 yearly salary is bit excessive from tax perspective but we dont have all details.

I have income beyond salary so will still be paying taxes after the pension contribution.

Also, I plan to retire in 3 years and so want to fill up my pension pot prior to retirement and transfer the pension pot in a vested benefits account to grow tax free. It was really a bit of bad planning on my part as I wasn’t expecting to retire so early. I should have paid more into pensions in previous years to reduce more at the highest marginal rates.

This is also the reason I don’t care too much about tax inefficiency of getting high interest on US T-Bills as they will mostly be offset with pension contributions.

Yes. The general rule is that your pension fund, AHV/AVS, and pillar 3a combined should give you a post-retirement-age income that matches the income you have just before you retire.

If your pension benefits do not accurately represent your current income (because you’ve received raises or increased your work hours, for example), then you will have a gap in your pension benefits. You can make voluntary contributions equal to or less than the size of that gap. These voluntary contributions are generally fully tax deductible. It is worth noting that the tax office can dispute a voluntary contribution if they have reason to believe it is being used for tax avoidance, but that is the exception.

The amount which you can vountarily contribute to close a potential gap is typically shown on your annual pension fund statement. If it is not, contact your pension fund and ask them to give you this information.

Situation 2: Employer-based voluntary contributions

There is another situation in which your employer chooses a pension plan which includes additional, voluntary contributions. In this case, the additional, voluntary contributions are deducted from your salary together with the obligatory contribution. These plans can be useful if, for example, your salary is higher than the maximum salary covered by obligatory pension contributions. However, you have no control over this kind of voluntary contribution, unless you can influence your employer’s decisions with regards to which pension plan they use.

1 Like

Remember that as your taxable income tends to zero so does your tax rate. Don’t forget taxes are payable when you withdraw your pension.

1 Like

Spread it out over the years you have the option to pay into. Highest tax effect.

Yes, care is needed, although the wealth tax savings would cover the tax on withdrawal.

Yup. That’s exactly what I’m planning on doing. Since I really under-contributed to pension and now plan to retire in 3 years, I only have 4 years left to fill up the pension pot and so will need to make outsized contributions over the next years.

1 Like

In the first 5 years in Switzerland, you may only comtribute 20% of your salary. Beyond this, you may never contribute more than 100% of the salary that was insured by the pension fund. Meaning even when married and with two salaries - you can not go beyond 100% of your salary. Further will you need to leave sufficient remaining income (Spouse, Dividend Distributions) that you can credibly live from the money. If you pay your life using Savings but no longer have an income, Tax authorities may conclude that you didn’t save for pension but that you abuse the system to optimize taxes in an excessive way.

Personally, I would never contribute more than 50-60% of your salary and I would ensure the remaining salary (Person view) is at least about 50k.

Ultimately, the risk is on you. Just because the pension fund took the money doesnt meant that you can deduct it from your income. Worst case, they need a while and after 2-3 years say no… but you already did it (irreversibly) for these 2-3 years. Loss is on you.

Swiss laws are flexible and open for creative solutions but courts take excessive cases where a law was read by the word (but not by its spirit) serious and they can in such situations bite very hard. Unlike in the UK/Case law system: just because a law doesnt explicitly mentions somethings/disqualifies an option that doesnt meant that you are allowed to do it. What counts is the spirit of the law and (unless it was explicitly written otherwise) not the wording as such.

Yes, there are examples where paying into a pension fund is non-deductible. Such as when you make a withdrawal to buy a house and then the amount has to be paid back in (without deduction).

However, I’m not aware of any rules which limit deductibility based on amount of contribution (assuming you remain within the limits of what is permitted for voluntary payments). Do you know of any laws on this, or past cases or even guidance from the tax authorities?

As said, this is not Case Law so you don‘t need to look for either an explicit legal wording nlr a case. The point of voluntary pension buy-ins is to cover pension gaps. It is not intended to excessively avoid tax. As long as you stay reasonable, you are good but what you propose is simply unreasonable. The tax office would likely just reduce the tax deductability and you woupd need to appeal and fundamentally take them to court. Do you have the motivation and funds to take it through all instances to set a new precedence case?

By cases, I mean are there any examples where a tax deduction has been denied on such a basis (or has it never happened before). Or guidance from the tax authority suggesting limits etc.?

I don’t see anything unreasonable about it.

Why do you think they would do that? On what basis could they do that?

1 Like

I wondered the same thing in the past and there actually is a federal court ruling regarding something similar: 142 V 169

The most important sentence for you is probably

So kann auch ein Arbeitnehmer im Rahmen von Art. 79b und 79c BVG erst gegen Ende seiner Aktivzeit fehlende Beitragsjahre einkaufen. Dabei spielt keine Rolle, woher die Mittel kommen, beispielsweise aus einer Erbschaft, und ob die Einkaufssumme den (aktuellen) Lohn übersteigt.

I am obviously no lawyer, but this sounds to me as if there are no limits at all and you could do 500% of your current salary.

Before doing that, it might be a good idea to get a tax ruling. The tax office in most cantons should be able to give you a legally binding guarantee that they will accept the deduction. In SZ, this is for instance explicitly mentioned as an option in the FAQ (2.5):


I concluded the same thing. I don’t think there should be any issues, but it is easy just to ask and confirm.

Maybe also get professional advice from an (ideally independent) financial advisor if you want to be (more) sure?