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Accounting
David Merz | Founding Partner
Zurich, April 18, 2025
Self-employed individuals in Switzerland have more flexibility when it comes to pension planning. This can present both opportunities and challenges, because unlike employees who are automatically enrolled in occupational pension schemes, the self-employed must proactively manage their social security and retirement savings. In this blog, we explore the pension and social security solutions available to the self-employed, offering guidance on legal obligations, voluntary pension schemes, and strategic financial planning.
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From a social security perspective in Switzerland, an individual is considered self-employed if they operate independently, are responsible for their own business activities and risks, and work for multiple clients without being subject to an employer’s instructions.
The legal structure of your business generally determines your self-employment status, which in turn influences your social security obligations and pension contributions. If you own a sole proprietorship or are part of a partnership, you are generally considered self-employed under Swiss social security law.
However, if you establish a GmbH (limited liability company) or an AG (corporation), you are typically viewed as an employee of your own company for the work you perform. You are therefore subject to the Swiss Occupational Pensions Act (OPA) and must pay contributions to the second pillar if you meet the earnings threshold.
Self-employed individuals must register their self-employment status with the AHV compensation office to ensure compliance with social security obligations.
Self-employed individuals enjoy more flexibility when it comes to social security; however, they must still fulfil specific obligations. The need to take independent responsibility for retirement provision also has its challenges and downsides. Without mandatory pension contributions, self-employed individuals must be extra vigilant to ensure they save adequately for retirement.
Just like full-time employees, self-employed individuals must also contribute to the first pillar, and this forms the foundation of their social security coverage. The first pillar consists of old-age and survivors’ insurance (AHV), disability insurance (IV) and the income replacement scheme (EO).
A key difference is that, unlike employees, self-employed individuals pay both the employer and employee portions. Additionally, the self-employed don’t contribute to unemployment insurance nor participate in its benefits.
First pillar contributions are based on net income, with rates adjusted according to earnings.
Participation in the second pillar is voluntary for self-employed individuals earning above the required threshold. Opting in provides additional retirement benefits and risk coverage for disability and death, similar to the protection full-time employees receive.
Contributions to the second pillar are tax-deductible up to the maximum contribution limit, and this creates a financial incentive for self-employed professionals to build a more secure retirement fund. We will further explore the mechanics of optional 2nd pillar pension for the self-employed in the next section.
Pillar 3a and 3b play a crucial role in retirement planning for self-employed individuals. These are the optional private savings portion of Switzerland’s 3-pillar social security model.
Pillar 3a allows for tax-deductible contributions, making it an attractive savings tool for long-term financial security. The annual contribution limits vary depending on whether the individual also participates in a 2nd pillar scheme.
On the other hand, pillar 3b represents unrestricted savings and investment opportunities that are not tied to retirement. While pillar 3b contributions do not offer the same tax benefits, they provide greater flexibility in terms of investment choices and accessibility of funds. They also offer an additional option for those who wish to exceed the maximum contribution limit of pillar 3a.
We will explore the pillar 3a in more detail in a later section.
Self-employed individuals can voluntarily join a pension fund. Contributions are tax-deductible up to the maximum allowable contribution limit. This limit is generally up to 25% of the insurable AHV income, although the exact thresholds depend on the chosen pension fund and individual circumstances. Additionally, voluntary buy-ins to cover pension gaps can be made, which are also fully tax-deductible. Similar to the first pillar, self-employed individuals in the second pillar contribute both the employer and employee share.
Voluntary contributions to the 2nd pillar enable self-employed professionals to benefit from additional retirement savings and risk coverage (e.g., disability and survivors’ benefits) over and above the basic mandatory 1st pillar. Furthermore, they can benefit from significant tax deductions by contributing to occupational pension schemes, especially high-income earners.
As a self-employed individual, there are several ways to participate in the occupational pension system:
If you own a business and have enrolled your employees in an occupational pension fund (typically a collective foundation), you can usually also join the same scheme. This allows you to benefit from the same retirement savings and risk coverage options as your employees and thus simplifies your pension management.
Self-employed professionals can often join the pension fund offered by their professional association. Many professional groups in Switzerland have dedicated occupational pension funds, such as doctors, accountants, and lawyers.
If your professional association does not have a pension fund, or you do not specifically belong to an association, there are insurance companies that have established associations specifically to provide occupational pension solutions for self-employed professionals.
Joining a professional association pension fund offers favorable conditions, risk-sharing benefits, and options suited to the unique needs of each profession.
The BVG substitute occupational pension fund is a non-profit organization with a federal mandate to provide an occupational pension scheme that accepts all employers and individuals who meet the legal requirements. It thus provides a safety net for those unable to join other schemes, though it may have less flexibility.
If you were previously part of a mandatory occupational pension scheme and are now transitioning to self-employment, you have the flexibility to choose between several options for managing your existing 2nd pillar funds.
These “vested benefits” are the retirement savings which have been accumulated in your occupational pension plan when you leave your job before retirement age. As such, they remain your rightful property, and you can decide between one of the following options:
The withdrawn funds can be used as start-up capital but will lead to a reduction in retirement benefits and are taxed as a lump-sum payment, with the tax burden varying by canton. Therefore, this decision should be carefully considered, as failure in self-employment can have significant financial consequences.
If you leave your full-time job to become self-employed, you have the option to withdraw your vested 2nd pillar funds to start your own business. The advance withdrawal must be made within one year of becoming self-employed.
If you are partially self-employed (e.g., running a side business while still employed), you can only access your vested benefits once you fully leave your job and are no longer covered by an employer’s occupational pension plan. The 12-month period for withdrawal starts from the point when you become exclusively self-employed. Documentation proving self-employment, such as AHV registration, is required.
While this option provides valuable initial capital for your business venture without needing to take on debt, it’s important to consider the risks, as these funds are meant for retirement security. There is always the very real danger that your business fails, and you may then leave yourself vulnerable by having eroded your retirement savings.
Furthermore, the withdrawn funds cannot be reinvested into a pension scheme later, so ensure sufficient retirement planning if withdrawing your existing pension funds.
Pillar 3a is a key retirement planning tool for the self-employed in Switzerland, offering flexible investment options and tax advantages. Here’s how it works in practice for the self-employed:
Contributions to pillar 3a are fully tax-deductible, meaning that any payments made to a pillar 3a fund are subtracted when calculating your taxable income. Self-employed individuals without 2nd pillar coverage can contribute up to 20% of their net income, with a maximum of CHF 36,288 per year (as of 2025). Those with 2nd pillar coverage are limited to CHF 7,258 annually (as of 2025).
Pillar 3a accounts offer a much more diverse range of investment choices compared to occupational pensions, from low-risk savings accounts to large-cap and small-cap equity funds. Selecting the right mix depends on your risk tolerance and retirement goals.
Withdrawals from pillar 3a are subject to taxation but at a reduced rate, which varies by canton and is taxed separately from regular income.
Funds can be withdrawn no earlier than five years before the statutory AHV retirement age or earlier under specific conditions, such as purchasing owner-occupied property, starting a sole proprietorship, or in the case of permanent emigration. Every withdrawal is subject to taxation.
Read our blog to learn more about early withdrawals from pillar 3a.
Starting from 2026, individuals will have the opportunity to retroactively fill gaps in pillar 3a contributions that may have arisen from 2025 onwards. Gaps refer to instances where an individual was eligible to contribute to pillar 3a but did not do so or did not contribute the maximum amount. The new regulations allow them to make up the shortfalls by contributing extra in later years (subsequent “Pillar 3a purchases”).
This new regulation allows for increased flexibility in managing retirement savings and ensures that missed contributions can be addressed to maximize tax benefits and long-term financial security. However, they come with various conditions and restrictions. Read our blog on subsequent Pillar 3a purchases to learn more.
Choosing between voluntary 2nd pillar contributions and pillar 3a savings depends on several factors, including the relative tax benefits, insurance coverage, flexibility, and how accessible the savings are for other uses.
Both the voluntary 2nd pillar and pillar 3a offer excellent opportunities for tax-deductible retirement savings for the self-employed. However, the fact that you can typically contribute up to a maximum of 25% of your AHV salary to the 2nd pillar along with simultaneously contributing up to the small limit (CHF 7258) to pillar 3a, generally means the occupational pension fund offers superior tax-saving opportunities compared to pillar 3a (which has a limit of only 20% of salary up to a maximum of CHF 36,288 when you are not part of an occupational pension fund).
This difference is not so pronounced at lower incomes, but the 2nd pillar becomes especially attractive for high-income earners as it does not have a fixed cap like that of the pillar 3a.
Occupational pensions come with built-in insurance coverage for disability and death. While this offers added protection, the options to customize coverage based on personal circumstances are limited. For example, contributions towards a survivor’s pension are mandatory, even if you have no dependents. This in turn dilutes your benefits, as you may be paying for coverage you don’t want or need.
On the other hand, pillar 3a focuses primarily on retirement savings and offers limited insurance protection. Some plans include optional coverage for disability or family protection, but additional risk insurance may be required, and these extra policies are not tax-deductible.
In other words, if you value risk protection, 2nd pillar may be the best choice as it provides in-built, tax-deductible cover. However, if you are primarily interested in tax-deductible retirement savings and prefer to manage your insurance cover independently, pillar 3a is the better choice.
Occupational pension plans, even when joined voluntarily, generally require regular contributions (e.g., fixed percentages of income) and follow more rigid structures defined by the pension fund. The process for adjusting contributions is often more complex and less flexible compared to pillar 3a.
That said, the 2nd pillar allows for additional and retroactive contributions to fill gaps from previous years. This feature is particularly advantageous for self-employed individuals who may have experienced irregular income or inconsistent pension contributions earlier in their careers.
Pillar 3a offers significant flexibility in how much and when you contribute within the annual limits. You can increase, decrease, or skip contributions depending on your financial situation, making it ideal for self-employed individuals with fluctuating incomes.
Furthermore, starting from 2026, individuals will be allowed to make retroactive payments to cover gaps in pillar 3a contributions from 2025 onwards. This was previously not allowed and was a significant disadvantage compared to the 2nd pillar. While the change enhances the flexibility of pillar 3a even further, the conditions and restrictions in retroactive purchases are typically more stringent than for the 2nd pillar.
The pension fund (second pillar) is primarily intended for retirement provision and can be withdrawn no earlier than five years before the statutory AHV retirement age. However, an early withdrawal is possible under specific conditions, including:
Pillar 3a is also subject to legal withdrawal conditions. Early withdrawals are permitted for:
In both cases, early withdrawals are subject to lump-sum taxation, which varies by canton. A withdrawal also reduces retirement savings and should be carefully considered.
To summarize the previous points:
Choose pillar 3a if you want flexible contributions and greater control over your retirement savings. It is particularly suitable for individuals with fluctuating incomes or those who want to tailor their investment strategy. Additionally, it allows for tax-advantaged savings with some flexibility in investment choices.
Alternatively, you can opt for voluntary contributions to the second pillar if you are a high earner looking to maximize tax savings while benefiting from built-in insurance coverage for disability and death. It is also an attractive option if you want to build a more stable retirement plan and secure a financially protected life in old age.
For many self-employed individuals, a combination of both pillars offers the best balance of tax benefits, protection, and flexibility.
Navigating pension planning and social security obligations as a self-employed individual can be tricky. Nexova specializes in providing tailored fiduciary solutions for Swiss SMEs and self-employed professionals, offering expert guidance on voluntary 2nd pillar options, strategies to optimize pillar 3a contributions, and support in managing tax implications.
Most importantly, Nexova helps you find the best retirement planning strategy based on your income, business structure, and long-term financial goals, ensuring both legal compliance and maximum financial benefit.
Why wait? Contact us today for a free consultation and discover how we can simplify your pension management and enhance your financial security.
Answers at a click
Yes, it is possible for sole proprietors to join a pension fund (second pillar) while also making contributions to pillar 3a. However, if you are part of a pension fund, the maximum contribution limit for pillar 3a is capped at CHF 7,258 (in 2025). If you do not voluntarily join the second pillar and only contribute to pillar 3a, the tax-deductible contribution limit is 20% of income, up to a maximum of CHF 36,288 (in 2025).
Yes, both 2nd pillar and pillar 3a funds can be used to finance the purchase of a primary residence. However, early withdrawals come with strict conditions and may affect your long-term retirement security. It’s essential to weigh the immediate benefits of homeownership against future financial stability.
Contributions to pillar 3a are tax-deductible, but withdrawals are subject to separate taxation at a reduced rate. The exact tax rate varies by canton and municipality and increases progressively with the amount withdrawn.Since a pillar 3a account must always be withdrawn in full, it can be beneficial to hold multiple pillar 3a accounts and stagger withdrawals over several years. This helps break tax progression and reduces the overall tax burden.
You will rely solely on the 1st pillar (AHV), which may be insufficient to maintain your standard of living in retirement. While pension contributions aren’t mandatory beyond the 1st pillar, neglecting retirement planning can leave you financially vulnerable later in life. Without an employer to automatically contribute on your behalf, the responsibility to build a solid retirement fund falls entirely on you.
Investing independently offers flexibility but comes with greater risk and no tax benefits. In addition to reducing your taxable income, pension contributions (2nd pillar and pillar 3a) provide a level of financial security, including insurance coverage in many cases. A mix of both approaches (private savings and pension) often provides the best of both worlds.
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