Pillar 3a in 2027: higher limit, indirect amortisation on a new basis

From 1 January 2027, the pillar 3a limit rises to CHF 7,373 for people affiliated with a pension fund, up from CHF 7,258 in 2026. The increase follows directly from the adjustment of AHV/AVS pensions decided by the Federal Council. For homeowners who amortise their mortgage indirectly, it is a good opportunity to review their strategy: the contribution base widens, and with it the amount deductible from taxable income.

Pillar 3a maximums are not set at random: they are indexed to the AHV/AVS pension. When the Federal Council raises pensions, the 3a limits follow automatically.

Why these figures? In 2027, AHV/AVS pensions rise by 1.59%: the minimum pension goes from CHF 1,260 to CHF 1,280 a month, and the maximum from CHF 2,520 to CHF 2,560. The 3a limit for employees equals 8% of the maximum insured salary under the BVG/LPP (three times the maximum annual AHV/AVS pension, i.e. CHF 92,160 in 2027). For the self-employed without a pension fund, it is 40% of that amount.

The new limits apply to contributions made in 2027. Contributions made up to 31 December 2026 remain subject to the 2026 limits.

In Switzerland, the part of the mortgage above two thirds of the property value (the second-rank mortgage) must be amortised, generally within 15 years and no later than retirement. There are two options:

• Direct amortisation: you repay part of the debt every year. Your mortgage decreases, and so does your interest.
• Indirect amortisation: instead of repaying the bank, you pay into a pillar 3a pledged to the lender. The debt stays constant until maturity, then the 3a capital is used to reduce it.

Today, indirect amortisation combines two tax advantages: 3a contributions are deductible from taxable income, and mortgage interest remains deductible on an unchanged debt. Note: with the abolition of the imputed rental value on 1 January 2029, the interest deduction will disappear for owner-occupied homes (except for a temporary first-time buyer deduction). The deduction for 3a contributions remains, which is why the higher limit is still an important lever for homeowners. Full details in our article on homeowner taxation and the end of the imputed rental value.

With a higher limit, indirect amortisation can be recalculated on a new basis. In practice:

• More amortisation capacity: each insured person can pay in up to CHF 7,373 a year. A couple of employees therefore has CHF 14,746 to cover the amortisation required by their bank.
• A higher tax deduction: the full contribution, up to the limit, is deductible from taxable income.
• More capital at maturity: over 15 years, maximum contributions add up to at least CHF 110,595 per person, excluding returns.

Example. A couple of employees must amortise a CHF 200,000 second-rank mortgage over 15 years, i.e. about CHF 13,333 a year. Both pay the maximum into a pledged pillar 3a.

The annual increase is modest, but it adds up every year until the financing matures. It also gives some headroom to households whose required amortisation was already close to the limit. The actual saving depends on your canton, municipality and income.

Amortisation rules vary from one lender to another: it is one of the criteria to compare, as we explain in How to choose your mortgage lender.

For indirect amortisation and the tax deduction, there is no difference between a bank pillar 3a and an insurance pillar 3a. In both cases:

• the limit is the same (CHF 7,373 in 2027 for an employee with a pension fund);
• contributions are deductible from taxable income, up to that limit;
• the capital can be pledged to the bank to serve as indirect amortisation.

The two solutions do differ, however, in contribution flexibility, risk cover (death, disability) and investment approach. An advisor can help you choose the option that suits your situation.

1. Pay in the 2026 maximum before 31 December. The CHF 7,258 limit still applies this year; the amount must be credited to your 3a account before year end.
2. Adjust your contributions from January 2027. Update your standing order or check whether your insurance contract lets you reach the new limit.
3. Review your amortisation plan. Is the amount required by your bank covered? Are both spouses’ contributions optimised?
4. Plan ahead for your mortgage renewal. It is the right time to review everything: rate, term, amortisation and taxes. Discover our mortgage renewal service.

At Censeo, we look at your property financing and your pension planning as a whole. Book an appointment with an advisor to make sure your indirect amortisation takes full advantage of the 2027 limits.

Read also: using your 2nd and 3rd pillar as equity.