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Old 01.02.2014, 22:30
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how to make tax-deductible 2nd pillar contributions?

Can anyone explain or point me to the rules for making contributions to the 2nd pillar (2 Seule) directly? e.g. couple of years ago I took a break from work to do further education and I'd like to directly close those gaps in a tax-deductible fashion. How can I do that?
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Old 02.02.2014, 02:38
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Re: how to make tax-deductible 2nd pillar contributions?

When you get the pension statement from your employer's pension fund, one of the lines on will be the buy in amount, if any. Assuming there is a buy in amount, then you follow the instructions set out by the fund to make the buy in of up to that amount. Assuming you are able to make the tax return you can claim the amount on taxes.
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Old 02.02.2014, 09:58
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Re: how to make tax-deductible 2nd pillar contributions?

Just adding to Jim2007 excellent reply: Even if you're not allowed to file a full tax return, many Kantons have simplified tax returns for foreigners being taxed at source (look at your Kanton's tax department website), where you can deduct additional Pillar 2/Pillar 3a contributions.

In practice, the process of buying in depends on your pension fund. I had to contact someone from my pension fund to send me a pay-in slip, which I can then use at any point during the year (multiple times, too). My OH gets a pay-in slip every year in December, automatically. He contributes to the missing years once a year, in December.
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Old 02.02.2014, 11:40
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Re: how to make tax-deductible 2nd pillar contributions?

All the previous posts are right and gave the relevant information.
The 2nd pillar account is remunerated with an interest rate depending on your pension fund (1% up to 2.5%).
But the key point is that any contribution made in 2014 is remunerated only starting from 1 Jan 2015. So it's better to invest it somewhere else during 2014 and then in December transfer it to your 2nd pillar.
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Old 02.02.2014, 14:49
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Re: how to make tax-deductible 2nd pillar contributions?

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When you get the pension statement from your employer's pension fund, one of the lines on will be the buy in amount, if any. Assuming there is a buy in amount, then you follow the instructions set out by the fund to make the buy in of up to that amount. Assuming you are able to make the tax return you can claim the amount on taxes.
That amount is the total amount available to make up any gaps from your past contributions.
Two additional factors apply here:
1. In case you arrived in Switzerland after a certain date, you can only contribute up to 20% of your insured income (not your total income) in one year for the first five years in Switzerland. I believe January 1, 2006 was the relevant date. The annual pension statement should reflect this insured income.
2. Even if you are not subject to this restriction: All other factors being equal it it advisable to spread your contributions over several years from a tax perspective.
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Old 02.02.2014, 16:43
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Re: how to make tax-deductible 2nd pillar contributions?

This is quite a complex subject and the rules vary from canton to canton and from pension fund to pension fund.
If you have significant buy-in possibilities and you have the funds to pay in, it may be worth spreading the pay-in over several years. The amount you pay in is deductible from tax each year you pay in and it may be worth looking at spreading it out (at least tax-wise). In many ways the tax deduction may be the more interesting part of the exercise, rather than just the increased pension.
Also note that if you do make capital buy-in to your pension fund, you won't be allowed to withdraw that amount as capital when you get to retirement age, as the tax authorities will catch up with you.
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Old 02.02.2014, 16:48
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Re: how to make tax-deductible 2nd pillar contributions?

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Also note that if you do make capital buy-in to your pension fund, you won't be allowed to withdraw that amount as capital when you get to retirement age, as the tax authorities will catch up with you.
That is incorrect, when you retire you can take the whole fund as cash if you want, there are no restrictions. You will pay some tax however they won't 'catch up with you' whatever you mean by that.
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Old 02.02.2014, 17:12
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Re: how to make tax-deductible 2nd pillar contributions?

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(...)
Also note that if you do make capital buy-in to your pension fund, you won't be allowed to withdraw that amount as capital when you get to retirement age, as the tax authorities will catch up with you.
Not exactly. The buy-in to your pension fund can't be used within 3 years for buying a property: if you have 30k in fund and you add 10k, you can use 30k to buy a property, or after 3years you can use 40k.
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Old 03.02.2014, 10:22
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Re: how to make tax-deductible 2nd pillar contributions?

Déduction fiscale du rachat
Nous vous rendons attentif au fait que si un quelconque versement de prestation sous forme de capital a lieu dans un délai de 3 ans après le rachat, il est possible que les autorités fiscales refusent la déductibilité du rachat, même a posteriori.

Whenever I've done this, I've been obliged to sign a declaration by the tax authorities (VD) basically committing to not withdrawing anything within the famous 3 years.
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Old 05.04.2015, 14:00
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Re: how to make tax-deductible 2nd pillar contributions?

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When you get the pension statement from your employer's pension fund, one of the lines on will be the buy in amount, if any. Assuming there is a buy in amount, then you follow the instructions set out by the fund to make the buy in of up to that amount. Assuming you are able to make the tax return you can claim the amount on taxes.
If you want to "buy" extra pillar 2 contributions for tax optimization purposes (and pension build up of course...), is it mandatory to do so with your existing employers pension fund or can you go on the market and choose any fund you wish (such as with pillar 3 voluntary contributions)?
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Old 05.04.2015, 22:50
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Re: how to make tax-deductible 2nd pillar contributions?

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If you want to "buy" extra pillar 2 contributions for tax optimization purposes (and pension build up of course...), is it mandatory to do so with your existing employers pension fund or can you go on the market and choose any fund you wish (such as with pillar 3 voluntary contributions)?
Extra pillar 2 contributions must be made to your employers pillar 2 fund, assuming your employed.
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Old 08.05.2015, 16:47
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Re: how to make tax-deductible 2nd pillar contributions?

I talked to my employer today if I can contribute more to my 2nd Pillar through him and he said it isn't possible as it's rule based.

He told me that what I can do is back pay the years I don't have, around 4 years missing. He said I need to talk to AXA to discuss how I pay them and at the end of the year I inform the Tax Office and get that amount as a tax deduction.

But is there a way that this is done at source without me taking any actions? Can my employer ask AXA to take a bigger chunk of my salary every month for BVG until my back pay amount is fulfilled? That way I would save all the unnecessary paperwork until then and spread it evenly with every salary for the next 15-20 months.

Anyone done something similar? Employer expects a call from AXA if that's something that can be done.
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Old 09.05.2015, 16:03
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Re: how to make tax-deductible 2nd pillar contributions?

I bought all my backbone years for 35k about 7 years ago, really bad investment its worth about the same ......... Had I invested myself it would be worth over 100k
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Old 10.05.2015, 00:29
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Re: how to make tax-deductible 2nd pillar contributions?

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He told me that what I can do is back pay the years I don't have, around 4 years missing. He said I need to talk to AXA to discuss how I pay them and at the end of the year I inform the Tax Office and get that amount as a tax deduction.
I've helped few people do this and it always worked in this way - directly between you and the pension fund.
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Old 16.05.2015, 16:59
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Re: how to make tax-deductible 2nd pillar contributions?

Make sure you're aware of what you buy into.

The way I understand the whole thing, pillar 2a, which covers your income from 24'675CHF thru 84'600CHF annual income, is governed and rather strictly ruled by the BVG (Gesetz über die berufliche Vorsorge), including for instance minimum return that must be credited to your individual "account" (Minimalzins, defined annually by the Bundesrat). Pillar 2b on the other hand, income above 84'600.- annually, is governed by ordinary insurance law where the insurance has much more room in determining how much you get credited.

Rumor (coming from, including but not limited to, swiss financial newspapers, so I think it is fact) has it that 2b is used to subsidize 2a when 2a didn't earn the amount needed for the "Minimalzins". As a consequence 2b is credited less, and grows slower, than its performance would imply.
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Old 16.05.2015, 18:29
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Re: how to make tax-deductible 2nd pillar contributions?

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I've helped few people do this and it always worked in this way - directly between you and the pension fund.
Is this something that I need to do now or can I do this when I am closer to 60? Is there a limit on when you can backpay the missing years?

I mean 30k now is a large amount but on my 60s it won't be a big deal. Unless of course there are penalties or you can't do it at all if X years pass.

Like fatmanfilms said, I am sure I can get a better return if I invest those for the next 30 years rather than pay them to Pillar 2.
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Old 16.05.2015, 18:53
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Re: how to make tax-deductible 2nd pillar contributions?

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Is this something that I need to do now or can I do this when I am closer to 60? Is there a limit on when you can backpay the missing years?

I mean 30k now is a large amount but on my 60s it won't be a big deal. Unless of course there are penalties or you can't do it at all if X years pass.

Like fatmanfilms said, I am sure I can get a better return if I invest those for the next 30 years rather than pay them to Pillar 2.
It will cost you more if you leave it longer. If you loose your job you won't be able to top up at all & if your salary is less you won't be able to contribute as much.

Of course the more you contribute in any single tax year, means less tax saving than spreading over more years.
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Old 16.05.2015, 19:08
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Re: how to make tax-deductible 2nd pillar contributions?

Yes but in the usual case where I am employed until I retire and my salary rises over the years it is actually worse for me, right?

I mean I can take these money and invest them now and 5 years before my retirement I spend 5-6k every year to back pay. That sounds more sensible, correct?
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Old 25.05.2015, 17:01
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Re: how to make tax-deductible 2nd pillar contributions?

Assuming you are from the U.S., the IRS will take advantage of any tax deduction claimed here and take it for themselves.
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Old 25.05.2015, 18:07
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Re: how to make tax-deductible 2nd pillar contributions?

The question is for EU workers.
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