Are you considering making a buy-in to a pension fund? You can use your 3a funds for this purpose and transfer them directly into the pension fund. In this guide, we will explain who is eligible to deposit the 3rd pillar into the pension fund, discuss whether it is worthwhile, and outline the steps you can take to proceed.
Table of contents
Who is allowed to transfer the pillar 3a to the pension fund?
You can transfer your pillar 3a to the pension fund if a purchase into the pension fund is possible. This purchase is only permitted when there is a contribution gap in your pension fund.
Please note that transfers to a vested benefits account are not permitted.
Do I have to transfer the entire amount from my pillar 3a account?
If the balance in your pillar 3a account is less than the maximum allowable purchase amount for the pension fund, you must transfer the entire account.
However, if your pillar 3a balance exceeds the maximum purchase amount, a partial transfer is permitted. In that case, you can keep the excess amount in your pillar 3a account.
Until when can a transfer be made?
You can transfer your pillar 3a to the pension fund until the regular retirement age of 65, even if you choose to retire early.
If you continue working after reaching the reference age, transfers are allowed up until the age of 70.
Please note: A direct transfer is not possible for a 3a insurance policy that becomes due from the age of 60.
Can I deduct my deposits from my taxes?
If you deposit your assets from pillar 3a directly into your pension fund, you cannot deduct this amount from your taxes. However, if you make the purchase using your private assets, you can deduct that amount from your taxable income.
Do I need to pay taxes when transferring my pillar 3a to the pension fund?
The transfer is tax-neutral, meaning you won’t incur any capital withdrawal tax at that time. Taxes will only be applied when you withdraw your assets from the pension fund. Additionally, you do not need to report the transfer on your tax return.
If you made additional contributions to pillar 3a during the same year, you can deduct these contributions from your taxable income.
Why should I transfer the pillar 3a to the pension fund?
Transferring your pillar 3a funds to the pension fund means you will lose the tax advantages that would have been available if you had used your free funds for your purchases.
However, if you don’t have the available free funds, using your 3a funds for purchases can still be beneficial. This approach can help increase your pension and enhance your risk benefits.
Important: Not every contribution to the pension fund is worthwhile, especially when it comes to the over-obligatory pension fund. It’s essential to check if a contribution will genuinely increase your pension and risk benefits.
What are the risks?
If you plan to withdraw from your pillar 3a while also making a purchase in the pension fund using free funds in the same year, proceed with caution.
There is no legal prohibition against making a purchase after withdrawing from 3a; however, some tax authorities have previously disallowed the deduction, perceiving it as a tax avoidance strategy.
To avoid complications, it is advisable to wait at least one year after the withdrawal before making the purchase. If you can demonstrate that you had sufficient assets without the 3a funds, the procedure is usually permitted.
Important: If you intend to withdraw a portion of the pension fund as capital, ensure that the purchase occurs at least three years before your retirement. Otherwise, you risk losing the tax deduction retroactively, even on after-tax amounts.
How to transfer your assets
To transfer your assets, the transfer must be made directly from your 3a provider to the pension fund. Typically, your 3a provider will provide you with a transfer form that you need to complete. After filling it out, send it to either the pension fund or the provider, depending on their requirements.
You can usually find the exact steps and necessary documents on your provider’s website or in the customer portal.
Steps to transfer your finpension 3a to a pension fund
If you want to transfer your pillar 3a at finpension to a pension fund, follow these steps:
- Log in to your 3a account at finpension.
- Click on the three dots next to the desired portfolio.
- Select “Withdraw portfolio.”
- Click on “Transfer into a pension fund.”
- We will then send you the transfer order via email.
- Please complete the form and submit it directly to your pension fund.
Once your pension fund confirms the transfer, we will change your account status to “in settlement.”
On the second business day of the following week, we will sell your securities. The proceeds will be credited to your cash balance, and we will then transfer the amount to your pension fund.
