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Healthcare and pensionsPensionsPillar 3a
Pillar 3a

Pillar 3: private pension

Pillar 3a is a type of private pension and together with pillar 3b forms the third pillar of the Swiss pension system. This system is divided into three pillars:

  • Pillar 1: the state pension (OASI – AHV/ARS)
  • Pillar 2: the occupational pension (BVG/LPP)
  • Pillar 3: the private pension, comprising pillar 3a and pillar 3b

Third pillar pensions are voluntary, private schemes. They allow you to actively improve your personal financial situation in retirement as you can choose from a range of savings and insurance solutions to suit your needs. 

Restricted pension plans are available from banks (3a accounts, investment funds, life insurance products) and insurance companies (pension policies).

Pillar 3a FAQs

In the short term: 
You can deduct pillar 3a contributions up to the maximum set amount from your taxable income – and your pillar 3a deposits are exempt from wealth tax. Pillar 3a therefore helps you to reduce your annual tax bill.
You can use our tax calculator to quickly work out how much you could save.

In the medium term:
Money from pillar 3a can be used to buy residential property.

In the long term: 
Pillar 3a will allow you to live the life of your choice in old age. It increases your pension and makes up any income shortfalls. 

Since preferential interest rates are applied to pillar 3a accounts, it is worth paying in early in the year. If you pay in at the beginning of the year, you will benefit from a whole year's interest. Compare current interest rates here.

Maximum contribution for employed and self-employed persons

YearMaximum amount with pillar 2Maximum amount without pillar 2
 20206,82634,128
 20196,82634,128
 20186,76833,840
 20176,76833,840
 20166,76833,840
 20156,76833,840
 20146,73933,696
 20136,73933,696
 20126,68233,408
 20116,68233,408
 20106,56632,832
 20096,56632,832
 20086,36531,824
 20076,36531,824
 20066,19230,960
 20056,19230,960
 20046,07730,384
 20036,07730,384
Yes, this is the main benefit of pillar 3a. You can deduct pillar 3a contributions up to the maximum amount of 6,826 francs (for 2020) from your taxable income. Your 3a savings are also exempt from wealth tax. Pillar 3a therefore enables you to reduce your annual tax bill and save a considerable amount of money.

Example
A single adult with no children, no assets and a taxable income of 80,000 francs can save up to 1,548 francs per year in the canton of Zurich.
Calculate your savings here: Tax calculator

A retirement savings account allows tax-privileged saving. The money is deposited with a pension foundation in either a savings account or an investment account that includes securities (shares, funds, bonds). Savings or investment account?

It's a good idea to start thinking about investing in the third pillar as early as you can. Building up a solid savings cushion is crucial for determining how much financial freedom you will have in retirement.


It’s never too early to save
If you invest 150 francs per month in a pillar 3a investment account starting from the age of 25, you will have paid in a net amount of 72,000 francs by the age of 65. However, assuming an average return of 3% each year, these assets will grow to 138,909 francs during this time. If you start paying in 200 francs per month at the age of 35, you will have put aside the same amount by the age of 65. However, assuming the same return of 3%, you will only have accumulated 116,547 francs all together. This is 22,362 francs less.
Here you can find information about the providers of pillar 3a products. It is divided into product details, bank information and forum posts. View list of pillar 3a providers
Savers can transfer their money from one pension foundation to another, provided they transfer the total account balance. It can make good financial sense to do so. This is because the interest rates on pension accounts vary from one provider to another. The transfer of funds is usually free of charge. Transfer 3a account
If you want to switch to a different provider, use our template to create your cancellation letter quickly and easily. Most providers do not require you to give notice. Close and transfer a pillar 3a account

Pillar 3a withdrawals

Access to pension accounts is restricted. You are allowed to withdraw pillar 3a savings no earlier than five years before statutory retirement age. If you continue to work beyond your statutory retirement age, you can defer withdrawal until up to five years after statutory retirement age.

The law permits you to access your pension account earlier in the following circumstances:

  • To purchase additional second-pillar pension benefits
  • If you leave Switzerland permanently
  • To start a business – and afterwards, if you change industry or want to invest in your business
  • To purchase or renovate your own home
  • If you draw a disability pension under Swiss disability insurance (DI – IV/AI)
  • To repay a mortgage
If you have a shortfall in occupational pension contributions, you can use third pillar pension savings to top them up with no tax implications. However, one condition is that any advance withdrawals to finance a property must have been paid back. Until you have paid back any withdrawn funds, you are not permitted to make tax-privileged payments into the second pillar.
If you are leaving Switzerland permanently, you are allowed to withdraw your pension savings. However, this is only possible if you can prove that you already have a permanent address abroad. Withdrawing funds for a round-the-world trip, for instance, is not permitted. Upon withdrawal, withholding tax is deducted directly from the amount paid out.

You can request a withdrawal from the pension account under the following conditions:

  • The business constitutes your primary occupation so you are no longer obliged to pay into an occupational pension.
  • The amount is withdrawn within one year of you starting your business.
  • You have registered with the OASI (AHV/AVS) compensation office as self-employed.
  • Your business is a sole proprietorship (partner in a limited or general partnership is also possible). You cannot withdraw from your pension account if the business is a public limited company (AG/SA) or a limited liability company (GmbH/SARL).
You can also withdraw from your pension account if you switch from one type of self-employed activity to another (change of industry). Once again, you must withdraw the amount within one year of taking up the new activity.
You may make another withdrawal at a later time for the purpose of investing in your business. The investment must be used for stock and equipment and not to cover ongoing operating costs.
If you draw a full disability pension (DI – IV/AI), you are entitled to withdraw the balance of the pension account if the disability risk is not insured under supplemental insurance. You cannot draw a pension from this account. You are eligible for a full disability pension if your degree of disability is 70% or more. The disability insurance process must be completed before you can request a pillar 3a withdrawal.

What do I need to bear in mind with regard to the third pillar / restricted pension plan?

Set up multiple 3a accounts and withdraw them at staggered intervals when you start approaching retirement. Wherever you live in Switzerland, the tax rate is lower if you withdraw 30,000 francs on five separate occasions than if you withdraw 150,000 francs at once. You cannot withdraw money any earlier than five years before statutory retirement age. For this reason, it rarely makes sense to have more than five accounts. Remember that the you must withdraw the balance of each 3a account in full.

Compare pillar 3a account interest rates

Pay in the maximum amount for as long as possible. You can make contributions right up to retirement age, and even beyond, if you continue to work. Contributions to the third pillar can be deducted from your taxable income. The more you pay in, the greater your tax savings.
Stagger your 3a withdrawals in coordination with any withdrawals of capital from your occupational pension. If you withdraw pension capital from the second and third pillars in the same year, it will be added together for the calculation of lump sum tax and a higher tax rate applied. The tax will be lower if you make your withdrawals in different years.
If you want to withdraw all or some of your pension assets from your occupational pension as a lump sum, you should close your existing 3a accounts one year before retirement and have them taxed separately. For the final year, you can open a new 3a account. This is a more beneficial from a tax perspective.

It is possible to withdraw savings from your pillar 3a account five years before statutory retirement age. Equally, if you continue working beyond retirement age, you can defer withdrawal by up to five years.

Note for non-Swiss citizens paying withholding tax:
When paying into a pillar 3a account, the same conditions apply as for Swiss citizens. However, you need to contact the responsible withholding tax office directly if you want to make these contributions tax-deductible.

How do I find a suitable pillar 3a account?
A pillar 3a account will give you greater financial flexibility when you retire. There is wide range of pillar 3a accounts available from by both banks and insurance companies. However, traditional pillar 3a accounts that earn interest have become less and less attractive in recent years because of the continued negative interest rate strategy adopted by the Swiss National Bank. Investment accounts are therefore becoming more attractive than savings accounts. With this type of account, you have a better chance of achieving higher returns. However, the risk is also higher. Another option is to invest in index funds or exchange traded funds (ETF).

Pillar 3a accounts are also being affected by the trend towards digitalization. For example, some start-up companies, in partnership with a bank, now enable you to manage your pillar 3a account easily on your smartphone. Pillar 3a insurance policies are another option available on the market. With these products, you are bound by a contract to make regular payments. You therefore lose some flexibility. However, this type of policy can be a good solution for people who otherwise lack the discipline to save for retirement.

Whichever pillar 3a account you choose, it’s important to check the costs involved. The higher these costs, the more your possible returns or interest will be eroded by fees.

Pension tips for every life situation

Whatever your situation in life, there are different aspects to consider if you want to live the life of your choice in old age. You can find the most important here:

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Your own home thanks to pension savings

The capital you accumulate by means of pension savings can help you realize the dream of owning a home. Find out here what to watch out for.

Tips for financing a home purchase
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Pensions for people with families

Being responsible for a family raises specific questions with regard to pensions. Find out here which solutions are available that fit your needs.

Tips for families
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In your mid-life years

What you decide now will shape your financial future. When it comes to pensions, you need discipline and patience. We explain how to find the right strategy for you and your goals.

Tips for adults
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How to prepare properly for retirement

When you retire, your financial situation will change significantly. The decisions you make now will determine your standard of living in retirement. We explain what matters.

Tips for retirees
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Retirement: decision time

The time has nearly come for you to retire. Now you need to decide whether to withdraw your capital in one go or draw a monthly pension. We explain how to make the right choice.

Pension or lump sum?
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Travel without regret

More and more people nowadays are fulfilling the dream of taking a longer time-out, often to travel, even around the world. Find out here how this might affect your pension.

Tips for globetrotters
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Self-employed and self-responsible

Entrepreneurial freedom brings with it extra responsibility for many things. If you want to save for retirement, you need greater discipline and more expertise. Here are some valuable tips.

Tips for self-employed people
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Tips for young people

Who knows what the future will bring? Flexibility and independence are important to young people. Nevertheless, it makes financial sense to start saving for a pension early on. Find out why here.

Tips for young people

The subject of pensions is complex. There is often not enough time to research everything in detail. If you wish, you can seek advice from our partner service Optimatis. Our experts have the information that you may spend a long time searching for. Benefit from their expertise by arranging a no-obligation consultation.

The independent partner service Optimatis and its qualified staff will work with you to establish a clear overview and produce a snapshot of your current situation. Optimatis can offer you the solution that best fits your needs from the wide range available on the market – a good reason to seek advice from an independent expert.

You just need to request an appointment and a specialist advisor will be in touch with you. During the meeting, you can decide how and whether you wish to proceed with the solutions proposed.

Have you started to save privately for retirement?

The earlier the better.
Request no-obligation advice

Pillar 3a: comparison of current interest rates

Tax calculator for the pillar 3a