Pillar 3

Pillar 3

The occupational retirement provision (3a/3b)

Private pension planning forms the third pillar of the Swiss retirement provision system and rounds off the benefits from pillars 1 and 2. It offers additional financial security and enables the insured to fulfil their hopes and dreams throughout their retirement. Pension planning under pillar 3 is voluntary and subsidized by the Confederation and the cantons through tax breaks (3a).

In pillar 3, a distinction is made between restricted pension plans (pillar 3a) and unrestricted pension plans (pillar 3b):

Pillar 3a – restricted pension plans

Pillar 3a is a tax-privileged pension provision. Contributions may be deducted from a taxable income up to a maximum sum. There is a choice between pure saving solutions, or saving solutions combined with insurance coverage. The advantage of an insurance solution is that pension shortfalls can be covered in the event of disability or death. In the event of death, relatives receive a lump-sum death benefit pursuant to a legally prescribed order of beneficiaries.

Those in gainful employment who belong to a pension fund as well as the self-employed can pay into pillar 3a. Gainfully employed persons with the occupational retirement provision can pay in the maximum annual amount of CHF 6,768 (from January 1, 2016) and deduct it from their taxable income.

Self-employed persons without the occupational retirement provision but with AHV income can pay in a maximum of CHF 33,840 (up to a maximum of 20% of their earnings from gainful employment) and deduct it from their taxable income.

Amounts saved in 3a restricted pension plans can only be drawn prematurely under certain conditions, e.g. in order to purchase occupational retirement provision, when taking up self-employed work, when leaving Switzerland or to finance owner-occupied residential property.

Pillar 3b – unrestricted pension plans

Although contributions to pillar 3b are not tax-deductible,  these plans are useful in providing you peace of mind in your retirement. Pillar 3b includes:

  • Life insurance (savings, pension and risk insurance)
  • Cash
  • Savings accounts
  • Residential property
  • Assets

In the case of pillar 3b, the insured are free to choose whom they wish to be a beneficiary in the event of death.

How is pillar 3 financed?

Pillar 3 is funded completely privately. The total amount of the contributions depends on the insured person's individual financial means and needs.

Please note

We recommend that you fully exhaust the paying-in limits of pillar 3a according to your financial means to ensure that you achieve the maximum tax-saving effect. If both spouses belong to an occupational pension plan, both can claim tax relief.

With pillar 3b you are free to choose the beneficiaries in the event of your death. The beneficiaries receive the benefit immediately without having to wait for the estate distribution.

We are happy to answer any questions you may have about your income needs after retirement, any pension shortfalls, or your individual pension plan. Just contact us.