Last update: 17.09.2024 08:35
At the end of every year, banks, insurance companies and financial service providers advertise pillar 3a like crazy. And many people ask themselves: is a pillar 3a fund worthwhile? Is a pillar 3a securities solution worthwhile? Or is a pillar 3a savings account worthwhile for me? We’ve done the research for you.
Pillar 3a funds generate higher returns than a 3a savings account
The third pillar is your voluntary, private pension provision for later. However, many people don’t know enough about it and cultivate a good mix of half-knowledge and prejudices. But there are many good reasons to start saving for pillar 3a as early as possible. With a simple action plan , it’s easy to get started.
Basically, you can either accumulate your annual pillar 3a savings amounts safely in a savings account for practically zero interest. Or you can invest the savings amounts in productive capital – this pays off in the long term. You can also do this in pillar 3a. Some call it a pillar 3a securities solution, others pillar 3a funds. Many providers now offer passive pillar 3a securities. One leading provider has provided us with an evaluation. It shows in backtesting how an investment in a pillar 3a savings account (red/dark blue line) or in one of the provider’s pillar 3a fund solutions (other lines) would have developed to date. What do you see there? Great figures, your assets would definitely have increased, the strategies with pillar 3a funds would all have been completely ok. But nobody knows what the future holds.
Three friends discuss: Is a pillar 3a fund worthwhile?
Sandra, Corinne and Alex have been friends since they were at school. They are sitting together comfortably and Sandra asks the others how they did it with their pensions? Is a pillar 3a fund, which Alex took out back then, worthwhile? They are all 39 years old, work as employees and have been putting aside the maximum annual amount for pillar 3a right at the start of each year since 2009. Because that brings a good schnapps more. So they all wanted to put aside a total of around 73,400 francs for later. Sandra doesn’t think much of pillar 3a. She prefers to keep her money in a savings account at the bank. Corinne has understood that she can save a lot of tax with pillar 3a. And because she has a high need for security and thought she would need the money for an apartment, she opted for a pillar 3a savings account. For Alex, the focus was on the long-term horizon, which is why he opted for pillar 3a funds, which others also call pillar 3a securities or pillar 3a securities solutions. Three people, three decisions. What was the financial impact of their decisions? Very differently.
After 10 years with the pillar 3a fund, Alex has around CHF 38,000 more than Sandra with her savings account
Sandra has entrusted her money to a savings account instead of pillar 3a. Of the three friends, she is the poorest at the end of the 10-year period 2009-2019. There are two reasons for this: firstly, taxes were deducted from her annual savings amount (we calculate at 27.4%). Secondly, she only received a measly interest rate on her savings account, which was much lower (0.2% on average) than the slightly higher 3a preferential interest rate (1.1% on average). Practically all of her assets were created through deposits – only around 400 francs of which are attributable to interest. At least Sandra was able to resist nibbling at her savings account money for going out, clothes and travel. Is a pillar 3a fund worthwhile for her? Let’s look further.
Corinne is delighted to be in second place with her pillar 3a savings account
After 10 years, Corinne has around CHF 77,000 in her pillar 3a savings account. This is significantly more than Sandra’s because, firstly, she has not paid tax on almost 30% of her investment amount. This has reduced Sandra’s investment amount. And secondly, Corinne received a higher interest rate on her deposits than Sandra because the bank can count on Corinne’s money in the long term. Although the interest rate isn’t a big hit, she still makes up around CHF 3,600 in interest on her deposits.
Alex comes out on top with his pillar 3a securities solution with an increase of 70%
The picture looks even better for Alex. Is a pillar 3a fund worthwhile? He thinks so. At the time, he opted for an equity fund with a balanced strategy. This means that up to 45% was invested in equities and the rest in bonds. Unfortunately, he made one of the common mistakes in pillar 3a, investing in active rather than passive pillar 3a funds. This is why his net return after costs over the 10-year period is only around 3.6%. Nevertheless, this is around 2.5% percentage points more than the Pillar 3a savings account. This pays off in the highest final assets of the three friends: he is pleased to have 92,000 francs. 20% of this is due to compound interest. With his 92,000 francs, he has a whopping 19% more than Corinne and 70% more than Sandra. Nice, isn’t it?
Conclusion: Is a pillar 3a fund worthwhile? Sandra thinks so
What do we learn from this? Putting money aside for later in a savings account as pillar 3b is a start. However, it is better to put money into pillar 3a. If you don’t trust securities, then set up a pillar 3a savings account. But if you can spare the money for around 10 years, it’s even better to invest in a pillar 3a securities solution. So what do you do now?
Mach den ersten Schritt zur finanziellen Unabhängigkeit
In einer Minute siehst du deine Vermögensentwicklung und dein Einkommen während der Rente.
