The 3rd pillar is your voluntary, private pension provision for retirement. How well do you know about it? We clear up the most common pillar 3a misconceptions and myths. Are you right about all the questions? Find out.
No. 1: I won’t be able to access my 3a assets before I retire
Wrong. For certain purposes defined by law, you may also withdraw your 3rd pillar funds beforehand. This includes, for example, financing or renovating owner-occupied residential property or financing self-employment. Even if you leave Switzerland for good, you will get your money back. Or if you want to repay a mortgage.
No. 2: Pillar 3a is superfluous, AHV and pension fund are sufficient
You can see it like this. We believe: “Help yourself and you will be helped.” According to the Raiffeisen Pension Barometer 2018, 75% of Swiss people believe that they are responsible for their own financial retirement provision. 45% trust in the future viability and financial strength of their own private pension provision with the 3rd pillar. Only 15% each rely on AHV and Pillar 2.
And almost two thirds of respondents believe that they will need the same or even more money after retirement than before. Pensions from the AHV and pension fund together should reach around 60 percent of the income earned before retirement (so-called replacement rate). The AHV and 2nd pillar are under enormous pressure due to demographic developments, the valid benefit commitments and the low interest rate level. Benefits are constantly being adjusted accordingly. In recent years, average pension fund pensions adjusted for purchasing power have fallen by 9 percent and new BVG pensions are lower than current BVG pensions. Many people therefore underestimate their pension gap. If you believe that pillar 3a is superfluous, you are probably one of them.
No. 3: I’m only 28 years old, you don’t have to pay into the 3rd pillar until later
Wrong. Firstly, you do not have to pay into the 3rd pillar. It is voluntary. Secondly, you can pay into the 3rd pillar as soon as you start working and have an income subject to AHV contributions. The earlier you start, the better: firstly, you get used to setting aside part of your income for your private pension. Secondly, you benefit from a long investment horizon. The longer the period until retirement, the greater the compound interest effect on your savings. The effect of compound interest is dramatically underestimated. In the case of pension funds with equity investments, you benefit from their higher returns – the risk remains, but decreases with a long investment horizon.
Pillar 3a misconception & myth no. 4: If I stop working, I can continue to pay in and leave the money behind
Wrong. You are not allowed to pay in new money – this is only possible in the years in which you earn an income subject to AHV contributions. However, it is true that you can leave your pillar 3a investments in your account if you are temporarily or permanently unemployed. They generate tax-free income for you until your normal retirement age.
No. 5: If I take early retirement, I have to draw the 3a money
Wrong. Even if you take early retirement, you can leave the money in your account until normal retirement age – or withdraw it up to 5 years earlier.
No. 6: I work part-time. That’s why I can’t pay in the maximum amount
Wrong. In order to be allowed to pay into pillar 3a, you must have income subject to AHV contributions in the year of payment. Even if you only work 20%, you can still pay in the maximum amount. There are no rules or regulations that link your pillar 3a payment to your level of employment.
Find the best pillar 3a
Unbelievable – most people pay too much for their pillar 3a and get too little return. Are you one of them? Find out which pillar 3a is best suited to you with just a few clicks in our free comparison.
No. 7: It’s not worth it for me because I can’t pay in the maximum amount
Wrong. Firstly, you don’t have to deposit the maximum amount, you can only deposit up to the maximum amount. The earlier you start paying in, the better it is for you (see myth no. 3). And it is also better to pay in at the beginning of the year than at the end. Even if you can’t pay in the maximum amount, you still benefit from a major tax advantage.
No. 8: It is best to invest my 3a assets safely. That’s why I need to take out 3a insurance or an interest-bearing account
Wrong. 3a You can invest your money in a pension foundation as a savings account or in pension funds. Banks and insurance companies offer corresponding products, some of which also include insurance elements (such as payment of contributions in the event of occupational disability). However, you should always separate savings and insurance. Securities in pillar 3a are also suitable for a long investment horizon and can generate significantly higher returns for you. Whether you can cope with the value fluctuation risks associated with securities depends on your risk tolerance and your investment horizon. At least from 1926 to 2018, according to a study by Pictet Bank, you have always achieved a positive total return with Swiss equities over any investment period of more than 13 years. Over the same period, the average annual increase in value on the Swiss equity market was 7.6 %.
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No. 9: You may only have one pillar 3a account
Wrong. You can open more than 1 retirement savings account. This is even recommended because an account must always be fully withdrawn when you retire. Pension accountonto in this context includes a pillar 3a savings account, a pillar 3a securities solution and a pillar 3a insurance policy. You can have several pillar 3a securities and pillar 3a accounts at the same time and with different banks or financial service providers. Then later, with A lump-sum payment tax is payable when pension benefits are drawn. This is independent of income tax. If you then draw pension benefits (such as from Pillar 2 or Pillar 3) over several years, you can reduce the amount of capital payment tax (keyword: tax progression). It therefore makes sense to set up several pillar 3a accounts. How many? It makes little sense to have more than five accounts because you can only close your pillar 3a account five years before the normal AHV retirement age. You can also postpone the withdrawal for up to 5 years (and continue to pay into pillar 3a) if you are employed after the normal retirement age. This means: As a man (woman), you can withdraw your 3a assets from the age of 60 (59) at the earliest, but no later than 70 (69). You can find out more about the five-account rule in this specialist article.
No. 10: I can also split my 3a account into several accounts at a later date
Wrong. Due to your age, you may only withdraw funds from a 3a account as a total amount. Moving to another provider is also only possible with the total amount of an account. Partial withdrawal is not possible. It therefore makes sense to set up and fund several 3a accounts during the savings phase. The amount up to which a 3a account should be “topped up” depends on the tax progression of your municipality. It is advisable to add another account from CHF 25,000, and from CHF 50,000 at the latest. This allows you to withdraw funds flexibly and better diversify your investments and therefore your risks.
No. 11: You cannot switch from a 3a insurance solution to a 3a bank solution or vice versa
Wrong. You can open a 3a savings account with a bank and later transfer it to a 3a policy – and vice versa. This does not usually make sense. With all 3a life insurance policies, you are generally tied to the provider you have chosen, even if your contract allows flexible deposit amounts – as is often the case with self-employed people. Cancellation of the insurance policy is generally associated with relatively high costs (i.e. losses) for you. The insurance company calculates a so-called surrender value – how much of the capital you have paid out to date will you receive to transfer it to another provider. This is particularly tiny in the early years. This is because the premiums for the insurance benefit, the administration of your policy and the broker’s commission are deducted from your annual premium. Here’s a tip to get you started: separate savings from insurance and, as a young, single person, don’t take out any long-term 3a policies with an insurance component. Or do you need death cover so that your pet is provided with CHF 100,000 if the worst comes to the worst?
No. 12: I can make up my payment into pillar 3a at a later date
Partly wrong. You definitely can’t make up for what you didn’t pay in in 2024 and before, nor can you claim it against tax – unlike when you buy into your pension fund. But at least the latest attempt at a political level was finally successful. The purchase will be possible from 2026. However, only under strict conditions and only for gaps that have arisen since 2025. You can find more details in this article.
No. 13: I have to declare the 3a assets as assets for tax purposes
Wrong. Your pillar 3a assets, whether in the form of an insurance policy, an account or a securities investment, do not have to be listed as taxable assets in your tax return. This means that not only is the annual interest or income on your 3a investment tax-free, but you also save on the annual wealth tax. You can find the 5 most important tax tips relating to pillar 3a in this article.
No. 14: Shares in pillar 3a are complicated and expensive
Wrong. Passive funds have found their way into pillar 3a in recent years. These boringly track an index instead of a fund manager searching in vain for the “best” shares. The costs of investing in index funds are much lower than with active funds. And various providers have made it very easy to invest your savings in a broad portfolio of index funds.
Find the best pillar 3a
Unbelievable – most people pay too much for their pillar 3a and get too little return. Are you one of them? Find out which pillar 3a is best suited to you with just a few clicks in our free comparison.
No. 15: When I retire, I must withdraw all my 3a assets. Even if my securities are in the red.
Wrong. If you are still working after retirement age, you can leave your pillar 3a funds for up to 5 years (age 70 for men / age 69 for women). This is called “deferring the reference”. Unfortunately, only a few financial institutions still allow you to transfer your investment funds to your private custody account at the time of retirement. Instead, they sell the funds and pay out the proceeds. If your provider does not allow this either, it makes sense to gradually reduce the proportion of securities in pillar 3a before retirement. This reduces your risk of fluctuations in value at the time of retirement.
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Disclaimer
We have taken great care in compiling the content of this article. Nevertheless, we cannot rule out errors and cannot guarantee that the content is correct, up-to-date or complete. This article does not replace tax advice. We do not offer investment or tax advice and recommend that tax issues are always clarified with a tax expert and/or the relevant cantonal tax authorities. Any liability is rejected.
Last update: 19.01.2025 13:18
