The differences between pillars 3a and 3b

Build your dream home. Take a trip around the world. Or simply enjoy the feeling of being able to maintain your standard of living in old age. By providing for your retirement privately in pillar 3, you give yourself the financial flexibility to fulfil your wishes. The earlier you start, the better. And you can also save tax in the process.

Pillar 3 is the private retirement provision component of Switzerland’s three-pillar model. It is voluntary, but it is still extremely important.

Pillar 3 offers various options for private retirement provision – you can save money, invest money and insure risks. Pillar 3 is divided up into pillars 3a and 3b.

Pillar 3a is the restricted retirement provision component. When you invest in pillar 3a, you benefit from tax advantages. As the name suggests, you are bound by fixed conditions. By contrast, pillar 3b is unrestricted, meaning you have much more flexibility.

Here is a summary of the most important information on private retirement provision in pillar 3:

• For whom: people living and working in Switzerland.
• Purpose: private retirement provision.
• Deposits: for employees, the maximum amount they can pay into pillar 3 is CHF 7,056 per year. For self-employed people who do not belong to a pension fund, it is 20% of net income or a maximum of CHF 35,280 (as of 1 January 2024).
• Duration: the money can be paid out between five years before and five years after normal retirement age.
• Early withdrawal: early withdrawal is only possible in exceptional cases, for example to finance residential property that you will use yourself, for transfer to a pension fund, on taking up self-employment or when you emigrate from Switzerland.
• Tax benefits: deposits can be deducted from your taxable income.
• Following a recent change, it is now possible to make retroactive payments into pillar 3a for 2025 and subsequent years.

• For whom: for everyone.
• Purpose: for all your goals and wishes.
• Deposits: no maximum amount.
• Duration: according to your needs.
• Early withdrawal: no legal restrictions.
• Tax advantage: depends on contract term and age.

Pillar 3 always makes sense – regardless of your situation in life and the questions you are asking yourself.

• As a young adult: how can I finance my life if something happens to me and I become unable to work?
• As a family: how can I ensure that my loved ones are protected financially?
• If you want to buy residential property: how can I finance my dream of owning a home?
• If you are planning your retirement: how can I maintain my accustomed standard of living after retirement?

Pillar 3 is always the right answer. To find the right pillar 3 solution for you, it is best to make an appointment with an advisor. That way, we can work out together how you can best achieve your goals.

Alternatively, you can choose the retirement provision you want easily and conveniently at the click of a mouse and find out which solution is an option for you.

You can pay into pillar 3a until a maximum of five years after normal retirement age – provided that you are still working. In pillar 3b, by contrast, you can make deposits for longer. Here, it depends on what was agreed when the contract was concluded.

You can only pay into pillar 3a if you are working. If you would like to take a break from work, for example, you can check whether your 3a policy can be changed to a 3b policy. This enables you to maintain the policy, i.e. to keep on saving money and stay insured.

Our Smart Invest life insurance gives you this flexibility. With this product, 3a policies can be converted into 3b policies and vice versa.

You can withdraw your pillar 3a assets at the earliest five years before the normal retirement age. People who work beyond retirement age can defer their pillar 3 payout up to a maximum of five years after the normal retirement age. Depending on the contractual conditions, you can postpone drawing your pillar 3b funds for longer than this. Other financial investments, such as custody accounts, generally do not have a contract term and can be withdrawn when required.

With pillar 3a, you save tax in two ways: firstly, you can deduct pillar 3a deposits from your taxable income in your tax return. Secondly, your pillar 3a balances are not taxed as assets. In some cases, it makes sense to have more than one 3a solution. This enables you to stagger your pillar 3a payouts over several years, thus breaking the tax progression.

Pillar 3b also offers potential tax savings. Your pillar 3b capital is not taxed on withdrawal if the following conditions are met:

• The contract term must be at least five years.
• You must have concluded the contract before the age of 66.
• You must have the lump sum paid out after the age of 60.