Your 3A retirement savings

The 3rd pillar in Switzerland is an individual savings system designed to supplement retirement income and provide long-term financial security. It takes two different forms: 3a and 3b. The 3a is designed for retirement savings and offers tax advantages. The benefits of 3a include the possibility of deducting contributions from tax, a potential return on savings, and the option of withdrawing capital at retirement. 3b, conversely, is for non-pension savings and offers greater flexibility of use, although the tax benefits are limited. The benefits of the 3rd pillar depend on how much money you have saved and how you choose to manage it, whether through banking or insurance.

ou can generally withdraw from your 3rd pillar in Switzerland in the following situations:

1. Early retirement : Starting from the early retirement age, which is typically 5 years before the average retirement age.

2. Moving abroad : If you permanently relocate from Switzerland to another country, you can withdraw from your 3rd pillar.

3. Purchase of a principal residence : You can also utilize your 3rd pillar to increase your equity capital for acquiring your primary residence. This option is available every 5 years.

4. Disability : In case of severe disability, you can request an early withdrawal from your 3rd pillar.

5. Death : In the event of your passing, the funds in your 3rd pillar will be disbursed to your beneficiaries.

Please note that the rules and conditions may vary depending on your financial institution and specific contract. For detailed information on the withdrawal requirements from your 3rd pillar, please get in touch with one of our advisers.

Pillar 3a is specifically designed for retirement savings, offering tax advantages by allowing you to deduct your contributions from your taxable income, thereby reducing your tax liability. Additionally, pension assets and their income are typically tax-exempt, with taxes being levied only upon withdrawal of the pension capital. Pillar 3a funds are typically invested in financial products such as savings accounts, certificates of deposit, or investment funds. Withdrawals from Pillar 3a are subject to strict conditions, primarily related to early retirement, purchasing a first home, disability, or emigration.

Pillar 3b is commonly structured as life insurance but is not inherently tied to retirement. It provides greater flexibility regarding fund utilisation but comes with different tax advantages compared to Pillar 3a. Withdrawals from Pillar 3b are generally less restricted than those from Pillar 3a, although the terms may vary depending on your contract. Capital withdrawals are not subject to taxation, but the contract's surrender value is taxed over its entire duration.

In summary, Pillar 3a primarily focuses on tax-advantaged retirement savings. In contrast, Pillar 3b offers more flexibility in withdrawals and coverage in the event of death or disability but lacks the same tax benefits. The choice between the two pillars depends on your financial objectives and risk tolerance. It's also possible to combine both forms of pension provision.

The 3rd pillar is very important because it empowers you to take control of your financial future. It enables you to save for retirement address needs such as acquiring a primary residence, early retirement, or establishing financial security in the event of disability. The 3rd pillar is an essential tool for supplementing 1st and 2nd pillar benefits and is central to your long-term financial planning.

Right now, making purchases from your 3rd pillar is not possible. However, it will soon become possible. The Federal Council is responsible for adapting the law so that, in the future, those who have been unable to save or have only partially saved in this form of pension provision can catch up.

This new tool aims to enhance retirement income and will enjoy the same tax benefits as a traditional payment. Nevertheless, there will be certain limits to consider :

1. Purchases will only be possible once every 5 years.
2. The maximum buy-in amount will be limited to CHF 35,280 (as of 2023).

It's important to note that early withdrawals for home ownership will be deducted from the maximum amount.

Integrating this new solution into your financial planning is a valuable addition that could have significant positive consequences.