Facts worth knowing about pillar 3a

A recent survey commissioned by the Zurich banking association from the ZHAW (Zurich University of Applied Science) shows that about two-fifths of Swiss-Germans do not concern themselves with individual retirement savings under the pillar 3a tied-benefits system.

Experts are hardly surprised since this confirms earlier findings. According to one of the large Swiss banks, only half of the gainfully-employed have a pillar 3a account, and they pay in less than a third of the ceiling amount per year. For 2016, the ceiling is CHF 6,768 (for persons who are members of a pension fund) or 20% of net earnings up to a ceiling of CHF 33,840 (for persons who are not members of a pension fund).

According to the ZHAW study, the failure to conclude a pillar 3a retirement savings plan is mainly due to lack of financial means (55% of respondents), and to the desire to preserve financial flexibility (13% of respondents).

For 33% of the participants in the survey, the main incentive for a pillar 3a solution is the fact that pillar 3a contributions are tax deductible. On the other hand, 29% believe that the first two pillars (AHV/AVS and pension fund) would not be sufficient after retirement. More alarmingly, 39% of respondents have little or no trust at all in the AHV/AVS or in pension funds.

Liberty Pensions offers solutions designed to satisfy the growing need for flexibility - regardless of financial means. With a Liberty 3a pension account, you can save for retirement without any obligation.

You are free to decide when and how much you wish to contribute. The only prescription is the annual ceiling which cannot be overstepped. Individual components such as disability or death benefits are optional.

In the current low-interest rate environment, it is advisable not to content oneself with the sole tax advantages but to try to build up retirement assets by adopting a long-term investment horizon and opting for a higher equities content. The equities content can be readily reduced over the term in order to safeguard against price fluctuations.

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