Private saving for retirement with the 3rd pillar is becoming increasingly important in view of the financial uncertainty in the 1st and 2nd pillars. Good planning for retirement ensures financial stability and independence in old age.
The advantages of the 3rd pillar in Switzerland are numerous. This is because it not only offers tax advantages during the savings process, but also various investment options, financial flexibility and the possibility of taking the saved capital with you. Advice can be very useful when considering the options and choosing a solution adapted to specific needs. Furthermore, it is advisable to start planning retirement savings early.
Access to the capital in the 3rd pillar is only partially possible
Anyone who wants to set up a Pillar 3a account should check the options for accessing the capital saved in it. The funds in pillar 3a can only be accessed before retirement under certain conditions, such as a change to self-employment or a change in self-employment, to finance owner-occupied residential property, to repay a mortgage or when moving abroad. In addition, the funds in pillar 3a can be withdrawn no earlier than five years before reaching the regular retirement age.
Pillar 3b, on the other hand, offers complete freedom, allowing individuals to use the funds for any purpose at any time. This flexibility makes the 3rd pillar an ideal savings model, not only for retirement, but also for further education or asset accumulation. However, tax deductions are not possible here.
The possibility of tax deductions makes saving with pillar 3a attractive
Pillar 3a in turn offers the possibility of tax deductions. Thus, contributions paid into pillar 3a can be deducted from taxable income, which can lead to significant tax savings. Individuals can thus save an average of between CHF 1'500 and CHF 3'500 per year. These tax benefits are an excellent incentive to save for retirement while reducing the overall tax burden.
It is important to note that the Federal Social Insurance Office sets the maximum Pillar 3a amounts each year. For 2023, the following applies: Employed persons with a pension fund may pay in a maximum of CHF 7'056. Employed persons without a pension fund may pay in up to 20% of their net income, up to a maximum of CHF 35'280.
Flexible investment options help build capital
Both pillar 3a and pillar 3b offer individuals the option of investing their contributions in securities funds. This flexibility allows individuals to shape their portfolio to maximize returns according to their risk tolerance and investment objectives. Over time, the pension fund can benefit from capital growth and compound interest, helping to build up a substantial retirement savings balance.
Those who move out of Switzerland may take their savings with them
If you move away from Switzerland, both types of pension assets can be withdrawn from the 3rd pillar or left in the country.This ability to take them with you ensures that the accumulated savings are not lost or can continue to grow.