Third Pillar – PRIVATE PENSION

The third pillar (comprising pillar 3a and pillar 3b) is a voluntary addition to the benefits from AHV/DI and occupational benefits insurance. Nowadays, benefits from pillars 1 and 2 will often be insufficient to maintain a person’s accustomed lifestyle in old age. For this reason, many people in Switzerland opt for additional private pension provision based on pillar 3, in order to avoid unpleasant income gaps. The third pillar consists of tied pension provision (pillar 3a) and flexible pension provision (pillar 3b). 

Contributions to 3a tied pension provision are tax-privileged and can be deducted from taxable income, up to a defined maximum.

• Pillar 3a – Tied pension for workers subject to AHV

The capital saved in this way is usually used for retirement provision. In some cases, such as eg. for the purchase of a primary home or the start of an independent gainful activity, it can also be received in advance. The premiums or contributions paid can be deducted from the taxable income.

• Pillar 3b – Free provision for all

With pillar 3b, the financial buffer for achieving goals and wishes after retirement can be further expanded. Financial risks in the event of disability or death are also insured as required. There are various savings and investment solutions as well as insurance solutions available for this.

Good to know

To maintain the usual standard of living even in old age, it is necessary to have around 80% of the last salary. As a rule, this amount is not reached by pillars 1 and 2 provided for by law. The AHV (pillar 1) and the statutory pension fund (pillar 2 / BVG) cover only around 60-70% of the last income. Retirement savings with pillar 3a thus form an essential part of retirement provision.

Pillar 3 at a glance:

• Voluntary private pension provision
• Tied pension provision 3a (tax-privileged) and flexible pension provision 3b
• Main objective: to maintain your accustomed lifestyle and fulfill your individual wishes in retirement.