The 3rd pillar in Switzerland is a voluntary retirement savings scheme designed to supplement the benefits provided by the AVS (first pillar) and the pension funds (second pillar). It comes in two main forms. On the one hand, the pillar 3aA retirement savings plan offers tax advantages in exchange for certain withdrawal restrictions. On the other hand, the pillar 3b offers more flexible savings, although it does not offer the same tax incentives.
Did you know?
Combined 1st and 2nd pillar benefits generally cover only about 60 % of previous income.
Pillar 3A
Pillar 3a offers a structured solution for supplementing AHV and pension fund income, enabling you to build up savings on advantageous terms. With a 3A, you can:
- Withdraw money available to purchase a principal residence
- Pledge your 3A for the purchase of a principal residence
- Building a comfortable retirement
- Making 2nd pillar purchases
It is possible to take out a 3A with a bank or an insurance company, with some differences in terms of payment flexibility and risk coverage.
What are the conditions for opening a 3A?
To contribute to a tied pension plan, you will need to earn income from gainful employment in Switzerland that is subject to AHV contributions.
Pillar 3a tax benefits
Tax incentives are one of the main attractions of Pillar 3a. Here are just some of the tax benefits associated with this scheme:
Deduction of contributions
The amounts you contribute to a Pillar 3a plan are fully deductible from your taxable income up to a maximum of CHF 7'258 / year (limit 2025), while a person not affiliated to a pension fund (e.g. self-employed) can contribute up to 20% of their income, capped at CHF 36'288.
This means an immediate reduction in your taxable income, and a lower tax bill every year.
Advantageous taxation on withdrawal
When a withdrawal is made, whether for retirement or the purchase of a principal residence, the amount withdrawn is subject to tax.capital gains tax. It is therefore taxed separately from income, at a reduced rate (1/5 of the tax).
Exemption from wealth tax
During the term of your Pillar 3A contract, the surrender value is not subject to the "tax".wealth taxThis is a real advantage over a 3B pillar.
What are the other advantages of Pillar 3A?
A 3rd pillar A also allows you to withdraw or pledge part of your savings to finance the acquisition of your own home. principal residencewhich makes it easier for you to become a homeowner. What's more, by making regular contributions to this account, you build up a additional income essential to ensure a comfortable retirement and maintain your standard of living after you stop working.
Finally, Pillar 3a offers the possibility of making 2nd pillar purchasesThis can fill gaps in your occupational benefits, optimizing your overall financial coverage.
A few figures on tied pension plans
In 2022, over CHF 137 billion were invested in tied pension plans, of which CHF 87 billion in banking and CHF 50 billion in insurance¹.
¹Federal Social Insurance Office. Statistics [online]. Available at: https://www.bsv.admin.ch/bsv/fr/home/assurances-sociales/bv/statistik.html. Accessed: March 10, 2025.
What are the disadvantages of Pillar 3A?
Pillar 3a has a number of disadvantages to consider, such as
Blocking funds
Amounts paid are locked-in until five years before legal retirement age. A early withdrawal is only possible in specific situations, such as the purchase of a principal residence, the start of self-employment, definitive departure from Switzerland or the purchase of years of Pillar 2ᵉ contributions.
Penalizing surrender value
In the event of early withdrawal, particularly with a Pillar 3a policy taken out with a insurancethe amount recovered may be less than the sums paid in respect of closing costs not amortized.
Pillar 3b
Pillar 3b is a form offree individual savingspillar 3b, offering greater flexibility than pillar 3a. Unlike pillar 3a, payments into a pillar 3b are not not capped annually and do not enjoy the same tax advantages - they are generally not tax-deductible, except in certain cantons.
This means that, although it does not offer such attractive tax deductions (unless conditions are met), Pillar 3b allows you to save and withdraw your capital whenever you wish. This makes it an ideal complementary solution for diversifying your savings strategy and financing personal projects.
What can a free pension plan consist of?
Pillar 3b comprises all savings other than the first and second pillars, as well as tied pension provision. These can include classic cars, securities, real estate, works of art and much more.
Tax benefits
Tax exemption on withdrawal
The withdrawal of your Pillar 3B capital can be entirely exempt if the contract is a provident plan, i.e. if the following conditions are met:
- The term must be at least 5 years (classic) or 10 years (fund-linked).
- The contract must be taken out before age 66.
- Payment is made after age 60.
Deduction of annual payments
The cantons define the amount of annual contributions that can be deducted. In some cantons, a Pillar 3B is not deductible at all, while in the canton of Geneva it is possible to deduct up to:
- CHF 2,232 for a single person
- CHF 3,348 for a married couple
In the canton of Fribourg, the following deductions are available:
- CHF 750 for a single person
- CHF 1,500 for a married couple
Disadvantages of Pillar 3B
Although Pillar 3B offers a great deal of flexibility by allowing you to pay in and withdraw funds at any time, its major drawback is that, unlike Pillar 3A, payments are not subject to any restrictions. not deductible of taxable income in most cantons, which means you don't benefit from direct tax savings on your contributions.
Pillar 3A vs 3B: Which to choose?
The choice between a Pillar 3A and a Pillar 3B depends above all on your financial objectives and personal situation. Pillar 3A is a linked solution designed primarily for retirement. It offers significant tax benefits since your contributions are tax-deductible, but in return, the money is blocked until you meet certain conditions (retirement, acquisition of a home, starting a self-employed business or leaving Switzerland permanently). This makes it ideal if you wish to prepare for retirement and benefit from substantial tax savings.
Pillar 3B, on the other hand, is a free savings account not subject to the same withdrawal restrictions. You can deposit and withdraw funds when you want it, giving you greater flexibility to finance other short- or medium-term projects. However, it does not offer the same tax advantages as the 3A, except in a few specific cantons.
Frequently asked questions
Put an end to a 3A:
- You must be 60 years old for a man and 59 for a woman.
- You are receiving a full disability pension
- You make a withdrawal for the purchase of a principal residence and withdraw the entire capital
- You (the policyholder) disappoint
Put an end to a 3B:
- No special conditions
There are a multitude of options for the 3rd pillar, including bank or in insurance. Most of our products can be subscribed to under both restricted and unrestricted pension plans.
In insurance, a 3rd pillar is set up in the form of an insurance policy. life insurancewhereas in banking, a 3a or 3b usually corresponds to a savings account classic or fund-linked.
People working in Switzerland - whether you are employed or self-employed - who generate an income of more than income subject to AHV can take out a pillar 3a. The 3A pillar is open to cross-border commuters in particular.
Yes, it is possible to transfer your 3rd pillar, whether from one bank to another or from one insurance company to another 3A pension solution.
In the case of Pillar 3b, the transfer terms and conditions also depend on the contract.
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