A young person can no longer hope for a pension in 30-40 years’ time.
The AHV has already been under severe pressure for several decades and will no longer be able to pay pensions to pensioners.
The situation is no better for pension funds: BVG revisions, falling conversion rates and low returns are exacerbating the problem.
The Swiss government is aware of this and is therefore promoting pension provision with pillar 3a.
You can also save up to CHF 2’500 a year in taxes.
With the right strategy, it is even possible to retire a few years earlier.
Employed: max. CHF 7’056/year
Self-employed: max. CHF 35’280/year (max. 20% of net income)
The tax savings depend on the amount of your income and your municipality of residence.
In cantons with high tax rates, the tax savings are considerably higher, especially if your income is high.
Here are a few examples:
A net salary of CHF 100’000 after all deductions was used for the examples. Pillar 3a of CHF 7’056/year.
If you would like to know how much tax you would save with pillar 3a in your canton of residence, get in touch with us.
You can have your pillar 3a paid out in the following cases:
Yes, capital payment tax is due upon payout.
This is significantly lower than the normal income tax rate (usually 1/5 of it) and the capital is taxed separately from other income.
No, the capital in your pillar 3a does not count as part of your assets during the term and does not have to be declared in your tax return.
The capital therefore grows free of wealth tax and no capital gains tax is levied on it.
Yes of course, this happens automatically.
There is a statutory order of succession for beneficiaries:
1. wife/husband (compulsory)
2. children (compulsory)
3. parents
4. siblings
5. other heirs
From position 3 on, you can determine the order of succession yourself.
The bank will contact you when you have saved enough to sell you their product. And it is actually better to save in the Bank-3a than in the savings account, as there is (almost) no interest there. The banker promises flexibility – you pay in when you want.
This works well at first, but 3rd pillar contributions quickly fade into the background because you spend the money elsewhere or get your priorities wrong. As a result, you often don’t save enough and often have to live on CHF 2’000/month or less when you retire.
Fun fact: Pillar 3a deposits at the bank only last 2.5 years on average!
Therefore ask yourself:
Is it really an advantage that I only pay in when I feel like it?
The 3rd pillar at insurance used to be very inflexible and has therefore fallen into disrepute among older people.
Fifteen years ago, contracts were severely restricted and it was often not possible to invest in stocks, or only in a non-transparent way. This made it quite unattractive for young people.
However, this inflexibility was eliminated a long time ago and nowadays insurance 3a’s often offer an even greater selection of funds and better performance than bank products.
Many providers also allow you to pause payments if, for example, you go traveling for a few months.
Important: As the administration costs are deducted at the beginning with insurance providers, the insurance 3a only performs worse in the first 2 years, but is better in the longer term.
However, if you are considering canceling your pillar 3a after only 2 years, you shouldn’t start a pillar 3a in the first place, as the bank also charges costs.
Who will continue to pay your monthly premiums if you are no longer able to do so due to disability?
The bank?
No. Only the insurance provider can.
The so-called premium exemption is always included and ensures that the insurance company takes over your premiums if you can no longer do so.
This way, the savings goal is achieved no matter what!
Whether it is due to an accident or illness, it can affect anyone. If you are disabled, you are usually dependent on the IV and your income is severely restricted.
As an option, the insurance company will pay you a supplementary pension to the disability pension.
At the start of the contract, the amount of this pension can be determined optionally. This is usually between CHF 1’000 and 2’000 per month.
The risk of death must be covered, especially if you have a family with children.
This is because the gap is enormous if one parent or the main earner no longer exists.
It also makes sense to cover this risk if an indirect amortization of the mortgage through the 3rd pillar is active, because this way the property does not have to be sold in case of death.
By the way, the indirect amortization of a mortgage through the 3rd pillar is the smartest way to finance your mortgage.
Are you considering buying a house or apartment, but don’t know exactly how to go about financing it?
Contact us – our experts will be happy to help you.
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