8 Tips for Making the Most of Your Pillar 3a
It’s clear that most of us don’t want to think about getting older. We want to enjoy life, play with our children, travel, and simply not worry about tomorrow.
That’s completely understandable—but the day of retirement comes faster than we’d like, and we want to help ensure you’re not caught off guard, facing a shortfall when the time comes.
In Switzerland, retirement income from the first two pillars covers a maximum of around 70% of your living expenses. To avoid having to tighten your belt later in life, we want to show you how to use Pillar 3a to truly make your retirement a golden era.
So grab a coffee, read through our 8 golden tips, and we hope you’ll find one or two that work for you.
- Start contributing to your Pillar 3a right from the beginning
One of the advantages of Pillar 3a is that anyone who lives and works in Switzerland can contribute to it. That’s why it’s wise to start building this retirement safety net as early as possible—whether you think you’ll need it or not.
If you make your contributions at the beginning of the year, after 30 years you could have around CHF 10,000 more in your Pillar 3a account compared to someone who contributes at the end of each year. Additionally, the interest rates on Pillar 3a accounts are typically higher than those on standard savings accounts.
2. Open multiple Pillar 3a accounts and withdraw the funds gradually later
When you close a Pillar 3a account, the entire balance must be withdrawn at once—it’s not possible to make partial withdrawals.
That’s why it’s beneficial to open multiple Pillar 3a accounts and spread your annual contributions across them.
Alternatively, you can also choose to open a new account once a certain balance has been saved on your first one, and then continue making contributions into the new account.
A key advantage of Pillar 3a is that you’re not obligated to make payments every year—you can skip contributions in some years if needed.
3. Contribute as much as possible to Pillar 3a
The first benefit is obvious: by contributing regularly, you strengthen your retirement provision. But a second major advantage of Pillar 3a is the tax savings. Depending on your place of residence and income level, you can save up to CHF 1,000 in taxes each year through your contributions.
If you’re employed and affiliated with a pension fund (BVG), you can currently contribute up to CHF 7,258 per year. If you’re employed but not affiliated with a pension fund, you may contribute up to 20% of your net income, with a maximum of CHF 36,288 annually.
4. Prefer a bank over an insurance company for your Pillar 3a
While choosing a bank for your Pillar 3a might seem like an outdated option, it is generally more cost-effective. With an insurance-based Pillar 3a, part of your contributions can be lost if you are unable to continue paying premiums or if you need to close the policy before its maturity date.
Of course, insurance policies offer benefits such as premium waivers in case of disability and survivor protection in the event of death. However, you can also secure these protections separately through an insurance policy when you choose a bank-based Pillar 3a.
We always recommend keeping saving and insurance functions separate.
5. In the long run, a Pillar 3a investment account offers higher returns than a savings account
If you decide to contribute to Pillar 3a, we recommend choosing one with investment options. Traditional Pillar 3a savings accounts have offered very low interest rates for years. Especially with inflation your money in a standard 3a account could lose value because inflation outpaces the interest earned.
Of course, an investment-based Pillar 3a account carries more risk than a traditional savings account, but over the long term, it offers significantly more attractive returns.
6. Choose an investment solution with low fees
If you decide to go for an investment-based Pillar 3a, it’s important to pay close attention to the fees. Otherwise, high fees can eat up a significant portion of your returns.
There are investment solutions that invest in index funds, where your assets are managed passively.
With this approach, you can accumulate several thousand francs more over the years.
Tax rules can vary from canton to canton.
7. You can continue contributing to Pillar 3a even after retirement age
You are free to keep working after reaching the official retirement age. This also means you can continue contributing to Pillar 3a during this period. However, this opportunity is limited: for women, contributions can be made up to age 69, and for men, up to age 70.
The good news is that if you no longer contribute to a pension fund (BVG), you are allowed to contribute double the regular amount to Pillar 3a in the year of retirement. However, the maximum contribution must still not exceed CHF 36,288 (state in 2025).
We recommend that you check the tax regulations in your canton regarding this, as the general insurance deduction on your tax return may be higher if you are no longer making contributions to a pension fund.
8. Don't withdraw your Pillar 3a savings in the same year as your pension fund benefits
It’s advisable not to withdraw your Pillar 3a savings in the same year that you receive your pension fund (BVG) benefits or your vested benefits account (Freizügigkeitsguthaben) payout.
The reason is that the tax burden is proportionally higher when your total withdrawals in one year are larger.
In some cantons, even your spouse’s income or withdrawals are taken into account when calculating the tax.
As you can see, contributing to Pillar 3a is worthwhile in every case.
Do you have any other tips on how to make the most of Pillar 3a?