Pillar 3a 2023 – 5 things you need to know

To give you a taste of everything pillar 3a we gathered the five most important things you should consider when thinking about putting money aside for retirement.

1) Why pillar 3a?

This is probably a question you have in mind. As you know the pension scheme in Switzerland is based on the three-pillar-principle and should ensure security and quality of life in old age.

The 1st pillar includes the state pension and is mandatory for everyone residing in Switzerland and the 2nd pillar is occupational pension and should ensure a reasonable standard of living after retirement. The 2nd pillar is mandatory for every employee in Switzerland. Unfortunately, the pensions from the 1st and 2nd pillars are not sufficient to maintain the previous standard of living. This is the so-called “pension gap.”

Here is where pillar 3a comes into play. Pillar 3a helps closing this pension gap and maintain your standard of living. It is a private provision and the best supplement to secure your future. Employed people can use pillar 3a to build up their own “retirement assets” so that they can enjoy life to the fullest later on.

2) What advantages does Pillar 3a have?

One of the biggest benefits of pillar 3a is obvious  – you save taxes while taking care of your future. Your pillar 3a savings can be fully deducted from your taxable income up to the maximum amount. With an average income, you can save around CHF 2'000 per year in taxes. 

3) Pillar 3a 2023

The maximum amount for pillar 3a usually changes every few years (whenever the AHV pension, i.e. the 1st pillar, also changes).

In 2023 you can deposit

• As an employee: up to CHF 7'056
• As self-employed: up to CHF 35'280
  So, a maximum of 20% of your taxable income. 

And don’t forget: Saving taxes also works during a bad market situation. 😉

4) Which options do you have with pillar 3a?

Not only banks and digital providers offer pension solutions, also insurance companies have products for your pillar 3a. With so many offers, it is sometimes difficult to keep track. Here is a short and concise summary of the most important things:  

Let’s talk about the common grounds first. Banks and insurance providers have to comply with the same legal regulations when it comes to their 3a products. No matter the provider you can always deduct the paid amount from your taxes. Regardless of what solution you choose, you can access the money only to a limited extent, i.e. money can only be withdrawn for home ownership, emigration, starting your own business or when you reach retirement (from 5 years before normal retirement). 

If you choose a 3a solution with an insurance provider you also receive insurance cover for disability or death. However, this additional protection also leads to new costs. The cost share is usually deducted from your savings deposit, which means that not all of your savings deposit goes towards your retirement provision. Ultimately, you get a pension policy with an insurance company with a fixed contract period (usually until retirement age) and thus commit yourself to paying a certain amount on a regular basis. On the other hand, with a bank there is no obligation to pay regularly. Also the amount you want to pay can be freely selected and adjusted at any time. 

5) Your pillar 3a at Selma

Selma is not only your 24/7 financial investment assistant  – she also supports you with your pillar 3a investments. No matter if you are just about to start or if you already have an existing pillar 3a with a different provider or if you already have an investment account with Selma – Selma has the perfect solution for you. 

One of the biggest advantages of having your investment account and your pillar 3a account with Selma is that you can save on fees. The more you invest with Selma the smaller your fees get  – across your investments and pillar 3a contributions. Win-Win. 🥳

If you’ve gotten a taste for Selma’s pillar 3a solution now but already have an existing pillar 3 account elsewhere, you can easily transfer it to Selma and benefit from the reduced fees.

Yes, pension planning and pillar 3a are not the most entertaining topics in the world. Anyway, it is important to think and talk about it and then also act on it because no matter what you have on your to-do list for after your retirement a pillar 3a account can definitely help you to do it.