The 3rd Swiss pillar is a key tool to complete your retirement and Optimize your taxes. It is divided into two main options: the Pillar 3a (regulated savings with tax benefits) and the Pillar 3b (flexible savings with no contribution limits). Here are the key points:
- Pillar 3a : reserved for working people in Switzerland, it allows you to deduct your contributions from your taxable income (2025 ceiling: CHF 7,056 for employees, CHF 35,280 for the self-employed). The funds are blocked until retirement, with some exceptions (real estate purchase, departure from Switzerland, etc.).
- Pillar 3b : accessible to all residents, it offers total flexibility on amounts and withdrawals, but with limited tax advantages.
Why choose the 3rd pillar?
- Tax reduction : Deductible contributions (3a) and exempt returns until withdrawal.
- Retirement supplement : To fill the gaps in the 1st and 2nd pillars.
- Flexibility and investment options : Secure savings or dynamic investments according to your needs.
By combining pillars 3a and 3b, you can maximize your tax benefits while keeping savings accessible for your projects. Swiss financial institutions offer a variety of solutions adapted to your goals. It is advisable to plan your contributions and consult an expert to optimize your strategy.
The 3rd pillar in Switzerland in 2025: Is it still a good plan?
Types of 3rd pillar accounts
The 3rd Swiss pillar is divided into two main categories: 3a And the 3b. These two options offer distinct benefits, allowing everyone to choose according to their retirement goals.
3rd pillar A (Linked pension)
The Pillar 3a is the most common form of private pension provision in Switzerland. It is a regulated savings that offers significant tax advantages.
To benefit from it, you must be gainfully employed in Switzerland and contribute toAVS. The contribution limits, already mentioned, vary depending on whether you are employed or self-employed.
Pillar 3a funds are locked up until retirement age: 65 for men and 64 for women. However, specific cases allow for early withdrawal, such as the purchase of a main home, the permanent departure from Switzerland, the creation of an independent business or a purchase in the second pillar.
3rd pillar B (Free pension)
The Pillar 3b, on the other hand, stands out for its great flexibility. It does not impose any constraints in terms of contributions or withdrawals. Unlike pillar 3a, it is available to anyone residing in Switzerland, whether it is active or not.
With pillar 3b, there is no no annual contribution limit. You can save according to your means and desires. In addition, the funds remain available at all times, making it an ideal solution for short or medium term projects.
However, the tax benefits are more modest. Some deductions are possible, but they depend on cantonal rules.
Pillar 3a vs 3b comparison
To better understand the differences between these two options, here is a comparison chart:
Pillar 3a is ideal for those who want reduce their tax burden while building up retirement savings. On the other hand, pillar 3b is perfect for those looking for a maximum flexibility and want to keep savings accessible for various projects.
Many Swiss residents choose to combine the two : they first maximize their contributions to pillar 3a to take advantage of tax advantages, then use pillar 3b for more flexible savings needs. This approach makes it possible to make the best use of the opportunities offered by the 3rd pillar, a subject that will be explored in greater detail later.
How to use the 3rd pillar
Here's how to open and manage your private pension account effectively.
Opening and feeding your account
Opening a 3rd pillar account is a simple process. All you need to do is choose a financial institution (bank or insurance company) that fits your goals.
- The banks : They offer savings accounts or investment funds, ideal for those looking for more flexible management and fees that are often transparent.
- Insurance companies : They combine savings and life insurance coverage, an interesting option if you want to guarantee financial protection for your loved ones.
To open a 3a account, you will need:
- One valid ID.
- One proof of address.
- One Certificate from your employer proving your lucrative activity.
Many institutions now allow online opening, making the process even easier. As for contributions, they must respect the ceilings set by the Confederation, which are adjusted regularly.
Pillar 3b, on the other hand, is accessible to everyone, even without a lucrative activity. This makes it ideal for students, retirees, or unemployed spouses.
Managing your contributions
Once your account is open, it's time to plan your contributions. For pillar 3a, several approaches are possible:
- Automatic monthly payments : A practical way to spread your contributions over the year. For example, a monthly payment of CHF 588 allows you to reach the annual limit without unbalancing your budget.
- Single payment at the end of the year : This option allows you to adjust the amount according to your annual income, especially if you receive a bonus at the end of the year. It also optimizes your tax deductions.
To maximize your tax savings, it is advisable to pay the maximum amount authorized each year. For example, an employee who contributes CHF 7,056.— per year can reduce his taxes by CHF 1,500 to CHF 3,000, depending on his tax rate. If you have multiple 3a accounts, make sure you do not exceed the overall ceiling, otherwise you will lose the tax benefits on the excess.
When can you withdraw your funds
Pillar 3a funds are generally locked up to retirement age, but some situations allow early withdrawal, under conditions:
- Buying a main home.
- Definitive departure from Switzerland.
- Creation of an independent activity.
- Total disability.
These withdrawals are subject to a capital benefits tax, calculated separately from your other income.
For pillar 3b, the rule is simpler: you can withdraw your funds at any time, without justification or penalty. This makes it a flexible solution for financing short or medium term projects.
Online tools, such as those offered by Best Third Pillar, can help you simulate your contributions, optimize your strategy and estimate your tax savings. These simulations allow you to better plan your retirement and financial projects.
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Benefits of the 3rd pillar
The 3rd pillar is a key pillar of financial planning in Switzerland, combining tax advantages, savings for retirement, and protection for your loved ones.
Tax savings
One of the main attractions of Pillar 3a is its tax advantages. The amounts you pay each year can be deducted from your taxable income, within the limits of the legal limits. This means a direct reduction in your taxes. In addition, the returns generated by your investments remain tax-free until the moment of withdrawal, which promotes optimal growth of your capital.
Building up assets for retirement
The 3rd pillar plays a crucial role in complementing the benefits of the first and second pillars, which are often not sufficient to cover all financial needs in retirement. Thanks to the effect of compound interest, regular contributions allow you to accumulate substantial capital over the long term. This system also offers significant flexibility: you can choose between prudent savings options or more dynamic investments, depending on your risk tolerance and goals. At the same time, it guarantees a certain security for your loved ones, in case of the unexpected.
Protecting your family
In addition to tax and wealth benefits, the 3rd pillar offers essential protection for your family. Under pillar 3a, benefits are primarily paid to the spouse or registered partner in the event of death. If these beneficiaries do not exist, direct descendants or other designated individuals receive the funds. You can also change this order according to your personal needs.
Pillar 3b, on the other hand, is particularly suitable for reinforced family protection. The life insurance policies it offers combine savings and financial security, offering support in the event of death or disability. These solutions are ideal for families who want to guarantee a safety net for their loved ones. Some pillar 3a insurances also include guaranteed capital, providing additional stability in an uncertain economic context.
Investment options
Another advantage of the 3rd pillar is the diversity of investment solutions available. You can opt for classic savings accounts with guaranteed rates, diversified investment funds offered by banks, or even insurance products combining savings and life insurance coverage. These sometimes include capital guarantees and life annuity options.
This variety allows you to personalize your strategy according to your goals, your age and your family situation. You can also spread your assets across multiple institutions to maximize both the security and the return on your capital. By diversifying your investments within the 3rd pillar, you optimize your results while limiting risks.
Tools like those offered by Best Third Pillar help you compare these different options. They allow you to identify the solutions best suited to your profile and to make the most of your pension strategy, maximizing your benefits while securing your financial future.
Plan your retirement with the 3rd pillar
Preparing for retirement requires a thoughtful approach to ensure financial independence that goes beyond basic benefits. Thanks to its fiscal and asset advantages, the 3rd pillar plays a key role in this planning.
Bridging the pension gap
The 3rd pillar is designed to fill the gaps left by the first pillars (AVS and LPP). These shortcomings can make a significant financial difference in retirement.
Let's take a concrete example: a person with an annual income of CHF 80,000. His AVS and LPP benefits will provide him with around CHF 4,000 to CHF 4,500 per month upon retirement. However, to maintain her standard of living, she would need around CHF 6'400.— per month. This leaves a difference of CHF 2,000 per month, or CHF 480,000 over twenty years of retirement.
Pillar 3a makes it possible to fill this gap by accumulating capital over the long term. With maximum annual contributions of CHF 7,056.— for employees (amount 2025), and thanks to compound interest, a person can build up significant capital. For example, over a period of 30 years, these regular payments could generate a capital of more than CHF 300,000, depending on the return obtained.
For its part, pillar 3b offers additional flexibility. With no contribution limits and with more flexible withdrawal options, it can effectively complement pillar 3a.
Create your personal strategy
Each individual has a different financial situation, and your 3rd pillar strategy should reflect your specific needs. The sooner you start, the more you benefit from compound interest, which can make a big difference in the long run.
For example, a 25-year-old person who pays CHF 500 per month into pillar 3a will accumulate much more capital than a person who starts at 40 with payments of CHF 800 per month. Even if the total contributions are similar, the effect of time can add several tens of thousands of francs.
Young workers can opt for dynamic solutions, with a large number of actions to maximize returns. As retirement approaches, a more prudent strategy, with secure investments, often becomes more appropriate. This gradual transition protects accumulated capital while optimizing gains.
Your family situation also influences your planning. Couples can coordinate their pillar 3a to optimize tax deductions and plan withdrawals over several years. Families with children often prefer pillar 3b, which can include life insurance to financially protect their loved ones in the event of the unexpected.
An effective strategy is based on thorough analysis and, ideally, professional advice to ensure that it meets your goals perfectly.
Get professional help
Navigating the Swiss pension system can be complex. With a multitude of products and options available, getting expert advice can make all the difference. A strategic error can be costly, whether in terms of returns or tax optimization.
Best Third Pillar offers simulation tools and personalized consultations to help you assess your current situation. These services take into account your tax profile, retirement goals and savings capacity to develop tailored recommendations.
The experts analyze your overall situation, compare the various solutions available and help you build a clear and effective strategy. They also explain the fees associated with each option, so you can make informed decisions.
Finally, the optimization of your strategy does not stop after it has been implemented. Regular reviews allow you to adjust your plan according to changes in your personal situation, legislative changes or market performance. This proactive approach increases your chances of reaching your retirement goals in the best possible conditions.
Conclusion
The 3rd Swiss pillar represents an effective solution to optimize your taxes while preparing for your retirement with peace of mind. Whether you choose pillar 3a, appreciated for its immediate tax deductions, or pillar 3b, known for its great flexibility, this private pension intelligently complements AHV and LPP.
In addition to tax savings, it allows capital to be built up over time. Compound interest, which is often underestimated, plays a key role in growing your savings, especially if you start early.
Your strategy must adapt to your needs and your life path. A dynamic approach early in your career can maximize your returns, while a more careful strategy will be better than when you approach retirement. Age, family situation, financial goals, and your ability to save are all factors to take into account.
Hiring an expert can make all the difference. Best Third Pillar offers free simulations and tailor-made advice to analyze your situation and guide you to the best options. This support allows you to avoid costly mistakes and to adjust your plan according to the evolution of your needs.
It's never too early to get started. Even a small amount of savings today can take full advantage of the effects of time. The 3rd pillar remains an essential solution to ensure your long-term financial security.
FAQs
What tax advantages does pillar 3a offer compared to pillar 3b in Switzerland?
Pillar 3a has significant tax advantages which clearly differentiate it from pillar 3b. First, the contributions you make into pillar 3a can be deducted from your taxable income. This means you can directly reduce your taxes each year.
Second, the amounts saved as well as the interest or returns generated under pillar 3a are not taxed as long as they remain in this account. This characteristic makes it a particularly attractive option to prepare for retirement while taking advantage of tax advantages right now.
In what cases can I withdraw my pillar 3a before retirement age?
In Switzerland, it is possible to withdraw your pillar 3a before the legal retirement age, but only in situations well defined by law:
- Buying a property intended to be your main residence.
- Repaying a mortgage or financing renovation work related to your main residence.
- Definitive departure from Switzerland, for example to move abroad.
- Launch of an independent activity, provided that you are no longer a member of a pension fund.
- Total and permanent disability, making it impossible to exercise a lucrative activity.
- Buying-up gaps in the 2nd pillar, to complete your missing contributions.
These options are subject to strict rules, and early withdrawal can have significant tax consequences. Before making a decision, it is strongly recommended that you consult a specialist who can guide you based on your personal situation and financial goals.
How can I effectively combine pillars 3a and 3b to prepare for my retirement in Switzerland?
To properly prepare for your retirement, combine the pillars 3a and 3b may prove to be a wise approach. The pillar 3a offers attractive tax advantages: your contributions are deductible from your taxable income, and the returns generated are not taxed as long as they remain invested. In 2025, the annual contribution limits are CHF 7,258 for employees and 36,288 CHF for the self-employed.
For its part, the pillar 3b stands out for its flexibility. You can withdraw your capital at any time, even if it doesn't offer direct tax cuts. By combining these two options, you can adapt your savings to your specific needs: on the one hand, take advantage of the tax advantages of the pillar 3a, and on the other hand, keep a financial reserve accessible in case of the unexpected.
