Les ETF In the 3rd pillar Switzerland offer attractive tax advantages, but their impact depends on the choice between Pillar 3a And the Pillar 3b. Here are the essential points to optimize your savings:
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Pillar 3a :
- Tax deduction up to CHF 7'056.- per year (2025).
- Exemption from dividends, interests and capital gains during accumulation.
- Reduced taxation upon withdrawal, but funds available only from the age of 60.
- Limited choice of eligible ETFs.
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Pillar 3b :
- No tax deductions on payments.
- Dividends and interests are taxed annually, but capital gains are exempt for private investors.
- Flexible withdrawals with no age restrictions.
- Complete freedom in choosing ETFs and no payout limits.
Quick summary : Pillar 3a reduces your taxes immediately and promotes long-term accumulation, while pillar 3b offers total flexibility and investment freedom. A combined strategy can maximize your tax benefits and meet your short- and long-term financial needs.
The 3rd pillar in Switzerland in 2025: Is it still a good plan?
1. ETFs in the 3rd pillar A
The Pillar 3a is a very attractive fiscal framework for investing in ETFs, thanks to specific rules that, when well controlled, make it possible to optimize your pension strategy.
Tax deductibility
Contributions to pillar 3a are fully deductible from taxable income, regardless of the financial product chosen. In 2025, the deduction limits are CHF 7'056.- for employees and CHF 7'258.- for self-employed persons affiliated to a pension fund [1].
“Payments to the 3rd pillar are fully deductible from your taxable income, up to a maximum amount.” — Mobilière [1]
This deduction can generate significant tax savings, generally between 15% and 35% of the amount paid [1]. For example, a maximum payment of CHF 7'056.- In 2025 could reduce your taxes by CHF 2'470.-, depending on your income and canton of residence.
To take advantage of this advantage, simply indicate the total amount paid in the “Deductions” or “Pillar 3a” section of your tax return, along with the payment certificate. Swiss residents taxed at source can also benefit from it by submitting a written request to their cantonal tax authorities before March 31 of the following year [1]. Now let's move on to taxation during the investment phase.
Taxation during the investment
During the accumulation phase, ETFs in pillar 3a are exempt from taxes on dividends, interest and capital gains. This exemption allows for an optimal capitalization effect, which is particularly interesting for ETFs that automatically reinvest dividends.
Withdrawal taxation
This favourable fiscal framework continues until the moment of withdrawal. At this stage, capital and earnings are subject to taxation at a reduced rate, much lower than regular rates. This rate varies from canton to canton, but it is still advantageous, especially for high-income people.
Investment flexibility
Despite some regulatory restrictions on eligible funds, pillar 3a offers a sufficiently broad selection of ETFs to build a diversified portfolio. Most ETFs on shares and bonds listed in Switzerland or the European Union are accepted, offering exposure to international markets. This choice is often wider than that of traditional insurance products, which tend to be limited to internal funds. In addition, from 2026, it will be possible to make retroactive payments over a period of ten years, while maintaining the tax advantage [1].
2. ETFs in the 3rd pillar B
The Pillar 3b offers a different approach to investing in ETFs, with distinct tax advantages and greater investment freedom. Unlike pillar 3a, where the deduction of payments plays a key role in tax savings, pillar 3b follows a different logic. Here is how these particularities influence the accumulation and withdrawal phases.
Tax deductibility
Under pillar 3b, it is not possible to deduct payments from your taxable income. Contributions are made with income that is already subject to tax, which limits fiscal optimizations from the start.
However, this lack of initial deduction is offset by tax advantages during the following phases, which may make pillar 3b attractive for certain types of investors.
Taxation during the investment phase
During the accumulation period, taxation has a mixture of advantages and disadvantages. Les dividends and interests are taxed at regular rates every year, which can limit the snowball effect, especially for ETFs that distribute income on a regular basis.
On the other hand, the capital gains carried out on investments are generally not taxed for private investors, as long as private wealth management criteria are met. This is an important advantage, especially for investors who prefer long-term strategies that focus on growth.
Taxation upon withdrawal
When it comes to the withdrawal phase, pillar 3b offers considerable flexibility. Unlike pillar 3a, there are no age restrictions or specific conditions for accessing funds. You can withdraw your capital at any time without incurring additional tax penalties.
Les capital gains carried out remain tax exempt, while dividends and interests collected are taxed according to current income tax rates. This flexibility makes pillar 3b particularly attractive for those looking for options for immediate access to their savings.
Investment freedom
One of the great advantages of pillar 3b is total freedom in choosing ETFs. Unlike pillar 3a, there is no list of restrictions. You can invest in sectoral, geographic, thematic or even alternative ETFs, which are often excluded from pillar 3a.
This freedom makes it possible to build diversified and sophisticated portfolios, including ETFs on commodities, real estate (REIT), emerging markets or quantitative strategies. In addition, there is no annual ceiling on payments, unlike the limit of CHF 7'056.- taxed under pillar 3a.
Finally, the possibility of making partial or total withdrawals without constraints offers valuable liquidity to meet specific opportunities or needs. This flexibility makes it an ideal complement to pillar 3a in a well-balanced pension strategy.
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Comparison: pros and cons
Explore the differences between pillar 3a and pillar 3b to optimize your savings and reduce taxes. Here is a summary table of the main criteria related to ETFs in these two pillars.
Benefits of pillar 3a for ETFs
Pillar 3a is particularly attractive thanks to its immediate tax advantages. The payments made, up to a maximum of CHF 7,056.- per year, are fully deductible from your taxable income. This allows you to reduce your taxes while saving for the future.
Disadvantages of pillar 3a
However, this pillar has some limitations. The annual payment limit may hold back savers with higher savings capacity. Additionally, the choice of ETFs is limited to a predefined list, which may restrict your investment options. Finally, funds can only be withdrawn under specific conditions, generally from the age of 60, which reduces flexibility in case of urgent need.
Benefits of pillar 3b for ETFs
Pillar 3b, on the other hand, offers total freedom when it comes to investing. You can choose ETFs according to your preferences, whether they are sectoral, geographic, or thematic funds. In addition, there is no payment limit, which allows wealthy savers to build up more wealth.
Disadvantages of pillar 3b
The main disadvantage of pillar 3b is the lack of tax deductions. The payouts are made from income that is already taxed, which may reduce the attractiveness of this option for some investors.
Combined strategy
To take advantage of the benefits of both pillars, a combined approach may be ideal. By investing in pillar 3a, you benefit from immediate tax savings, while pillar 3b offers you greater flexibility and freedom to invest. This balanced strategy allows you to maximize your tax benefits while adapting your savings to your specific needs.
Best Third Pillar offers free simulations to help you find the ideal distribution between these two solutions. You will thus be able to optimize your tax savings while building a solid financial strategy adapted to your goals.
Conclusion
ETFs under the 3rd pillar have tax advantages that differ depending on whether they are integrated into pillar 3a or 3b. With pillar 3a, you can benefit from an immediate tax deduction, which reduces your taxable income up to the fixed annual limit. Depending on your marginal tax rate, this savings can represent between 20% and 35%. On the other hand, pillar 3b operates according to a different fiscal logic.
Unlike pillar 3a, pillar 3b does not allow tax deductions. However, it offers the advantage of capital gains exemption for private investors, while allowing total freedom in choosing ETFs. This opens the door to wider diversification and access to varied markets.
If your priority is to immediately reduce your taxes while saving moderately, pillar 3a is an attractive option. On the other hand, if your needs include more flexibility and greater savings capacity, a combination of the two pillars may be wise.
To help you optimize your tax savings and define the best distribution between pillars 3a and 3b, Best Third Pillar offers free simulations and personalized advice from experts. Take the opportunity to find the solution that best fits your financial goals.
FAQs
What factors should you take into account when choosing between pillar 3a and pillar 3b when investing in ETFs?
The choice between Pillar 3a And the Pillar 3b depends entirely on your financial priorities and personal circumstances. Here is a quick overview to help you get a better idea.
The Pillar 3a is particularly interesting if you are looking to reduce your taxes. Indeed, the contributions paid are deductible from your taxable income, which can represent a significant tax saving. However, this advantage comes with a constraint: your funds remain blocked until certain conditions are met, such as the purchase of real estate, retirement or a change of professional activity.
For its part, the Pillar 3b offers much greater flexibility. You can access your savings anytime, with no restrictions. On the other hand, it does not offer the same tax advantages as pillar 3a, which may be a point to consider if taxation is a key aspect of your savings strategy.
So how do you choose? If your main objective is to prepare for retirement while benefiting from tax savings, pillar 3a is often the ideal choice. On the other hand, if you prefer freedom of access to your funds for short or medium term projects, pillar 3b will be more suitable.
In both cases, investing in ETFs can be a smart solution. These funds allow you to diversify your investments while limiting fees, thus maximizing the growth potential of your savings.
How can I combine the tax advantages of pillars 3a and 3b to optimize my retirement provision?
To get the most out of your pension while reducing your tax burden, it makes sense to spread your contributions across several 3a accounts. This strategy allows withdrawals to be spread over several years, which reduces the tax impact at the time of retirement.
At the same time, pillar 3b can enrich your planning by offering increased flexibility to finance medium or long-term projects. Depending on your canton, it may also offer interesting tax advantages. By combining pillar 3a and pillar 3b, you can adjust your savings more precisely to your financial goals and personal circumstances.
What are the tax impacts of an early withdrawal under pillar 3a in Switzerland?
An early withdrawal under pillar 3a is subject to taxation separately from other income. This amount is subject to a reduced rate, called Capital payment tax, which works progressively. In other words, the larger the amount withdrawn, the higher the tax rate applied will be.
A crucial detail to keep in mind: the tax is levied in the canton where you live at the time of the withdrawal. The rates may therefore vary depending on where you live in Switzerland. To best manage your taxation, it may be a good idea to plan your withdrawals carefully and, if necessary, to seek advice from a specialist.
