The big Q&A on the third pillar

Just to recap... What is the pillar 3a?

It is part of the private pension system in Switzerland, which is divided into three parts:

1st pillar: the state pension (AHV).

2nd pillar: occupational pension provision (pension fund or BVG)

3rd pillar: private pension provision, consisting of pillar 3a and pillar 3b.

Third pillar - is it really worth it?

Definitely! The pillar 3a is worthwhile for everyone who has an income, and thus pays Swiss income tax. By making annual payments, you not only save up for your retirement, but will also save a good amount of tax each year. The higher the income and the payments into the third pillar, the greater the tax saving effect.

But what if I don't have a third pillar?

If you rely exclusively on the pension benefits of the first and second pillars, then you‘ll only receive about 60 percent of your last income when you retire. Which, in view of inflation, is all the more problematic if you want to keep your usual standard of living.

How exactly can I save taxes with Pillar 3a?

The payments can be deducted from your taxable income. All you have to do is to submit a receipt for the amount paid in with your tax return.

Important: In order to benefit from this advantage, the payments into the 3rd pillar must be made by mid-December at the latest. As a Caveo customer, you will of course be reminded of this on time. 

Can I lose money in my third pillar - for example in the event of inflation?

No, you can rest easy, even in the event of inflation. The amount you set aside when you take out a third pillar contract will be paid out later in exactly the same way.

Can money from the third pillar be withdrawn before retirement? If so, under what circumstances?

Pillar 3a funds can be accessed as early as five years before reaching the retirement age. However, there are some special cases in which the Pillar 3a can be paid out early: these include a change to self-employment, the financing of owner-occupied residential property, the repayment of a mortgage, a move abroad or disability and death.

What does pillar 3a cost me per month?

The fixed monthly amount that you pay into pillar 3a can be determined individually. We at Caveo will advise you on this matter competently and tailor it to your individual income and budget situation. The maximum annual amount is set by the state and amounts to CHF 6,883 in 2021. Persons without a pension fund can pay in a maximum of 20% of their earned income, but no more than 34,416 francs. The maximum amount is redefined every year.