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#8 No time for Pillar 3a?

Felix Niederer

In this blog post, we take a look at Pillar 3a and whether it's really worth the time investment. Felix Niederer, CEO and co-founder of True Wealth, gives us insights into this important topic and explains what solutions are available on the market.

The importance of Pillar 3a

Everyone in Switzerland is familiar with Pillar 3a. The state favors private pension provision in Pillar 3a by granting tax benefits. This is done for good reason, as the AHV and pension fund alone are often not enough to secure your standard of living in retirement. The higher your marginal tax rate, the more you benefit from the tax advantages of Pillar 3a.

The upper limit on payments

However, there is an upper limit for the payments into Pillar 3a. This is around 7'000 francs per year if you are affiliated with a pension fund. Self-employed people who are not affiliated with a pension fund can even pay in over 30'000 francs. Given this cap, it's important to find a solution that makes the process as simple as possible while ensuring you don't miss out on any tax benefits.

Insurance companies or banks?

There are basically two types of Pillar 3a solutions on the market: Insurance and Banks. Insurance solutions often come with an insurance component, which makes transparency difficult. In the case of banking solutions, there are again two subcategories: interest-only solutions and securities solutions. The latter invest your money in the capital market, offering the chance of a solid return.

Tax deferral, not exemption

It is important to understand that Pillar 3a does not offer tax exemption, but tax deferral. This means that you must pay taxes when you withdraw the money. A special tax rate is applied to the withdrawals. A big advantage here is that you can withdraw the money over several years, which can reduce the tax burden.

When you can withdraw the money?

In most cases, you can only draw the money five years before your AHV age, but there are exceptions. If you become self-employed, leave Switzerland or use the money to buy or renovate a property, you can access it earlier.

An integrated solution

To optimize Pillar 3a deposits while minimizing the hassle, True Wealth offers an integrated solution. You can integrate your Pillar 3a with wealth management and benefit from automatic Pillar 3a deposits.

There are other good offerings on the market, but True Wealth's approach has proven itself and offers a simple way to use Pillar 3a efficiently.

Money transfer and your ideal Pillar 3a solution

A frequently asked question is whether you can transfer Pillar 3a deposits you've already made to another provider. The answer is yes, it is possible. It just requires filling out a form and communicating with your current provider.

The ideal Pillar 3a solution looks different for everyone, but it should be simple and time-efficient first and foremost. Therefore, choose a solution that best meets your needs while saving you time and effort.

If you have any questions or comments, feel free to email Felix Niederer.

Disclaimer: We have taken great care with the content of this article. Nevertheless, we cannot exclude the possibility of errors. The validity of the content is limited to the time of publication.

About the author

Felix Niederer

Founder and CEO of True Wealth. After graduating from the Swiss Federal Institute of Technology (ETH) as a physicist, Felix first spent several years in Swiss industry and then four years with a major reinsurance company in portfolio management and risk modeling.


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