Tied Pension Provision

Tied pension plans, also known as pillar 3a in Switzerland, are a central component of the Swiss three-pillar system. They serve as a private retirement savings plan and are promoted by the government through tax incentives. The term «tied» should be taken literally here. The capital contributed is generally locked away or invested until shortly before reaching the standard retirement age and is not freely available.

The most important incentive of pillar 3a is the tax savings. Contributions up to an annually set maximum amount can be deducted directly from taxable income. In addition, interest and dividend income are tax-free during the term, and the accumulated balance is not subject to wealth tax. Only upon withdrawal is the capital taxed at a reduced special rate, known as the capital gains tax.

Early withdrawal is only possible in legally defined exceptional cases, such as the purchase of owner-occupied residential property, the start of self-employment, or permanent departure from Switzerland (emigration).

Investors can choose between traditional interest-bearing accounts at banks and yield-oriented investments. In particular, the low-cost Pillar 3a apps enable easy participation in the capital market via equity funds, which is especially attractive for long-term investments.

Restricted pension savings is thus a powerful tool for closing the pension gap, strengthening personal responsibility, and significantly reducing the current tax burden at the same time.

Toward more securities and lower fees: Switching to a Pillar 3a account takes only a few minutes and can pay off for a lifetime. In this blog post, we explore the topic in more detail.

Pillar 3a is fee-free at True Wealth. You can find more information here:

Pillar 3a with ETFs and index funds. 0.0% management fee.