Pillar 3a: savings insurance for old age
Pillar 3a life insurance combines retirement savings with insurance cover. In doing so, you not only build up capital for old age, but also protect yourself and your family against the risks of death or incapacity to work.
What is pillar 3a?
Pillar 3a, also known as tied pension provision, is part of private pension provision in Switzerland (= 3rd pillar). Pillar 3a pension solutions are primarily used for retirement provision, and the federal government offers tax incentives.
With a life insurance policy in pillar 3a, you can save money for old age and protect your family against the risks of death or incapacity to work.
Pillar 3a ...
- helps you save money for your retirement. The benefits you receive from the first and second pillars only cover around 60% of your pre-retirement income. Pillar 3a will help you close this gap.
- allows you to save for your future while reducing your tax burden at the same time. It can also help to provide additional collateral for a mortgage for residential property.
- is “tied”. This means that you can only access the money you have saved under certain conditions. For example, when you buy a property that you live in yourself or when you retire.
What are the benefits of pillar 3a?
Pillar 3a of retirement provision in Switzerland offers you numerous benefits:
Contributions to pillar 3a can be deducted from your taxable income. This can lead to significant tax savings. When you are paid out, your pillar 3a assets are taxed separately from your income at a reduced rate.
You can decide each year how many francs you want to pay in, up to the statutory maximum amount. You can also access your pillar 3a assets even before you retire – as early as five years before you reach the reference age.
Your money is protected against seizure and bankruptcy. You can also close any gaps in your pension provision and provide additional collateral for the mortgage for your residential property.
How big are your pension gaps?
What we offer: free pension advice
Find out about your financial situation after retirement and identify pension gaps. Our pension advisors will be happy to help you.
Assessing risks
Assessing the financial consequences of incapacity to work or death
Identifying pension gaps
Know your individual pension situation and possible gaps
Build up assets
For the dream of owning your own home or capital for retirement
Questions and answers: life insurance and pillar 3a
A pension gap in Switzerland refers to the difference between the financial needs in retirement and the income actually available from the three pension pillars.
The pensions from the OASI (1st pillar) and the pension fund (2nd pillar) generally correspond to around 60 to 75% of the last salary. The remaining 40% or so account for the pension gap. This gap can be filled by modifying your standard of living when you reach retirement age or by using private assets that have been built up beforehand – for example, with the tax-privileged pillar 3a.
It is advisable to look out for possible gaps at an early stage and make up for them with private pension provision. This is because experts assume that you will need 80 to 90% of your pre-retirement income when you retire, which means that around 20 to 30% are missing. In addition, many people do not reach the predicted 60% from the first and second pillar, as there are gaps in the OASI or pension fund. Appropriate pension products can be used to provide additional cover in old age.
Pillar 3a and pillar 3b are both parts of the third pillar of the Swiss pension system, which is referred to as voluntary private pension provision. They serve to supplement the benefits from the first pillar (state pension provision) and the second pillar (occupational benefits provision). Here are the main differences:
Pillar 3a (tied pension provision)
- It is subject to conditions and is primarily used for retirement provision.
- The federal government offers tax incentives. Annual contributions to pillar 3a are only possible up to a fixed maximum contribution and may be deducted from your taxable income.
- Access to the paid-in capital is only possible in certain cases, such as five years before reaching ordinary retirement age, taking up self-employment, emigrating permanently, buying owner-occupied property, repaying an existing mortgage or buying into a pension fund.
Pillar 3b (unrestricted pension provision)
- It is more flexible and is therefore also known as unrestricted pension provision.
- There are no annual maximum contributions in pillar 3b. However, the contributions cannot be deducted from taxes.
- It can also be used for medium- or long-term savings goals.
- As a rule, you can access the money from your pillar 3b at any time – but please note the contractual provisions of the chosen solution.
The savings are used for pension provision. You can therefore receive the money at the earliest five years before the normal retirement age. However, you can also withdraw the capital earlier under the following conditions:
- You take up self-employment.
- You emigrate and move abroad from Switzerland.
- You buy a house or apartment for your own use or pay off a mortgage.
- You are drawing a disability pension.
You can deduct your contributions to pillar 3a from your taxable income. The specific tax savings depend on the tax rate, which varies from commune to commune. However, the following applies in all cases: the more you deposit, the more taxes you save. Each year, you will receive a receipt for the amount paid in and can submit it together with your tax return. In order to benefit from the advantages of the current tax period, you should make contributions to the third pillar by mid-December at the latest.
The law stipulates that the spouse or registered partner must take precedence. If they do not exist, direct descendants or surviving dependants who received substantial financial support from the deceased shall receive the assets. This also includes people who pay for the upkeep of joint children, such as ex-partners. This is followed by parents, siblings and other eligible heirs.
The maximum amount for contributions to pillar 3a in 2025 is:
- for employed persons with a pension fund: max. CHF 7,258 and
- for employed persons without a pension fund: max. CHF 36,288, but max. 20% of net income from employment.
