The third pillar is an important component of retirement planning, especially for women. The Swiss pension system, which includes the AHV and occupational pension (pension fund), is not designed for the employment patterns of women with career breaks and part-time work. In the second pillar alone, there is a 60 percent difference in pension between women and men in Switzerland. Therefore, it is even more important for women to save privately with a 3a pillar account whenever possible. We explain what to look out for with the third pillar, why it's important to have multiple accounts, and how you can save on taxes.
Who can open a third pillar account?
Anyone with an income subject to AHV contributions can have a third pillar account. There is no minimum income required. So, you can save privately whether you are a career starter, self-employed, or working part-time. In 2023, you can pay a maximum of 7,056 francs into the third pillar.
I already have a 3a account. Is that enough, or do I need a second account?
Experts recommend having a maximum of 50,000 francs in each account. If you save more, you should open another account. The reason: with multiple 3a accounts, you can save on taxes when withdrawing the money. How exactly? We’ll explain it to you shortly.
How many 3a accounts can I have at most?
There is no legal limit on the number of 3a accounts you can have. You can open as many accounts as you want. Most providers have a limit of five accounts. If you want more 3a accounts, you can spread them across different providers.
Is there an ideal number of 3a accounts?
There is no one-size-fits-all answer to how many accounts are ideal. It depends on how much you can save and at what age you want to withdraw the money. The general rule of thumb is that two to three accounts are ideal.
Why do I save taxes with multiple 3a accounts?
You have to pay capital taxes on the money you withdraw from the third pillar. Although a reduced tax rate applies to pension funds, the rule still applies: the higher the amount you withdraw in one year, the higher the tax rate. Since you can only dissolve a 3a account in its entirety – partial withdrawals are not possible – it makes sense to spread the saved amount across multiple accounts.
Do I have to dissolve all 3a accounts at once?
No, you don’t have to. On the contrary: it makes sense to dissolve the individual 3a accounts one after the other in different years. This staggered approach ensures that you save on taxes.
How should I stagger the withdrawal of my third pillar?
You can withdraw the money you’ve paid into your 3a pillar as early as five years before the official retirement age. If you work beyond retirement age, you can keep your 3a accounts for another five years. How you stagger the withdrawal of your accounts depends on how many accounts you have, how much money is in these accounts, and at what age you want to retire. Generally, it is advisable to dissolve only one account per year.
Can I withdraw my third pillar independently of my second pillar?
Yes, you can, and this is also very advisable. Also for tax reasons: if you decide to withdraw the entire capital from your occupational pension, the second pillar, instead of a monthly pension, you should ensure that you don’t make this withdrawal in the same year as a withdrawal from the 3a pillar.
What should married couples consider when withdrawing from the third pillar?
Married couples in Switzerland are taxed together. This also applies to pension funds. Therefore, it makes sense to make a joint plan on when to dissolve which accounts.
What should I do with my money in the third pillar? Save or invest?
It pays to invest your pension money because your pension assets grow more. Historically, stock markets have yielded returns of up to seven percent annually. Of course, there can be years when you lose money on the stock markets. However, since your pension assets are usually invested for decades, you have good growth opportunities. You don’t have to invest all your assets in stocks. You can also decide to invest part and keep part in your account. Generally, the younger you are, the more shares you can invest in stocks because your investment horizon is longer.
