ša pilar Switzerland

Take advantage of Switzerland’s Pension System by contributing to Pillar 3a

or how not to let money lie idle and boost your pension income

State pension is declining from year to year and this trend will continue, mainly due to demographic changes. For most of us, retirement would mean a significant reducing of living standards. Retirees without their own savings are therefore often forced to work also beyond their retirement age. To prevent this, most countries around the world are trying to encourage their citizens to save for retirement also privately.

Do you wish to live your life to the fullest even in retirement? Saving with pillar 3a can make this dream come true.

In the Czech Republic, there is a state-supported supplementary pension insurance system in place, which is a voluntary extension to the compulsory pension tax.

The Swiss pension system consists of 3 pillars:

1st pillar (AHV) – is the mandatory state pension, it is intended to ensure a subsistence-level income in old age.

2nd pillar (BVG) – occupational pension funds, part is paid by the employer and part by the employee

3rd pillar is made up of pillars 3a and 3b; this is a fully private and voluntary pension provision, to maintain a person’s accustomed lifestyle in old age

You can conclude private provisions in 3rd pillar with banks as well as with insurance companies. You can withdraw your 3rd pillar savings on retirement or no earlier than five years before reaching retirement age (64 for women, 65 for men).

Inflation (currently in the range of 3-6%) decreases the value of money, ie. money on your bank account or on a savings account only loses its value. Investing money in a pension system is therefore the better option.

Advantages of pillar 3a:

● Systematic and regular monthly savings

● Possibility to use the saved amount to buy a residential property or to become self-employed. (Pillar 3a funds can either be withdrawn in advance or pledged for residential property).

● If you take up residence outside of Switzerland, you can withdraw pillar 3a retirement savings in full

● The savings are on your private account and belong 100% to you. All this in one of the safest financial markets in the world.

● You can deposit up to the maximum amount of contributions into your pillar 3a account tax-free in the current year (6883CHF for the year 2021) and deduct them from your income in your tax return in full. Like this you can save around 2000CHF per year on taxes. 

● Insurance companies usually have lower fees than banks and also offer the possibility of additional tax deductions at the so-called Risiko Premie (Life Insurance, Incapacity to work Insurance or Disability Insurance.)

Compared to other savings, the supplementary pension saving 3a guarantees money appreciation in the form of tax deduction. It can therefore be a choice also for those who have free funds, but may not be saving for the pension, yet.

Contact us and discover all these benefits!

Our team flexihelp offers individual comprehensive advice on this subject.