Pillar 3a is an important component of the Swiss pension system. It offers attractive opportunities to provide for old age, save taxes and build wealth in the long term. But how exactly does Pillar 3a work? And is it worth it for you as an expat? In this article, I will explain everything you need to know, including practical examples and tips on how you can make the most of Pillar 3a.
What is Pillar 3a?
Pillar 3a is part of the Swiss three-pillar pension system, which is designed to ensure your financial security in old age:
First pillar (AHV): State old-age and survivors insurance.
Second pillar (BVG): occupational pension provision (pension fund).
Third pillar: Private pension provision, which is divided into the tied pillar 3a and the free pillar 3b.
Pillar 3a is tied pension provision . This means that you can only access the money you have saved during the savings phase under certain conditions, for example when you purchase your own home, start self-employment or leave Switzerland permanently.
What makes them special?
Tax advantages: Your contributions are tax deductible (up to CHF 7,258 for 2025 with pension fund).
Capital growth: Interest and earnings remain tax-free until you withdraw the money.
Individual design: You decide how you want to invest your money in Pillar 3a.
Investing with Pillar 3a
Many people do not know that within Pillar 3a you can not only save in a classic pension account, but also invest in investment products such as funds or ETFs.
Options for Pillar 3a
Pension account (classic):
Similar to a savings account, but with a better interest rate than regular bank accounts.
Ideal for security-oriented savers who do not want to take any risks.
pension funds:
Your money is invested in funds that consist of stocks, bonds and other assets.
Higher return opportunities, but also higher risk.
Individual ETF portfolios:
More flexible investment options that you often find with online providers.
Ideal if you want to invest long-term and profit from the stock market.
💡 Tip: The younger you are, the more risk you can take – and the more return you can achieve.
Example:
Assume you pay CHF 6,000 into Pillar 3a every year.
With a classic pension account, your capital grows over 10 years with an interest rate of 0.5% to approximately CHF 61,500.
However, if you invest in a fund with an average return of 5%, your capital could grow to over CHF 75,000 – a significant difference!
You can find out more about this in my post about Pillar 3a and the various investment options 👉 [Insert link to post].
Is Pillar 3a worthwhile for expats?
The attractiveness of Pillar 3a depends largely on how long you want to stay in Switzerland.
Example 1: Planned length of stay – 5 - 10 years
If you plan to leave Switzerland after about 10 years, Pillar 3a still offers some advantages:
Tax deductions : You can deduct up to CHF 7,258 (2025) from your taxable income each year and thus save taxes annually.
Early withdrawal : When you leave Switzerland permanently, you can withdraw the capital you have saved.
Challenge:
If you move to a country with higher tax rates or to a country without a double taxation agreement with Switzerland, it may be less attractive from a tax perspective as the capital may be taxed again in your new country of residence.
👉 Conclusion: Pillar 3a is particularly worthwhile if you want to maximize the tax benefits during your stay and plan the tax situation in the destination country well.
Example 2: Planned length of stay – 20 years
If you want to stay in Switzerland for 20 years, Pillar 3a becomes even more attractive:
Long-term capital accumulation : You can build up considerable retirement capital over two decades through regular payments.
Additional interest and tax-free income : Your capital grows thanks to interest and remains tax-free during the savings phase.
Challenge:
If you move to another country after 20 years, you should check the tax implications of withdrawing the capital.
👉 Conclusion: After 20 years, Pillar 3a will become a strong pillar of your retirement provision. The tax advantages outweigh any possible disadvantages when withdrawing it later, especially if you plan ahead.
Example 3: Planned length of stay – Forever in Switzerland
If you plan to stay in Switzerland permanently, Pillar 3a unfolds its full potential:
Maximum tax savings : The annual deductions add up to significant tax savings over decades.
Additional retirement provision : You build up a solid pension cushion that supplements your AHV and pension fund.
Flexibility in old age : You can use the capital flexibly for home ownership, travel or other projects in retirement.
Challenge:
No significant disadvantages as long as you keep the tax-privileged capital accumulation in Switzerland.
👉 Conclusion: For expats who want to stay in Switzerland permanently, Pillar 3a is one of the best options for retirement provision.
How to withdraw capital from Pillar 3a – Forever in Switzerland
You can withdraw the money you have saved at the earliest five years before the AHV retirement age. In special cases, such as emigrating or buying a home for your own use, early withdrawal is possible.
💡 Attention: When you withdraw the capital, it is taxed at a reduced rate, which varies depending on the canton. If you move to another country, additional taxes may be payable in the destination country.
Summary: How to make the most of Pillar 3a
Take advantage of tax benefits through annual contributions.
Invest your money in funds or ETFs to achieve higher long-term returns.
Plan your stay and move carefully to minimize tax disadvantages.
Pillar 3a is a powerful tool for your financial independence - regardless of whether you stay in Switzerland for 10 years, 20 years or forever. With the right strategy, you can save taxes, build wealth and secure your future. 🌟
📩 Questions? In my workshops we go into this topic in more detail. Register and find out how you can individually optimize your pension provision!
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