If you’re a seasoned bargain hunter, you’ll be absolutely delighted about what we have to say here! You can save money not only when making purchases but also – rather counter-intuitively – when paying your taxes. Under pillar 3a, your savings can be as high as four figures. You might know that there are two types of product within the third pillar and that, as with anything in life, there are pros and cons associated with each.
If you’re on the lookout for tax perks and other benefits, pillar 3a or «tied» pension savings might be good options for you. Here, however, you have to bear in mind that you’ll only be able to access the savings after you retire, so no earlier than the age of 60. However, in some special situations, you can get hold of the cash held in your pension pot early. Are you full of beans and plan to carry on working after you reach retirement age? If so, you can wait before drawing a pension and keep making payments into your third pillar for as long as you continue working. Just one detail though, for the record: there is a maximum limit specified by law for pillar 3a contributions, which you’re not allowed to breach.
Are you not that bothered about tax advantages, and do you value freedom above all else? If that sounds like you, take a look at pillar 3b or «unrestricted» pension savings. This means you can stay as flexible as a circus acrobat, as you can access your savings at any time and also freely chose the amount you’d like to save.

Reach for the stars

The best news ever: your annual pillar 3a contributions can take a large chunk out of your taxable income. Here, the operative principle is «more is more»: the more you pay in, the more you can save as the lower your taxable income becomes. If you always pay the maximum amount into your pillar 3a account, you can cut your tax bill by a maximum of 2’000 CHF per year.
Yuh also gives you the option of investing your pillar 3a cash in securrities. Thanks to our five investment strategies, which we have carefully fine-tuned for you, you can not only save tax, but also benefit from strong returns over the long term. And, for good measure, you’ll also benefit from the effect of compounding interest.

Can anyone pay into a pillar 3a account?

Unfortunately, not anyone. The gates of the Kingdom of Pillar 3a are only open to people working in Switzerland who earn more than the minimum threshold for old-age and survivors’ insurance (OASI) contributions. The rules applicable to employees and self-employed workers differ slightly, as there are two different maximum thresholds:
  • Employees covered by an occupational pension scheme can invest up to 7’056 CHF in pillar 3a every year (figure valid for 2023).
  • Or if you’re not a member of an occupational pension scheme (in which case, you’re most likely self-employed) you can pay in as much as 35’280  CHF (figure valid for 2023).

There’s saving, and then there’s saving

Your pillar 3a pension plan is absolutely unique – just like you. The amount you’re able to set aside as savings ultimately depends on not insignificant considerations, such as your income, assets, family circumstances and where you live, and needs to be set individually for each person.

Two examples:

Unmarried person

Stella (28) is unmarried, works as a lawyer at an insurance company and lives in Zurich. She has an annual taxable income of 100’000 CHF. She spends of all her money on the good things life has to offer, such as holidays and clothes. As a result, her savings account is normally empty at the end of the month. Now, however, she has decided to start saving for a pension to make sure she doesn’t have any financial worries in old age. She decides to pay the maximum amount into her pillar 3a each year (7’056 CHF). By reducing her income by this amount, Stella achieves an annual tax saving of 1’850 CHF.
Taxable income: 100’000 CHF
Pillar 3a deduction: 7’056 CHF
Taxable assets: 0 CHF
Place of residence: Zurich
Religion: none
Tax saving: around 1’850 CHF
(Source: Postfinance Tax Savings Ready Reckoner)

Four-person family

Gregory (36) and Verena (34) live in the Seefeld district of Zurich, are married and have two small children. Both of them work part-time and their joint taxable income is 100’000 CHF. This four-person family can just about make ends meet with these salaries, thanks to affordable housing from a cooperative association. Although there’s nothing left over to save, it’s always been very important for the family to squirrel away the maximum amount into pillar 3a. By reducing their joint income, the family achieves an overall annual tax saving of 1’600 CHF
Joint taxable income: 100’000 CHF
Pillar 3a deduction for the whole family: 7’056 CHF
Taxable assets: 0 CHF
Place of residence: Zurich
Religion: none
Cumulative tax saving for both together: around 1’600 CHF
(Source: Postfinance Tax Savings Ready Reckoner)

Withdrawal tax? Keep calm and carry on saving

Over the years, you’ve ended up setting aside a really tidy amount. It’s time to make a withdrawal, but the tax man is already knocking politely on the door. In this case, he wants withdrawal tax. The amount of this tax differs from canton to canton. But don’t panic! As a rule, the amounts you’ve saved in tax over the years will be higher than the withdrawal tax due at the time you extract your funds.
Here, we can give you an extra tip for the road: you can, and should, open more than one pillar 3a account over the years. Experts recommend having 2 or 3 accounts. That means that you can close down the accounts gradually, while at the same time significantly reducing your overall tax burden over multiple tax periods.
The important thing to know is that money invested in a pillar 3a account is only subject to income tax or withdrawal tax once. And when you think about it, this makes sense: the higher the payout, the more tax you pay. For example, if you withdraw 50’000 CHF in 2021, and then another 50’000 CHF during each of the following two years, that’s generally more advantageous than taking out the full 150’000 CHF in 2021 (unless you’re an unmarried man without any children living in the Canton of Zurich). If married couples or registered partners withdraw their pillar 3a retirement savings during the same tax year, the amounts are cumulated and then taxed together. Exceptions apply, depending upon the canton.