Pillar 3b: flexible pension provision Switzerland
What is Pillar 3b?
Pillar 3b flexible pension schemes are part of private pension provision. Together with Pillar 3a, they form the third pillar of the Swiss pension system. Pillar 3b is called flexible or non-tied pension provision because it is not tied to taking retirement. This means that the term and pay-out date can be freely selected. So a Pillar 3b scheme gives you the flexibility to either minimize your pension gap in old age or aim for medium to long-term savings targets. In addition, anyone can pay into Pillar 3b, whether employed or not.
Paying into Pillar 3b
Pillar 3b is not subject to any maximum annual contribution. You decide whether you wish to make a one-off payment of a larger sum into Pillar 3b, or whether you prefer to put aside some cash on a monthly basis. You can also decide for yourself how much risk you want to take: Do you prefer an investment involving little risk, but also less opportunity for gains? Or would you rather invest in securities involving greater risk, but also offering the prospect of greater gains? You determine the degree of risk yourself. You also have the choice of saving with or without insurance cover. The latter has the advantage of allowing you to insure yourself, your family or even your business partner against death or incapacity for work. Apart from the compulsory shares, you can choose the beneficiaries yourself.
Pay-outs from pillar 3b
Unless there are any contract-specific minimum terms, you can determine the timing of your capital pay-out yourself. A partial advance withdrawal is also possible. However, with Pillar 3b savings, you not only make financial provision for your old age, but also protect your family in the event of your death. You can also insure yourself against incapacity for work with a 3b pension solution.
Tax advantages under Pillar 3b
Unlike Pillar 3a contributions, payments into Pillar 3b cannot be deducted from your taxable income. Your Pillar 3b savings balance must be declared as an asset for tax purposes. However, the pay-out is tax-free provided all the following conditions are met:
- the policyholder has reached age 60 at the time of the pay-out,
- the contract was concluded before reaching age 66,
- the contract term is at least five years and
- the policyholder and the insured are one and the same person.
