MAXIMUM AMMOUNTS

Persons affiliated to a pension fund (generally employees): can make maximum contributions for the year 2023 of CHF 7'056 /year. Those who are not affiliated to a pension fund (generally self-employed): they can make contributions of 20% of their income, but up to a maximum of CHF 35'280/year.

2023 - How much can you contribute to the Pillar 3a?

For tax deduction purposes, the amounts paid into pillar 3a from 01.01.2023 to 31.12.2023 are taken into account. Then, between January and February 2024, you will receive the certificate from the company with which you have concluded the third pillar to attach to your tax declaration. If you have more than one third pillar, you will of course receive a certificate for each contract, but in any case the total may not exceed the maximum deductible for the year 2023. Thus, the sum of the premiums paid to the third pillar 3A will be deducted from your taxable income. If, on the other hand, you are taxed at source, e.g. B permits or cross-border commuters, you will have to apply for Ordinary Additional Taxation (TOU) at the withholding tax office by 31 March of the following year in order to be able to take advantage of the tax deduction.

Deducting the 3rd pillar from taxes

Maximum AHV/IV pension: CHF 2'450 /monthMinimum AHV/IV pension: CHF 1'225/monthBVG entry threshold: CHF 22'050BVG coordination sum: CHF 25'725THIRD PILLAR With second pillar, maximum deductible: CHF 7'056, &nbsp;Without second pillar (max. 20% of net salary): Max. CHF 35'280

Social insurance figures 2023

Terzo pilastro 2023, importi massimi, imposte e assicurazioni sociali

Troisième pilier 2023, montants maximaux, impôts et assurances sociales

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Third Pillar 2023, maximum amounts, taxes and social insurance

Third Pillar 2023

GENERAL INFORMATION

The third pillar is one of the components of the Swiss social security system, along with the first and second pillars. The first pillar represents state provision, is compulsory for everyone living in Switzerland, and is made up of AHV (Old Age and Survivors' Insurance), IV (Invalidity Insurance) and IPG (Compensation for Loss of Earnings) and is intended to guarantee a minimum subsistence level. The second pillar represents occupational pension provision and consists of the BVG, occupational and non-occupational accident insurance, daily sickness benefits insurance and vested benefits institutions. In the collective ideal, it should be able to keep the beneficiary's standard of living unchanged from when he or she was working. But the reality is quite different since, between the first and second pillar, those with full contributions would reach retirement with about 60% of their last income. That is why the third pillar is worthwhile and highly recommended.

Third pillar, its role in the Swiss pension system

The 3rd pillar is not compulsory and it is up to the individual to choose whether to take it out with a bank or an insurance company. It is a security buffer for the future and also for the present. Indeed, in the event of misfortune, i.e. death or disability, those with a third pillar could have an income for themselves and their family. So, it is convenient to subscribe to a third pillar? Absolutely yes. With the 3rd pillar, gaps in the mandatory social security system can be filled. More and more people are deciding to subscribe to a third pillar in anticipation of old age (knowing, however, that they can benefit from it in the event of life transitions such as buying a house, moving abroad or starting self-employment).

The third pillar represents private pension provision

The third pillar is divided into tied pension plan 3a and free pension plan 3b. There are many options, which can be adapted to each individual's needs. Having the third pillar also allows you to save on tax. While the first and second pillars are an obligation, the third pillar is a choice that should be implemented. If you opt for the restricted 3rd pillar pension, you should be aware that the money will be tied up and only in certain cases, such as those mentioned above, can it be withdrawn in advance. If, when taking out a 3rd pillar, you include cover such as a death lump sum or disability pension, your family or the 3rd pillar owner will have financial cover in case of misfortune. Thus, stipulating a third pillar is very important for both employees and the self-employed. The various forms allow capital to be set aside according to availability and there are also upper limits imposed by law. For example, in 2021, an employee who chooses to have a tied pension can pay in a maximum of CHF 6,833 per year. For the self-employed, on the other hand, the maximum is 20 per cent of income, but not more than CHF 34,128 per year. For the unrestricted pension plan there is no maximum.

Tied and free pension provision, the different types of third pillar

A tied third pillar can be taken out with an insurance company or a bank. Which is more convenient? The fundamental difference lies in the 'waiver of premium in the event of disability' cover. If one chooses an insurance company, in the unfortunate event of a disability, even a partial one, the company itself will pay the premiums in the place of the insured, until the time of his or her retirement. The same is not the case with the bank, so when you retire you will only receive what you paid in.

Banking third pillar or insurance third pillar? The difference comes in the event of disability

The insurance third pillar is, in fact, life insurance with capital accumulation, with a financial instrument such as investment funds, indices, certificates, etc. inside it. The way it works is very simple, by paying a monthly premium throughout your working life, you will accumulate a capital that will be paid out to you at retirement age in one lump sum. Each product has its own characteristics. There are products with or without a final guarantee, which focus more on yield, and others that focus more on security. But the choice of one product over another must be made, above all, according to the specificities and uniqueness of each person. It must be said that there is no product that is better or worse than the others, but there are products that respond to a greater or lesser extent to the needs of individual customers. Because the third pillar has to be tailor-made and after a careful analysis of existing covers. In this way, every possible scenario can be foreseen and, if necessary, cover for death and/or disability can be included to protect you and your family.

Insurance third pillar, how does it work?

The third pillar is also tax-efficient. It is in fact deductible from income tax. The deduction of the amount paid into the third pillar affects your taxable income, lowering the rate you use to calculate your taxes. So, having a third pillar also means paying less tax! And when you redeem the capital you will pay income tax at a reduced rate. If you opt for a free pension instead, there are no limits and you can pay into your third pillar as much as you want. Anyone living in Switzerland can take it out. You can redeem the accumulated sum (even partially) whenever you want, so in addition to saving for your retirement, the free third pillar can be designed for well-defined medium-term projects (educating your children, buying a house, for example). The amount paid in is not tax deductible, except under certain conditions, but when you withdraw the sum you will be taxed on your assets and not on your income.

Third Pillar and taxes: what is the relationship?

What if a person dies or becomes disabled? Be careful, because the compulsory social security system does not offer much cover. If you do not have a 3rd pillar, your spouse will not receive a widow's pension unless you fulfil certain requirements, such as having at least one child in common, or being at least 45 years old and married for five years. If, on the other hand, the deceased person has taken out a third pillar and included a death benefit in it, it will be paid to the heirs, thus avoiding many problems. Think, for example, what would happen if, following a death, the spouse could no longer afford to continue paying the mortgage on their house, or the children could no longer afford to continue their university studies? This is why planning for the third pillar in good time becomes crucial. What happens instead in the case of disability? Again, if a disability pension was provided for when the contract was signed, it will be received until the end of the contract (i.e. until retirement). In short, thinking about protecting your loved ones and yourself is strongly recommended when you choose to take out a third pillar, because you are covering situations that you rarely think about but which, if they occur, risk putting everyone in serious financial difficulty. The third pillar is convenient for everyone: including people who are not gainfully employed and perhaps take care of the house and children, but who may find themselves in a state of disability and therefore need money to support themselves and find someone to help them, the very young who do not work and do not enjoy second pillar cover and would therefore receive a minimum pension from the IV in the event of disability.

Protect your family with the third pillar

Certainly, for a worker living abroad and working in Switzerland it is almost even more important, because he/she is unlikely to pay all the contributions to the mandatory pension system. In order to guarantee himself a good standard of living, he has to make up for it with a third pillar. What about tax deductions, in this case source tax? For a cross-border commuter it is only possible to deduct the third-pillar share if he receives 90% of his income in Switzerland, where income means all family income. The biggest advantage for a cross-border commuter, however, is that he has money available after retirement and does not have to drastically lower his lifestyle.

Is it also worthwhile for cross-border commuters to subscribe to a 3rd pillar?

Qu'est-ce que le troisième pilier et à qui sert-il?

Cos’è il terzo pilastro e a chi conviene stipularlo?

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What is the third pillar and who should subscribe to it?

Choosing between an insurance third pillar or a banking third pillar depends, above all, on the purpose for which we do it.
We can say that the most important difference between a bank and an insurance lies in what is called 'waiver of premium in case of disability'.
This cover, typical of insurance companies, means that in the event of disability, the insurance company pays the premiums in your place until the end of the contract (i.e. until retirement age).
A concrete example: Mr Rossi, aged 30, starts today paying CHF 3,000/year with a banking third pillar, while Mr Bianchi, also aged 30, pays CHF 3,000 with an insurance third pillar. Since there are 35 years to go until retirement, we can say that both should arrive at age 65 with a capital of approx. CHF 105,000 (not counting interest, surpluses, etc.). But what happens if they both become disabled only after, say, 7 years? Mr Rossi, who has paid his banking third pillar for 7 years, will receive CHF 21,000 (plus interest) when he retires.
Mr. Bianchi, on the other hand, who paid his insurance third pillar for 7 years, will receive CHF 105,000 (plus surplus evv) when he retires.
This big difference is produced by the waiver of premium payments. This is why, for those who still have many years ahead of them until retirement, the insurance third pillar, or a mix of insurance and banking third pillar, may be the right choice.

Is it better to have an insurance third pillar or a banking third pillar?

Est-il préférable d'avoir un 3ème pilier d'assurance ou un 3ème pilier bancaire ?

E’ meglio un terzo pilastro assicurativo o uno bancario?

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Is it better to have an insurance third pillar or banking third pillar?

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The answer is yes. The third pillar can be used to pay for the renovation of the primary house. Be careful though, because you can only use capital for certain types of jobs.

Can I use the third pillar to pay my home restoring?

The law provides that, within one year of becoming independent, the capital accumulated in the pension fund can be withdrawn.
To do it, you have to registrate your self as independent at the AHV office.
For further information, do not hesitate to contact us  by clicking here

Can I withdraw my BVG capital to start an independent business?

Certainly, if both are employed in the family, both can make a 3rd pillar (3a) and thus take advantage of a bigger tax advantage, as well as bigger security in case of disability or death.

Can both husband and wife make a third pillar 3a?

Of course yes, almost all life insurance policies, like the 3rd pillar, can be pawned and also serve as a credit instrument. In particular, the third pillar is used for indirect amortization.

Can the 3rd pillar 3a be pawned?

Not working, children and students do not enjoy second pillar covers. This is the reason why, in the event of disability, they are considered "early disabled" and will have a benefit only from the 1st pillar, equal to 133% of the full minimum pension, which today is equivalent to CHF 1562 / month.
Early invalidity is a problem that we do not think about (or do not want to think about), but which has very important repercussions on the life of our children and on the economy of the family in general.
However, there are coverages under the third pillar that solve this problem with very low costs, BUT YOU MUST THINK ABOUT IT..

Did you know that children and students are not well covered for disability?

Who stays at home is the real engine of the family and plays a very important role within it.
Just think for a moment of having to hire a full-time person who will wash, iron, cook, tidy the house, bring children to school and their after-school activities and much more.
This is why it becomes very important to cover a wife/husband who is not employed in case of disability and death.
With a very small premium you can give peace of mind to your family in a very difficult time. Think about it.

Is it worth insuring who is not working?

A special feature of insurance.
In the event of death, the beneficiaries of your third pillar will immediately receive the stipulated capital, without waiting for the division of the inheritance.
Furthermore, if the beneficiaries are the legitimate heirs, they will be entitled to the benefit even if they renounce the inheritance

Third pillar successor benefits

There are many factors to consider when talking about death.
When the source of income is lost, the family must adapt to a new lifestyle, cut costs, evaluate if the current mortgage is still sustainable, or if we can still finance the studies of our children.
With a pension analysis, we can answer all these questions and find solutions quickly.

What consequences would my death have for the family?

Depending on your needs and goals, you will choose the type of third pillar that best suits you.
For example, the third pillar 3a, does not allow major changes to the beneficiary clause as a precise order of beneficiaries is already provided by the law.
If, on the other hand, we take out a free third pillar (3b), we will be able to arrange the order of the beneficiaries as we wish.
During a consultancy interview we will go deeper into this important topic.

What is the better beneficiary clause for me?

Indirect depreciation through the third pillar offers us a double advantage. First: it allows us to accumulate the capital that will be used to pay off the mortgage when you retire, deducting the amount paid every year from taxes. Second: by keeping the debt unchanged until retirement (or mortgage expiration), you will have a greater interest charge, which you can deduct for tax purposes. Overall, this system is generally more advantageous than direct depreciation.

Have you already heard about indirect amortization?

Often and willingly there is the belief that, being married, the spouse automatically has the right to receive a widow's pension in case of death. But is not so.
In fact, in the first pillar (AHV), but also in the second pillar (LPP), the following conditions must be fulfilled in order for your spouse to be entitled to a widow's pension.
1) Having 1 or more children, or
2) Be 45 years old and have been married for at least 5 years.
For this reason it is important to understand your situation well through a social security analysis and, if necessary, to put the right remedies through, for example, a taylored third pillar..

Did you know that being married is not enough to have a widow's pension?

Giving our children the opportunity to study in a prestigious university, perhaps even abroad, is the best contribution we can make to their future. Thinking about it in time is worthwhile. By saving small amounts every year, you will be able to accumulate, without effort, the money necessary for education.

Have you already thought about how to finance your children's studies?

We can't know what our children will do when they grow up, but whatever their dream, we parents can support them with an initial capital.
Using a policy to save a portion of family allowances every month, we will create a capital that can be used, for example, for studies abroad, or to start their own business.
The important thing is to think about it in time

Have you ever thought about using family allowances to create savings for your children?

If the bank has not already thought about it when granting the mortgage, you should think about it. In fact, one of the recurring problems in case of death is the fact that the family finds itself with an important debt, no longer having an income. Thinking about it in time is important!

Have you thought about covering the mortgage in case of death?

Not being subject to the 2nd pillar BVG, in case of disability, the independent worker are entitled only to the benefits of the first pillar.
Reason why, taking out a third pillar to cover the risk of disability could be the right choice.
Of course, before taking out a third pillar it would be appropriate to make a social security analysis.

How is a self-employed worker covered in case of disability?

An invalidity due to illness can have negative effects on family finances because, generally, with the coverage provided by law we are not sufficiently insured. The third pillar allows to fill this gap, giving us the peace of mind to overcome moments of difficulty. Through our social security analysis, you will be able to decide whether or not to include, in your third pillar, the coverage in case of disability.

In case of disability, will I still be able to pay the mortgage?

By law, independent workers are not obliged to join the second pillar but, depending on their professional activity and their family situation, it is possible that the BVG offers excellent advantages in terms of tax and coverage.
A social security analysis will answer all your questions.
For further information please do not hesitate to contact us  by [clicking here](/contacts)

Is better the 2nd pillar, or the 3rd pillar for a self-employed?

Death is a sensitive topic, but one that needs to be discussed as soon as possible. In case of the death of one of the parents (or both), our children would receive the benefits for orphans of the 1st and 2nd pillar, up to the 18th year of age (or 25th if they study). But these benefits are often not enough and leave our children in financial difficulty. With a pension analysis, you can predict possible scenarios and take the necessary measures to offer your children a peaceful future.

Parental death, how do I protect my children?

In the event of bankruptcy, your 3rd pillar insurance is not foreclosed and does not flow into the bankruptcy estate.
An important condition is that the beneficiaries of these contracts are the spouse and the children.
This way your family members are 100% protected.

What happens with the third pillar in case of bankruptcy?

There are many solutions to cover the death and, depending on the type of mortgage and amortization, we can choose a policy with constant capital, or with decreasing capital. For example, if you regularly make amortization, the most sensible thing would be to have a policy where the death capital decrease at the same rate as decrease your debt. During a personal consulting you will find answers to this and other topics.>

What type of policy is used to cover the mortgage in case of death?

Choosing between an insurance 3rd pillar or a banking one, depends, above all, on the purpose with which we do it.
We can say that the most important difference between a bank and an insurance is the "WAIVER OF PREMIUM FOR DISABILITY".
This coverage, typical of insurance, means that in the event of disability, the insurance company pays the premiums for you until the contract expires (that is, until the ordinary age of retirement).
A concrete example: Mr. Rossi, 30 yeras old, starts today to pay CHF 3,000 / year in a third pillar banking account, while Mr. Bianchi, also 30 years old, pays CHF 3,000 with an insurance third pillar. Since both have 35 years to retirement, we can say that both should arrive at 65 years old with a capital of CHF 105,000 (not including interest, surpluses, etc.). But, what if they both become disabled only after, for example, 7 years of payments? Well,Mr. Rossi, who has paid his third pillar for 7 years in a bank account, will receive when he retires CHF 21,000 (plus interest).
Mr. Bianchi instead, who paid his insurance third pillar for 7 years, when he retires will receive CHF 105,000 (plus surplus evv)..
This big difference is produced by the WAIVER OF PREMIUM FOR DISABILITY. This is why, for those who still have many years before retirement, the insurance third pillar, or a mix between insurance and banking, could be the right choice. For further information, do not hesitate to contact us by clicking here.

Is better an insurance 3rd pillar or a banking one?

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Third Pillar 2023, maximum amounts, taxes and social insurance

What is the third pillar and who should subscribe to it?

Is it better to have an insurance third pillar or a banking third pillar?

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