What is the Third Pillar?

3rd pillar savings

What is the Third Pillar?

The 3rd pillar is basically the tool we have to integrate the 1st pillar (AHV) and the 2nd pillar (BVG), in order to have a better pension situation. Since the Swiss social security system was designed to reach retirement with around 60% of our last income, the third pillar becomes essential if we want to maintain the same standard of living.

Section 1 of the OPP3 ordinance illustrates two acknowledged pension schemes: a. 3a pillar pension contract concluded with the insurance institutions; b. 3a pension pension agreement concluded with the banking foundations..

What the law says: BVG OPP3

To whom are pillars 3a and 3b intended. And what are the maximum contributions?

The third pillar 3a is intended for people who works, whether employed or independent, and allows the following maximum contributions (in tax deduction): Persons affiliated to the 2nd pillar BVG (generally employees): can pay contributions of CHF 6'826 / year

Those who are not affiliated to a 2nd pillar BVG (generally independents): can pay contributions equal to 20% of the income, but up to a maximum of CHF 34'128 ​​/ year.

Pillar 3B, on the other hand, is intended for everyone, workers and non-workers, and has no restrictions on the premium to be paid. This is the form of retirement planning used for savings that are not necessarily intended for retirement, such as fund your children's studies. In this type of policies, risk benefits can also be included, for example, to cover in the event of disability or death the person who is not working (for example, a housewife).

Types of Third Pillar, differences between bank and insurance

Here is a table showing the three types of third pillar (3B Insurance, 3A Banking and 3A Insurance), the reference options and the relative possibilities between bank and insurance.
Download the complete table: click here..

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