Pillar 3a (tied pension provision) and pillar 3b (flexible pension provision) have the same basic function: to build up capital for the future and, in insurance solutions, to cover the risks of disability and death. Many insurance companies even allow you to switch a contract from 3a to 3b without signing a new one. Yet the rules behind them are very different, and choosing the wrong one can cost you in taxes or flexibility. Here are the main differences, and how to decide.
The differences at a glance
| Pillar 3a (tied) | Pillar 3b (flexible) | |
|---|---|---|
| Who can pay in | Only people with income subject to AHV | Anyone |
| Maximum contribution | CHF 7,258/year with a pension fund; 20% of income, max CHF 36,288/year without (2026) | No limit |
| Premiums deductible from income | Yes, up to the maximum | No (except a limited deduction in a few cantons) |
| Duration | Until the reference retirement age (up to 5 years longer if you keep working) | Freely chosen |
| Early withdrawal | Only for legally defined reasons | According to the contract, without a specific reason |
| Beneficiaries | Order set by law | Freely chosen |
Taxation
Pillar 3a: premiums are deducted from taxable income, up to the annual maximum. During the contract, the capital is not subject to wealth tax, and interest and returns are not taxed as income. At withdrawal, the capital is taxed separately from other income and at a reduced rate. Spreading withdrawals over several years, with several 3a accounts or policies, can reduce this final tax.
Pillar 3b: premiums are paid from taxed income and, in most cantons, cannot be deducted (Geneva and Fribourg are exceptions, with a limited deduction for certain 3b insurance). During the contract, the surrender value of a 3b life insurance is declared as wealth. In return, the payout of a 3b life insurance with periodic premiums is generally tax-free as income, provided certain conditions are met (for example a minimum duration and the policyholder being the insured person).
Duration and contributions
Pillar 3a is linked to retirement: you can pay in only as long as you have income subject to AHV, and the contract runs until the reference retirement age. If you keep working beyond it, you can continue paying in for up to five more years. Since 2026, those who did not pay the maximum in a year (starting from 2025) can, under certain conditions, make up the missing contributions later.
Pillar 3b has no such limits: there is no maximum contribution, you can pay in even without earned income, and you can freely choose the duration of the contract, for example ten years to finance your children's education.
Early withdrawal
Pillar 3a money is tied. The earliest ordinary withdrawal is five years before the reference retirement age. Before that, it can be withdrawn only in the cases provided for by law:
- buying or building your own home, or repaying the mortgage on it (in principle every five years);
- starting a self-employed activity;
- leaving Switzerland permanently;
- buying into your pension fund;
- receiving a full disability pension from the IV, if the disability risk is not insured.
Pillar 3b follows the conditions of the contract: you can surrender it or take a loan on it without a specific reason. Keep in mind that surrendering an insurance policy in the first years usually means getting back less than you paid in.
Beneficiaries in case of death
Pillar 3a: the order of beneficiaries is set by law (Ordinance on pillar 3a):
- the surviving spouse or registered partner;
- the direct descendants, people who were substantially supported by the deceased, or the partner who lived with the deceased for the last five years or who has to support common children;
- the parents;
- the brothers and sisters;
- the other heirs.
Within some of these groups you can specify the shares or change the order, but you cannot skip the spouse in favour of other people.
Pillar 3b: the beneficiaries can be chosen freely, even outside the family, within the limits of inheritance law. This makes 3b useful, for example, to protect a partner in a recent cohabitation or to provide for a person outside the family.
Who pillar 3b is suited for
- People who already pay the maximum into pillar 3a and want to save more.
- People without earned income subject to AHV, who cannot pay into 3a.
- Those who want maximum flexibility on duration and withdrawal.
- Those who want to choose the beneficiaries freely.
- Those who want a tax-free payout and can do without the annual deduction.
In conclusion: pillar 3a or pillar 3b?
The answer is, as always, "it depends". It depends on your income and the taxes you pay. It depends on whom you need to include as a beneficiary. And above all, it depends on the purpose for which you are saving. For many people the best solution is a combination: a pillar 3a to get the most out of the tax deduction, and a pillar 3b for the extra flexibility.
To find an answer to all these "it depends", it is best to ask for competent advice. That way, with the numbers and facts in hand, you can make the best decision.