Third Pillar for cross-border commuters
Why does it make sense?
The Swiss pension system is designed to reach retirement, in the best case scenario, with 60% of the last income. But beware, only those with full contributions (44 years of first pillar and 40 years of second pillar) will receive that percentage.
So if, like the vast majority of cross-border workers, you started working in Switzerland after the age of 21, you will certainly have a lack of contributions, and therefore the percentage compared to your last income will certainly be lower.
That's where the third pillar comes in to fill those gaps and secure your future.
How does the third pillar work for cross-border commuters?
It is a product linked to investment funds where you will pay in the amount you have chosen each month and thus, throughout your working life, accumulate a capital that will be paid out to you in one lump sum at retirement age.
The third pillar used for cross-border commuters allows you to choose and include up to 10 investment funds (from a list of more than 100) and also change them during the year. Therefore, the choice of investment funds is of paramount importance and must be tailor-made for each person.
Being a 3rd pillar with an investment fund component, and having multiple funds to choose from, the product is well suited to both prudent savers and those seeking a higher return. But to have a third pillar that fully satisfies you, competent advice is a must when setting up the strategy.
The 3rd pillar for cross-border commuters, as a supplementary pension, is private and voluntary, and therefore needs to be set up taking into account the benefits of the 1st and 2nd pillars, adjusting it as life circumstances change.
For example, the premium can be increased or decreased according to the evolution of your income.
Protect your income and your loved ones
The third pillar is not only a retirement savings, but also a security cushion for the future as well as the present.
In the event of disability, in fact, it activates a cover called 'premium waiver', which makes the company take over your premiums until retirement age, ensuring that you arrive at your goal with peace of mind whatever the circumstances.
In addition, those with a 3rd pillar may choose to include a disability pension to compensate for lost income, or a death lump sum to protect your family.
For example, death cover is important for those who have a mortgage to pay, or who want to guarantee their children the money they need to finance their studies, even in the worst case scenario.
But to do this, it is clear that you first need to know your current first and second pillar benefits.
Quick questions and answers
1) Is the third pillar flexible? Yes, for example you can adjust premiums and investment funds at any time.
2) If the funds go bad, could there be losses? Yes, and that is why you have to rely on competent advisors like ours.
3) Is it worthwhile to make a third pillar with a duration of more than 65 years of age? NO (except in very specific cases), so be wary if you are offered a third pillar for a longer duration.
4) Can I keep it even if I no longer work in Switzerland? Of course you can, you can continue your plan, perhaps adjusting your premium to your new situation.
5) Are there any penalties if I withdraw or cancel it early? Yes, there are penalties during the first 5 years in case of withdrawal/cancellation.
6) Is it true that you can deduct withholding tax? Yes, if you choose a Pillar 3a, but under certain conditions. Consult us for more information.
How to recognise good advice?
Here are a few points to look out for if you are about to conclude a third pillar:
1) Is the intermediary you are dealing with registered with the FINMA intermediary register?
2) Can the intermediary explain to you in detail the composition and functioning of the investment funds?
3) Did you choose the investment funds together?
4) Was it explained to you that in addition to gains, there may also be losses?
5) Was the offer made taking into account your current Pillar I and Pillar II cover?
6) Did the intermediary give you the full offer and enough time to evaluate it?
Why choose Thirdpillar.ch for your third pillar?
1) We are neutral and impartial, and in us you will find frank and honest advice.
2) Our advice is highly specialised, and you can also get it via video call.
3) We use state-of-the-art analysis software.
4) At Thirdpillar.ch every customer is unique, and we only offer tailor-made solutions to ensure your satisfaction.
5) We give our customers as much time as they need, so no stress.
Related articles regarding this theme
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The Three-Pillar System in Switzerland
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What benefits have cross-border commuters in making a third pillar in Switzerland?