Pillar 3a vs. 3b: the key differences
Pillar 3a or 3b, which form of provision suits you best? Compando compares taxes, flexibility, withdrawal and the combination of both pillars.
1. What is the difference between Pillar 3a and 3b?
Pillar 3a and Pillar 3b together form private pension provision, the third pillar of the Swiss pension system alongside OASI and the pension fund. Both supplement state and occupational pension provision, but follow different rules on lock-up, tax and access.
Pillar 3a is the tied pension. The capital in Pillar 3a is tied to the pension purpose and only becomes available towards the end of your working life. This lack of flexibility is rewarded with tax benefits.
Pillar 3b is the free pension. It covers any pension assets outside Pillar 3a. The capital stays available at all times, but the tax advantage is missing.
In short: For working people, Pillar 3a is the first step: it saves taxes every year and builds up pension wealth. Anyone who also wants to build freely available assets adds Pillar 3b on top.
| Pillar 3a (tied) | Pillar 3b (free) |
|---|---|---|
Purpose | tax-privileged retirement provision | free saving for your own goals |
Who may contribute | working people with OASI income | everyone, even without employment |
Products | 3a savings account, 3a securities, 3a insurance | savings account, securities, funds, life insurance, home ownership |
Tax deduction | deductible from income up to the maximum contribution | no deduction |
Contribution | max. CHF 7'258 per year with a pension fund | no upper limit |
Availability | at the earliest 5 years before retirement | at any time |
Early withdrawal | only home ownership, emigration, etc. | at any time, without conditions |
Beneficiaries on death | statutory order | freely selectable |
2. Pillar 3a and 3b: where is the difference in taxes?
The tax advantage is the biggest difference between the two pillars: Pillar 3a is tax-privileged in every phase, Pillar 3b only at withdrawal.
Tax phase | Pillar 3a | Pillar 3b |
|---|---|---|
Contribution | deductible from income | not deductible |
Assets | exempt from wealth tax | wealth tax applies |
Returns | tax-free | taxable as income |
Withdrawal | reduced capital withdrawal tax | mostly tax-free |
The 3a deduction is capped at the maximum contribution; with Pillar 3b, only individual cantons such as Geneva or Fribourg grant an exception for certain insurance products. If Pillar 3b is paid out as a lifelong annuity, only the flat-rate income share of 40 percent is taxable, whereas a Pillar 3a in annuity form counts fully as income.
Example: Anyone who contributes CHF 7'258 to Pillar 3a lowers their taxes by around CHF 2'200 per year at a taxable income of CHF 100'000. The same amount in Pillar 3b brings no deduction, but is freely available.
Calculate your tax savings personally
Which 3a tax savings result from your income and canton of residence is shown by the tax calculator for all cantons. At middle incomes, an annual saving of between CHF 1'300 and CHF 2'200 arises.
3. Contribution and withdrawal in Pillar 3a and 3b
Contribution: Only working people with OASI-liable income contribute to Pillar 3a, and only up to the annual maximum contribution. Pillar 3b is open to everyone, with no amount limit.
Withdrawal: With Pillar 3a, the capital stays tied until five years before the ordinary retirement age; an early withdrawal is only possible in five special cases: home ownership, taking up self-employment, permanent emigration, drawing a disability pension or buying into the pension fund. Pillar 3b, by contrast, is accessible at any time, with no waiting period. Especially for young families, the self-employed or households with fluctuating income, this free access can be decisive.
4. When is Pillar 3a worth it and when Pillar 3b?
For practically all working people with OASI-liable income, Pillar 3a is worth it: the annual tax deduction is a sure advantage that Pillar 3b does not offer. Even small amounts secure the tax benefit.
Pillar 3b works as a supplement once the Pillar 3a maximum contribution is used up and you also want to invest in securities or build up short-term reserves. For most households, the combination of both pillars is the norm, weighted by income, life stage and liquidity needs.
How much pension wealth Pillar 3a builds over 10, 20 or 30 years is determined by contribution amount, investment strategy and time horizon. You can calculate it directly.
5. Conclusion: the key points on Pillar 3a and 3b
The choice between Pillar 3a and Pillar 3b comes down to three points:
- Taxes: Only Pillar 3a lowers your taxes every year, which is the strongest argument for working people.
- Flexibility: Only Pillar 3b stays available at all times and suits short-term goals.
- Combination: Not 3a or 3b alone, but the right weighting of both pillars gets you there.
Over long terms, the compound interest effect makes the biggest difference. How much of it remains is determined above all by the chosen 3a provider.
Compare Pillar 3a providers
Which 3a provider fits your profile is clarified by the comparison of costs, investment strategy and minimum deposit. Between digital providers and insurance solutions lies almost a full percentage point in fees.
