Invest Pillar 3a: account or securities?
On the Pillar 3a account your retirement money loses purchasing power over the years. Compando shows from which investment horizon securities pay off, how high the risk actually is and for whom the account nevertheless remains the right choice.
1. Is it worth investing your Pillar 3a?
Over long periods yes. The reason, however, does not lie where most people suspect. A classic Pillar 3a account yields 0.1 to 0.6 percent interest today. Measured over decades that sits below average inflation. Your capital does grow, but prices rise faster. What you withdraw in 30 years buys you less than it would today.
A securities solution instead puts the retirement money into investment funds. These are either actively managed or track an index passively, mostly through institutional index funds rather than exchange-traded ETFs. You are not buying individual shares but units in a broadly diversified fund of equities and bonds, with some strategies also holding real estate.
Example calculation: you pay in the maximum amount of CHF 7'258 for 30 years.
Solution | Assumed return | Capital after 30 years |
|---|---|---|
Pillar 3a account | 0.3 % | around CHF 227'000 |
Securities | 4 % | around CHF 407'000 |
Securities | 6 % | around CHF 574'000 |
Between the account and the securities lie around CHF 180'000 to 347'000. You pay in the same amount in all three cases. The difference is made by the compound interest effect.
Calculate your retirement capital with your own figures
Enter your contribution and investment period. The wealth calculator shows you what final capital is possible with an account and with securities.
2. Account or securities: which is better?
The expected return tells you why securities pay off. Whether they belong in your Pillar 3a is decided by your investment horizon. It determines whether you can sit out a market decline or whether you have to sell at the wrong moment.
- Under 10 years: the account
- 10 to 15 years: consider a mixed solution
- Over 15 years: securities pay off
This rule holds only as long as the money actually stays put. Two circumstances therefore speak for the account despite a long horizon:
- A planned withdrawal. Anyone using Pillar 3a in the next few years for home ownership or the step into self-employment needs the money on a fixed date. A market decline in the wrong year then costs real money.
- A need for security that you know about. Not everyone can withstand a 20 percent decline without selling. Anyone who does not trust themselves with that runs more calmly with the account and does nothing wrong.
If neither applies, the long term speaks for securities. The tax deduction stays the same either way, because it follows the contribution and not the form of investment.
3. How high is the risk when investing?
How strongly your capital fluctuates is determined by the equity share. With a high share the value can temporarily fall by 20 to 30 percent. Historically, recovery phases followed such declines. That is not guaranteed.
Equity share | Risk | What this means |
|---|---|---|
up to 25 % | low | small fluctuations, yield clearly above the account rate |
25–50 % | medium | noticeable fluctuations, yield grows with the holding period |
over 50 % | high | strong fluctuations, only sensible with a long horizon |
The 50 percent limit is not arbitrary. It is set out in Art. 55 OPO 2. Pension foundations may exceed it but have to justify doing so explicitly. That is exactly what providers do who offer equity shares up to 95 or 99 percent. Such solutions only suit you if you can genuinely withstand a large decline. The loss risk then lies above that of a conventional pension solution.
The longer the investment period, the lower the risk, because more time remains for recovery phases. Over an investment horizon of 15 years and more, temporary setbacks could historically be made up again. The greatest real loss is caused not by the market but by selling at the bottom. That is why your equity share should match your investment horizon and not your daily mood.
4. Conclusion: who benefits from securities in Pillar 3a
Securities pay off for working people who bring three things together: an investment horizon of 15 years or more, no planned withdrawal in that time and the calm to sit out a 20 percent decline. If one of these is missing, the account remains the right choice.
If all of it applies, an early start weighs more than any later increase in contributions.
Example calculation: a 26-year-old primary school teacher from the canton of St. Gallen pays CHF 300 a month into Pillar 3a, for 39 years until retirement. With a securities solution and 4 percent return she arrives at around CHF 337'000. In a Pillar 3a account at 0.3 percent it would be around CHF 149'000. The difference of around CHF 188'000 comes from the form of investment alone. That it turns out so large is down to the 39 years of running time.
Large contributions are not needed for this. Retirement capital also builds up over the years with small amounts. Anyone wanting to invest their money by ecological criteria will find sustainable variants at many providers. What counts is that you start early.
Compare account and securities directly
Which 3a solution suits you on costs, equity share and minimum deposit is shown by the direct comparison of all Swiss providers.
