Old Pillar 3a insurance: cancel or keep?

1. Is my Pillar 3a insurance still worth it?

Whether your Pillar 3a insurance is still worth it comes down above all to the saving share and the costs. With some 3a insurance policies, up to 30 percent of the annual premium flows into risk protection and administration instead of into the saving share.

These five figures show how well your policy still stands today:

• Saving share: how much of the premium actually goes into wealth building
• Cost structure: level of acquisition and administration costs over the term
• Interest: current performance compared to securities solutions
• Double coverage: whether the risk protection runs parallel to the pension fund
• Flexibility: whether premiums, strategy and term can be adjusted

Without this check, it remains unclear whether your Pillar 3a still fits your own pension goals and whether another solution makes more of your contributions.

2. What are the pros and cons of a 3a policy?

A Pillar 3a insurance combines saving with risk protection. That brings its own advantages, but also disadvantages compared to a pure account solution.

Good to know: Many classic 3a insurance policies include disability or incapacity benefits. With an employer change or rising income, the pension fund often takes over this protection. The risk component is then effectively paid twice instead of increasing the saving share.

3. Why does a 3a insurance often leave less in the end?

Many insured people wonder why less wealth is left with their 3a policy than expected, despite regular contributions. The main reasons are costs, guarantees and the chosen form of investment. As a result, the final capital over long terms often turns out considerably lower than with a low-cost securities solution, which in return carries the market risk.

Example calculation: A 36-year-old carpenter from Obwalden pays CHF 7'258 per year into a classic 3a policy with 0.5 percent interest. He has 29 years remaining until retirement:

The difference arises from the compound interest effect over 29 years, not from higher contributions. The higher return potential of securities is offset by a market risk, while the policy offers guaranteed capital. Which bank or insurance solution fits your own profile depends on your need for security, the costs and your desired return.

4. What should I consider when surrendering a 3a policy early?

The surrender value is the amount that remains when the policy is dissolved. In the first years it is often 20 to 40 percent below the premiums paid in, because guarantees and amortised acquisition costs are lost. The calculation is regulated in the Insurance Contract Act (ICA); contract year, provider and original guarantees determine the concrete value.

In Pillar 3a, however, a cancellation usually means no cash payout, because the capital is tied. Two ways are common:

• Make the policy paid-up: you stop paying in, the balance stays in the policy and barely keeps working on the market.
• Transfer the surrender value: the balance moves tax-neutrally into another 3a solution such as a 3a account or a securities solution and is invested further there.

An actual Pillar 3a withdrawal with reduced capital withdrawal tax is only possible under the statutory withdrawal reasons, such as home ownership, self-employment, emigration or retirement.

Common mistakes when cancelling:

• Cancelling hastily: guarantees and surrender value not checked
• Ending the policy without analysis: double coverage recognised too late
• Leaving the balance idle: not transferred after being made paid-up, although another 3a solution could bring more return

Not every policy should be cancelled. Often making it paid-up, reducing the premium or a parallel 3a account is more sensible than a complete cancellation.

5. When is it worth switching the Pillar 3a insurance?

With a remaining term of 15 years, a switch can make over CHF 50'000 difference in final capital, and with 30 years considerably more through the compound interest effect. If the remaining term is short or the guarantee benefits are strong, continuation often prevails instead.

Young insured people with a long remaining term benefit most from a switch. Older insured people with good pension-fund coverage or an appreciation of classic solutions do well to continue. Anyone who switches finds account, securities and app solutions among today's Pillar 3a providers.

More on the transfer process

Cancel and switch Pillar 3a

How the transfer of a 3a solution between bank, app or insurance runs step by step, which deadlines apply and which constellation fits your situation. Compando accompanies the entire process.

6. Conclusion: cancel, keep or switch?

Keeping a 3a policy can make just as much sense as a switch or a cancellation. Decisive above all are the remaining term, the protection need and the surrender value.

• Keep: with a short remaining term, a high surrender loss or still-needed risk protection
• Switch: with a long remaining term, a low saving share and protection already covered elsewhere
• Cancel: only after checking the surrender value, guarantees and tax consequences, usually in favour of a more flexible solution

Cancelling hastily often costs more than it brings. Only a neutral check of your policy shows which path fits your pension situation.

This article was first published on 07/05/2026