Pillar 3a returns: how much is realistic?
How much return does my Pillar 3a really bring? Compando shows which return is realistic, how heavily the fees eat into it and why Pillar 3a pays off even without a return.
1. How high is the return in Pillar 3a?
Between 0.1 and 6 percent a year. Where you land in that range is decided by two things: the equity share of your solution and the fees of your provider.
Solution | Return per year (after fees) | Fluctuation |
|---|---|---|
3a account (0 % equities) | 0.1–0.6 % | none |
Defensive (25 % equities) | 2–3 % | low |
Balanced (45 % equities) | 3–4 % | noticeable |
Ambitious (80 % equities) | 4–6 % | high |
Both columns rise together. A higher equity share raises the chance of a return over the long run, but also the fluctuation and the risk of loss. A solution that delivers the one without the other does not exist.
- 3a account: a variable interest rate without price fluctuation. Your balance never falls, but your provider can lower the rate at any time. Over decades the rate sits below inflation, and your money loses purchasing power.
- Securities: your money goes into equities, bonds and other asset classes. The chance of a return rises, in exchange you will see a lower balance in bad years.
Which equity share you choose is set by your investment strategy. Whether securities pay off for you, however, is decided by your investment horizon and not by the return figure. Anyone who needs the money within a few years does better with the account despite the low interest.
2. How heavily do fees reduce the return?
Half a percent more in fees sounds like little. Anyone paying in the maximum amount loses around CHF 32'000 over 30 years because of it.
The reason: the fee is not charged once but every year. It reaches into your entire capital, including the returns of previous years. The larger your capital grows, the larger the amount the provider deducts from it.
On total costs, providers lie far apart:
- Digital providers: 0.3 to 0.5 percent a year
- Classic bank solutions: 0.5 to 0.8 percent
- Insurance solutions: up to 1.2 percent
Example calculation: a 34-year-old graphic designer from Aarau pays in the maximum amount of CHF 7'258 for 30 years. Her funds earn 4.5 percent gross return. With the cheap provider, 0.5 percent in fees leaves 4 percent net; with the expensive one, 1 percent in fees leaves 3.5 percent.
Total costs | Net return | Capital after 30 years |
|---|---|---|
0.5 % | 4.0 % | around CHF 407'000 |
1.0 % | 3.5 % | around CHF 375'000 |
Half a percent of difference costs her around CHF 32'000. She pays in the same amount, carries the same risk and ends up with more than four annual contributions less in her account.
What counts is therefore the net return after fees, not the gross return. Cheapest are passive index funds and ETFs, more expensive are actively managed investment funds. What the individual providers charge is set out in their fee schedules. With an existing insurance solution, review the policy on top: on top of the fund costs come acquisition and risk premiums there, which cannot be captured in a single cost ratio.
Which provider costs you the least return?
Total costs, equity share and minimum deposit decide your final capital. The direct comparison shows all Swiss 3a solutions side by side.
3. How much capital can I build with Pillar 3a?
With the maximum amount and 4 percent net return over 30 years: around CHF 407'000. Almost half of that comes not from your contribution but from the return.
Period | Paid in | Final capital | Of which from return |
|---|---|---|---|
10 years | CHF 72'580 | around CHF 87'000 | around CHF 15'000 |
20 years | CHF 145'160 | around CHF 216'000 | around CHF 71'000 |
30 years | CHF 217'740 | around CHF 407'000 | around CHF 189'000 |
The share from returns does not grow evenly. After ten years, barely 17 percent of your capital comes from the return; after thirty years, almost half. This compound interest effect needs one thing above all: time. Twenty years of investing therefore bring not double what ten years bring, but just under two and a half times as much.
An early start weighs more heavily than a large contribution. The more years remain until retirement, the greater the share from returns. Anyone starting with small amounts benefits from the same effect, as long as the contribution arrives regularly.
For context: the 4 percent in this calculation is an assumption after fees, but before inflation. What you will actually be able to afford in thirty years is decided by the real return after the loss of purchasing power. It lies noticeably lower.
What final capital grows out of your contribution and your investment period is shown by the wealth calculator.
4. Conclusion: is Pillar 3a worth it even without a return?
Yes. Even if the market delivers nothing, the tax deduction remains. Every contribution into Pillar 3a lowers your taxable income, no matter whether the money sits in the account or in securities.
At an income of CHF 70'000 and the maximum amount, the tax deduction brings CHF 1'000 to CHF 2'000 a year. Your canton of residence decides where in that range you land. Over 30 years this adds up to CHF 30'000 to CHF 60'000. On top of that:
- The capital stays exempt from income and wealth tax during the term
- On withdrawal a capital withdrawal tax applies, though separately from your other income and at a reduced special rate
This withdrawal tax comes off your saving again. Since it lies well below your normal tax rate, a clear advantage remains in the end.
Three things move your final capital the most: starting early, choosing low fees and using the tax deduction every year. The fees and the tax deduction are entirely in your hands. The early start costs you nothing, but only works once the market delivers. Whether it delivers is decided by neither you nor your provider.
How much tax does your contribution save?
Income and canton of residence determine your personal saving. The tax calculator shows it for every canton and every contribution.
