The 3rd Pillar in Switzerland: What Exactly is it?
When discussing retirement or pension provision in Switzerland, the AHV (1st pillar) or pension funds (2nd pillar) usually come to mind. These are two systems that are not chosen by individuals: they depend on our status (married, divorced…), our employer, or our salary.
The 3rd pillar, also known as individual pension provision,
It allows you to:
✔︎ save money in the long term,
✔︎ reduce your taxes,
✔︎ prepare for a project (buying property, starting a business, leaving Switzerland permanently, etc.).
And this is not insignificant: when used well, a 3a can yield much more than a simple savings account.
The key is to understand how it works, who it’s useful for, and when it’s truly worth getting started.
The Three Pillars Explained Simply
The Swiss system is based on three levels of pension provision:
| Pillar 🇨🇭 | Type | Objective | Who Contributes? | Mandatory? |
| 1st Pillar (AHV/IV) | Public | Cover Basic Needs | Everyone (via contributions) | ✔︎ Yes |
| 2nd Pillar (OPA) | Occupational | Maintain Standard of Living | Employee + Employer | ✔︎ Yes (if employed) |
| 3rd Pillar (Individual Pension Provision) | Private | Supplement Retirement and Optimize Taxation | Optional | ✘ No |
📌 Only the 3rd pillar depends on you: you can make personalized choices, adjusted to your income and plans.
3a or 3b: Don’t Confuse Them
Individual pension provision (3rd pillar) comes in two formats:
| Type | Tax Deductible? | Funds Locked? | Common Use |
| 3a (Tied Pension Provision) | ✔︎ Yes, up to CHF 7,056.– (or CHF 35,280.– if without 2nd pillar) | ✔︎ Yes, except for special cases | Retirement, real estate purchase, business creation |
| 3b (Free Pension Provision) | ✘ No, except in Geneva and Fribourg (very limited amount) | ✘ No | Free Savings |
📌 Pillar 3a is the only one that offers concrete tax advantages.
What Pillar 3a Concretely Offers
Pillar 3a is the most well-known form of the 3rd pillar. It is a retirement savings account with tax advantages, but certain rules need to be known:
– Tax deduction: up to CHF 7,258 in 2025 if you have a second pillar pension plan (up to CHF 36,288 otherwise, e.g. for self-employed persons).
– Long-term returns: possibility of investing your 3a (in shares/ETFs) rather than leaving your money idle in a savings account.
– Achieving retirement goals, buying property, starting a business, leaving Switzerland, etc.
– The capital is locked in until 5 years before the legal retirement age (with some exceptions).
– Taxed withdrawal: the capital is taxed at a reduced but progressive rate upon withdrawal: the higher the amount withdrawn at one time, the higher the tax rate. This is why it is advantageous to open several 3a accounts and spread withdrawals over several years.
Should You Start Now?
Yes, in the vast majority of cases, the sooner the better.
Each year without a contribution is:
- a lost tax opportunity (up to several hundred or thousand francs),
- one less year of return if you invest your 3a,
- and a weakened compounding effect in the long term.
Even with a modest income, contributing a few thousand francs often results in an immediate net gain, especially once you exceed a tax rate of 15%.
📌 The earlier you start, the more powerful 3a becomes.
Only exceptions: if you are not yet taxed, or if you plan to move abroad in the short term.
Not always. But in many cases, yes, because the immediate tax gain can offset the lock-up restrictions.
Here are some typical cases:
| Profile | Benefit of 3a |
| Young Employee | ✔︎ To save early & maximize compounding effects |
| Self-employed/Freelancer | ✔︎ Very useful, as there’s no 2nd pillar → higher contribution limit |
| Potential Homeowner | ✔︎ 3a can serve as a down payment for purchase |
| Part-time Spouse | To be checked based on income and expenses |
Yes. And it’s recommended for reducing tax upon withdrawal. By withdrawing over several years, you avoid excessively high taxation in a single instance.
Even with a modest income, the tax deduction remains proportional. If you are taxed at more than 20%, contributing CHF 3,000 can reduce taxes by CHF 600 or more.
3a Account Comparison: Bank, Insurance, or Investment Platform?
There are three main types of products for investing your 3a. However, their performance, flexibility, and fees vary significantly:
| Product Type | Example | Estimated Return | Flexibility | Fees | Protection | Suitable Profile |
| Bank Account | UBS, Postfinance, Raiffeisen… | Low (<1%) | ✔︎ Flexible withdrawal according to law | ✔︎ Low | ✔︎ Deposit Guarantee (up to CHF 100,000) | Short-term, zero risk |
| 3a Insurance | AXA, Swiss Life, Helvetia… | Medium (1–2%) | ✔︎ Flexible withdrawal according to law | ✘ High (1–2%) | ✔︎ Death Coverage | Family / Inheritance Goals |
| Invested Funds (ETFs) | Viac, Zak, Finpension, Frankly, Yuh, etc. | High Potential (5–7%) | ✔︎ Flexible withdrawal according to law | ✔︎ Low (0.2–0.5%) | ✘ No protection against potential losses | Long-term savings, tax optimization, and returns |
Yes. And it’s often more profitable in the long term than a traditional 3a savings account. But it involves some short-term risk.
The Right Choice Depends on your Goal
- You want no risk and are aiming for a near-term real estate purchase? → A 3a bank account might be enough.
- Are you looking for family security? → A 3a insurance with death coverage might be relevant, despite the fees.
- Do you want to optimize your long-term savings? → A 3a investment solution (ETF) via a mobile app is often much more profitable.
In %%curreentyear%%, pillar 3a solutions are much more transparent: each platform clearly displays its fees, offers automated management and allows you to track your savings at any time.
To help you make an informed decision
See the ranking of third pillar accounts in Switzerland in 2026.
