A self-determined life in old age requires private provisions arranged as early as possible. The third pillar represents a big step towards financial security. While the funds you invest in pillar 3a are tied up over the longer term, you are free to use the capital in your pillar 3b. Swiss Life answers the most important questions related to this topic.
What is pillar 3b?
Pillar 3b is an element of private provisions and, together with pillar 3a, constitutes the third pillar of the Swiss pension system. These are the three pillars:
- 1st pillar: state benefits (AHV)
- 2nd pillar: occupational provisions (pension fund or BVG)
- 3rd pillar: private provisions, made up of pillar 3a and pillar 3b
As distinct from pillar 3a (tax-qualified provisions), pillar 3b is not tax qualified, which means that it is not bound to retirement and can be used for medium or long-term savings objectives.
You can choose from a large pool of provisions solutions. All assets that are saved voluntarily are counted towards pillar 3b, among them equities, securities, properties or even vintage cars. Life insurance also frequently serves as additional security for the period following retirement.
What are the key types of investment?
Key types of investment are:
- a savings account
- investment funds
- structured products
- insurance policies
What are the advantages of pillar 3b?
If you rely solely on 1st and 2nd pillar pension benefits, you will only be able to count on around 60 percent of your last income in retirement. Annuity benefits are therefore not to be underestimated. Pillars 3a and 3b help you maintain your accustomed standard of living even after retirement, and to close any gaps in coverage you may have.
Additional advantages of pillar 3b:
- Anyone residing in Switzerland can pay into a pillar 3b.
- You determine how to use your pillar 3b savings.
- You may freely designate a beneficiary.
- You may freely choose when it is paid out.
- There is no maximum annual deposit.
Do I enjoy tax advantages with pillar 3b?
Although you do not enjoy the same direct tax advantages as with pillar 3a, there is an upside:
Depending on the type of investment you choose, there are a variety of rules and conditions. Capital-sum insurance with a surrender option, for instance, offers tax benefits. While you cannot deduct the deposits from your taxes and the surrender value is taxed as an asset during the term, at payout the entire amount is tax free, including all earnings, provided you have complied with legal conditions.
Who offers pillar 3b?
You can conclude private provisions in pillar 3b with banks as well as with insurance companies. If you opt for an insurance solution, you benefit from supplementary cover in the event of death or disability.
It isn’t easy to find the retirement provisions that are just right for you. The range of 3b solutions available is large and you should certainly make your selection based on your situation in life. How old are you? What shape are your finances in? Are you fit and healthy? Although these are small details, they can play a major role in your choice of product.
You have various options when it comes to selecting a deposit type: would you prefer to make periodic (e.g. monthly) fixed payments? Or have you received an inheritance and want to invest a larger lump sum (one-time policy)? Your risk appetite also plays a role. Would you prefer a low-risk investment that may generate lower profits, or would you like to take a greater risk and thus possibly earn more?
Swiss Life offers both insurance and bank solutions. Would you like for example to benefit from modern savings insurance with guaranteed benefits and potential returns? In that case we recommend Swiss Life FlexSave Uno.
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Swiss Life FlexSave Uno: Dynamic savings with a guarantee
Not only does Swiss Life FlexSave Uno offer a guaranteed minimum payout, it also presents attractive earnings opportunities. In years when the stock markets perform well, there may be additional gains due to participation in the index basket.
Make more from your money
We offer you a range of attractive solutions for your asset accumulation – with or without coverage. Our consultants will help you identify the solution that suits you. Why not sign up to a professional financial planning session?