Start thinking of retirement before you’ve even finished your studies? That’s a tall order. After all, students typically need every cent for tuition charges, rent or a new laptop. Nevertheless, should students also be setting aside private provisions, so that they can lead a self-determined life 50 years down the road? Swiss Life sheds light on the matter.

Pasta with ketchup or cornflakes but no milk? To prep or to party? Go to class or crash out? Typical questions students ask themselves. For many budding academics, however, retirement provisions play a much less important role. After all, they’ve barely dipped their feet into the big pond of everyday career life – and they should already be thinking of retiring? 

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The fact is that post-employment benefits from the first and second pillars cover only around 60 percent of one’s last income. Deposits in pillar 3a help maintain the accustomed standard of living even after retirement, resulting in a self-determined life.

Another advantage is that pillar 3a need not necessarily be used for retirement provisions. It is normally possible to withdraw money from pillar 3a as early as five years before reaching the AHV retirement age. However, there are special cases in which it is possible to withdraw money early. These include becoming self-employed, financing an owner-occupied home or moving abroad – dreams that many young students and employed people, among others, might like to see come true some day.

But when is the right time to start saving? Are students even allowed to pay into pillar 3a?

Who is entitled to do so?

Any resident of Switzerland may pay into pillar 3a as long as they have occupational income subject to AHV contributions. The maximum contribution for gainfully employed persons with a pension fund is set in 2019 at 6826 francs. Gainfully employed persons without a pension fund may not pay in more than 20 percent of their income (max. 34 128 francs) in 2019.

This also applies to students. If they earn an income subject to AHV contributions when working part time or in an initial professional capacity while studying, they are also entitled to pay into pillar 3a.

When should I begin making deposits to pillar 3a?

As a general rule, the sooner you begin making deposits to pillar 3a, the better.

There is no “right” time to start. You should determine it individually, in accordance with your own life situation. It is also worth paying even small amounts into pillar 3a. If you set just a small sum aside each month, you can nevertheless benefit from high profit rates and already look forward to tax savings, because deposits into the third pillar can be offset in your tax declaration. With a budget plan you can determine how much money is available to you for monthly savings.

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After your studies: part-time employment and private provisions?

Some students want to work part time at first once they’ve finished their studies, for many different reasons: family planning, to have more time for hobbies or to ease their way into the working world.  

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When it comes to private provisions, we recommend that those who begin work in part-time jobs also make regular third pillar payments – even if they are only small amounts.

Image source: iStock, bernardbodo


Provide for the future with 3 pillars

The three pillars of the Swiss pension system help you build your assets up over the years and decades – for when you’re older, if you become disabled or if you die. We can help you look forward to a self-determined future.

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