Pillar 3 in the retirement system
Switzerland runs a 3-pillar system:
- Pillar 1 (AHV/IV): covers the vital minimum, state-managed, funded by current contributions
- Pillar 2 (BVG): maintains standard of living, managed by pension funds, mandatory for employees
- Pillar 3: complementary individual savings, optional but very tax-advantageous
The overall goal is to reach 70 to 80% of last salary at retirement. Without pillar 3, many retirees fall below this bar, especially after interrupted careers or self-employed paths.
Pillar 3a vs 3b
Two pillar 3 variants exist:
Pillar 3a (tied):
- Maximum tax-deductible contribution (2026: CHF 7,056/year for employees, CHF 35,280/year for self-employed without BVG)
- Capital locked until retirement (or special cases: primary residence purchase, leaving Switzerland, self-employment)
- Reduced taxation at withdrawal (single reduced cantonal rate)
- Beneficiaries defined by law (spouse, descendants, etc.)
Pillar 3b (free):
- No contribution limit
- Capital always available
- No tax deduction (except specific cantonal cases)
- Annual taxation of interest but often at low rate
- Free beneficiary choice (by contract)
3a is the priority envelope to fill. 3b becomes useful once 3a is maxed out or for specific transmission goals.
The tax advantage
The main interest of 3a is its tax deductibility. For an income of CHF 100,000 with a 25% marginal rate:
- Maximum 3a annual contribution: CHF 7,056
- Annual tax saving: about CHF 1,760 (25% of 7,056)
- Over 35 career years: total saving ≈ CHF 62,000
- Excluding compound interest on reinvested savings
The advantage grows with marginal tax rate: a senior executive at 35-40% marginal rate saves more.
Bank or insurance
Two product types offer 3a:
Banking 3a:
- Total flexibility: stop or modify contributions anytime
- No penalty in case of redemption (except pre-retirement withdrawal)
- Possibility to invest in savings account, funds or ETFs
- Transparent fees (often 0.3 to 1% management)
- Ideal for most cases
Insurance 3a:
- Integrated coverage (death, disability)
- Minimum guaranteed capital
- Long-term commitment: high penalty if you stop contributing
- Often high fees (3 to 8% the first year, then 1 to 2%)
- Useful in some specific cases (families with young children, at-risk profiles)
Pragmatic rule: prefer banking 3a and buy life/risk insurance separately for CHF 30-50/month.
Savings account vs fund vs ETF
In a banking 3a, you can allocate between:
- 3a savings account: low interest (0.5 to 1.5%), guaranteed capital, ideal for the last 5 years before retirement
- Classic 3a funds: 30 to 60% equities, fees 1 to 2%, historical performance 3 to 5%/year
- 3a ETF (VIAC, Frankly, finpension): 80 to 100% equities possible, fees 0.3 to 0.7%, historical performance 5 to 7%/year
Over 30 years, the difference between savings account and ETF can exceed CHF 150,000 in final capital. For young people (< 50), 3a ETF is largely preferable.
The multi-account strategy
A little-known optimisation: opening multiple 3a accounts with the same or different providers:
- Each account can be withdrawn separately in different years
- This allows spreading withdrawals over 3 to 5 years from age 60
- Withdrawal tax being progressive, spreading reduces the total bill
- Potential saving: CHF 5,000 to 20,000 depending on canton and capital
From age 50, open a 2nd or even 3rd 3a account and split contributions.
Comparing and choosing
Major players in 2026:
- VIAC: digital ETF 3a, fees 0.52%, allocation up to 99% equities, market leader
- Frankly (Zürcher Kantonalbank): ETF 3a, fees 0.44%, ZKB integration
- finpension: ETF 3a, fees 0.39%, flexible allocation
- TrueWealth: robo-advisor, fees 0.55%, broad ETF range
- Traditional banks (UBS, CS, BCV): classic 3a services, higher fees but personalised advice
A 0.5% annual fee gap represents CHF 30,000 to 50,000 in final capital over 35 years. The choice is not trivial.
