Pillar 3a

What is pillar 3a?

The two pillars, 3a and 3b, together form the private part of retirement provision. They differ in that pillar 3a is restricted and subsidised by the state, whereas pillar 3b is unrestricted and is not subsidised. This means that as a rule, capital from pillar 3a can only be withdrawn after retirement, while capital from pillar 3b can be freely disposed of at any time.

The purpose of the third pillar is to raise the standard of living of pensioners to the level they enjoyed during their working lives. Pillar 3a is subsidised through tax privileges both during the savings phase and when the lump sum is paid out. The maximum amount subsidised per year is limited by law.

What is a pillar 3a account?

A pillar 3a account is a special type of account that serves only to collect a person’s savings for pillar 3a. Pillar 3a accounts are offered by banks, foundations and insurance companies.

Not all pillar 3a accounts are accounts in the traditional sense that offer a specific rate of interest on the money invested which varies over time. There are also pillar 3a accounts that are similar to a securities custody account and are therefore sometimes referred to as «pillar 3a custody accounts». Pillar 3a assets are not booked in these accounts as cash at a specific interest rate. Instead, the funds are used to buy units in equity, bond, precious metal or real estate funds whose value may rise or fall over time.

Our digital solution from relevate is both a 3a account and a custody account: with us, you can save your pillar 3 assets as a cash deposit at a fixed interest rate (relevate cash strategy) or invest them (additionally) in different funds (the other seven strategies).

What are the benefits of a pillar 3a account?

Those who pay the maximum amount into their pillar 3a account each year can enjoy significant tax benefits that ensure a direct (tax) return on the savings amount.  In addition, there are tax breaks when withdrawing capital at a later date, which means that a private pillar 3a pension scheme can be more lucrative than a purely privately run pension scheme with standard financial products.

Saving in pillar 3a also has psychological benefits. The publicly communicated maximum amount creates an official reference value for the best-case minimum private pension provision per year. Without this figure, it is entirely up to savers themselves to decide how much to put aside.

Furthermore, tying pillar 3a assets to the purpose of retirement provision ensures that pensioners are not tempted to use the money for other purposes and thus jeopardise their standard of living after retirement. Termed «mental accounting», this theory was developed by the American economist Richard Thaler and proven by several empirical findings in the field of behavioural economics.

How do I open an account?

If you have an income subject to AHV contributions, have reached the age of 18 and are not older than 65, you can register with our digital product relevate and open your 3a account quickly and easily in just a few minutes. Anyone who continues to work beyond retirement age can continue to pay into pillar 3a up to a maximum of five years later. In this case, an income subject to AHV contributions remains a prerequisite.

How many pillar 3a accounts are permitted by law?

There is no legal limit on the number of 3a accounts. At relevate, you can open up to five different portfolios. Only the maximum amount paid in across all accounts is limited overall for tax purposes.

When can I withdraw the money?

Pillar 3a can be paid out at the earliest five years before reaching regular retirement age. If employees continue to work beyond retirement age, withdrawal can be deferred for up to five years.