3rd Pillar A or B

Finance, Taxes, Banking, Insurance and Retirement
1
Hello,

Maybe again this topic has been mentioned many times but sometimes we just need compress info in a nutshell.

I am thinking to have a 3rd pillar but i haven't understand much what is the difference between them and mostly if it is better to have it directly through my bank or my insurance.

If i understood right the difference between A and B is in the withdrawal terms and the taxation.

Can somebody give a personal inside and help?

Thanks!

2
A gives you a tax advantage, B none.

I ́d recommend to get an investment Pillar 3 with VIAC, nice performance and much better than the 3A I have at the bank.

3
Pillar 3a: is a bound retirement account. Essentially, you can deduct what you pay in from your taxable income, and on payment the accrued assets get taxed at reduced rate. The downside is that you cannot take out the assets until your pension (or for buying a house, or leaving Switzerland/EU for good, etc).

Pillar 3b: this is essentially your private savings/investments. Nothing to it. Dividends/interest get taxed, capital gains do not.

If you do decide to go for pillar 3a:

- you can either simply hold "cash": i.e. on a interest paying account. However, the interest being paid is laughable these days so unless you want to hold cash as part of your overall investment strategy or are merely banking on the tax savings or are speculating on a market crash I do not believe it is very interesting.

- you can invest varying degrees: there are various options here. Most banks offer pillar 3a investment solutions/funds with varying degrees of investment into shares. Also several banks are offering low-cost ETF based solutions (ZKB -> frankly; WIR Bank -> VIAC). Since pillar 3a generally means that the assets are bound long-term, investing into shares "should" generate higher returns over time (one issue is of course that since payout is more or less upon retirement, you can be faced with payout in a dip). Also, de facto you will be taxed on capital gains (however, this is actually a nice problem to have).

- you can go for a mixed insurance product: I have not really seen the benefit of this.

If anyone is interested re Frankly/VIAC pm me for registration codes which will give discounts/vouchers on the fees (and I get a corresponding benefit.

4
In the case of Viac there is a risk of loosing the money right (according to the plan you have)? The banks have better secure accounts for 3rd pillar?

5
What do you mean? Of course there's a risk of losing money, as with any equity investment (including those held by banks).

6
Finpension is better still in my view. I'd go with 100% MSCI world quality ex-CH

7
If you're interested in opening a 3a account with frankly, I have a voucher code towards the fees (and I get some credit); send me a PM.

8
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9

Where did you find this information? It doesnt make sense that 3b is deductible, since 3b can be withdrawn at any time.

The tax benefits of a 3a are only given because the money has to stay there until one of few conditions (like moving abroad, buying house etc.) is met.

10
I also thought 3b was a bit of a smokescreen, however according to this allianz link there are potentially some tax advantages:

(translation from deepl)

"If you use Pillar 3b for your private retirement provision, you can benefit from tax advantages when paying in larger sums. In order for your Pillar 3b capital, together with the earnings and surpluses, to be tax-free when paid out, the following conditions must be met:

The term must be at least 5 years

The payout may only be made after age 60

The contract must be concluded before age 66"

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12

Funny that they write this, since the 3b is tax free anyway. There are no tax benefits to it (except those that HIAO says exist in Geneve)

3b counts toward your wealth during whole period and above a treshold you pay wealth tax on it obviously

13
There can be some tax benefits:

- as mentioned some cantons allow you to deduct to a limited extent premium payments to Pillar 2 life insurance;

- also if you have insurance with single premium (Einmalprämie) which is for retirement purposes, then the income generated in that insurance (i.e. dividends etc.) is not taxed, when there is an insurance payout. Other types of insurances means that you will need to pay tax on the difference to the premium you paid in ( https://www.fedlex.admin.ch/eli/cc/1...1184/de#art_20 ).