Savings Plan or Pillar 3a? The Right Order
September 6, 2026
5 min read
- Pillar 3a usually comes first. The tax deduction works like an immediate, certain additional return in the year you contribute — something no equity market offers.
- The unrestricted savings plan comes next, but it is uncapped, available at any time and not tied to retirement age.
- It is not either-or. Most households do best by filling Pillar 3a to the maximum and putting everything beyond that into a savings plan.
Pillar 3a is superior on tax. The unrestricted savings plan is more flexible. So the right answer is rarely a choice — it is a sequence.
Anyone starting to set money aside runs into this question quickly: fill the third pillar first, or invest directly in a securities portfolio? Both routes lead to the same equity market. The difference lies in taxation and availability.
01What Pillar 3a does better
The central advantage is the tax deduction. What you contribute reduces your taxable income in the same year. How much that is worth depends on your marginal tax rate and where you live, but the effect is typically a substantial share of the contribution.
That saving is certain. It does not depend on how markets perform, and it arrives immediately. An equity market may exceed such a return over time, but it can never guarantee it.
On top of that, Pillar 3a balances are not subject to wealth tax during the accumulation phase, and income within the solution is not taxed as ongoing income. Tax applies at withdrawal — separately from other income and at a reduced rate.
02What the unrestricted savings plan does better
No ceiling. Pillar 3a is capped at an annual maximum. Anyone wanting or able to invest more needs an unrestricted portfolio anyway.
Available at any time. A savings plan can be reduced, paused or liquidated whenever you like. Pillar 3a balances are locked until a few years before retirement age; early withdrawals are only possible in defined cases such as buying a home, becoming self-employed or leaving Switzerland permanently.
No end date. Pillar 3a balances must be withdrawn. A portfolio can keep running, be partly sold or passed on, without a date forcing your hand.
Free in its use. A sabbatical, further education, a renovation, a year of working less — goals that sit before retirement can only be funded from unrestricted assets.
03The sequence that works in most cases
Step 1
Emergency fund
Three to six months of expenses, instantly available. Without it everything else is fragile.
Step 2
Expensive debt
Clear consumer loans. A guaranteed return equal to the interest rate.
Step 3
Pillar 3a
Up to the annual maximum — and in securities rather than an interest account.
Step 4
Savings plan
Everything beyond that into an unrestricted portfolio: uncapped and flexible.
One point about step 3 that often gets missed: a Pillar 3a held in a pure interest account captures the tax advantage but not the return advantage. Over thirty years the difference between an account and a securities solution is usually larger than the tax deduction itself. If you say 3a, you should also say equity allocation.
04When the sequence does not apply
There are situations where the savings plan moves ahead of the third pillar.
When the money is needed before retirement. Planning a sabbatical in eight years, you gain little from a tax deduction if the capital is locked until 60.
When there is no taxable income. Without income the deduction does nothing — during a career break, for example, or on a very low income. The main advantage of Pillar 3a then falls away.
When the 3a balance becomes very large. Because withdrawals are taxed progressively, a very high balance can create a noticeable tax bill on payout. Staggering withdrawals across several accounts and years softens this — beyond a certain size, unrestricted assets alongside make sense.
05Frequently asked questions
Is Pillar 3a worth it on a low income?
The tax benefit scales with your marginal rate and is correspondingly smaller on low incomes. With very low or no taxable income the main advantage disappears, and an unrestricted savings plan is often the better choice for its flexibility.
Can I contribute to both at once?
Yes, and that is the normal case. The usual approach is to fill Pillar 3a to the annual maximum and direct everything beyond that into an unrestricted savings plan.
When can I withdraw Pillar 3a assets?
Generally within a defined window before ordinary retirement age. Early withdrawal is possible only in specific cases, such as owner-occupied property, becoming self-employed, or leaving Switzerland permanently.
Should Pillar 3a be invested in equities?
With a long horizon there is a strong case for it. A 3a interest account captures only the tax benefit and forfeits a substantial part of the achievable return over decades. Horizon and risk tolerance decide.
How many Pillar 3a accounts should I have?
Several accounts allow staggered withdrawals across different tax years, which dampens progression on the withdrawal tax. How many make sense depends on the expected total and on your canton.
Can I make up missed Pillar 3a contributions?
Retroactive contributions for past years are possible under certain conditions. Because the rules can change, it is worth checking the current provisions before planning around it.
What happens to my Pillar 3a if I emigrate?
Permanently leaving Switzerland is a valid reason for early withdrawal. Withholding tax applies to the payout, at a rate depending on where the pension foundation is domiciled.
Does an ETF savings plan replace Pillar 3a?
No. They do different jobs: Pillar 3a delivers the tax deduction but is locked and capped. An unrestricted savings plan is uncapped and available at any time, but offers no deduction on contribution.
06Keep reading
Overview
Everything about investing regularly with unrestricted assets.
Both at arvy
Pillar 3a in securities and an ETF Savings Plan for unrestricted assets — the same investment logic.
arvy ETF Savings Plan
0.39% management plus 0.06% TER on the world equity portfolio, invested weekly, available at any time.
To the savings plan →This article was written by Thierry Borgeat, co-founder of arvy, and reviewed by Patrick Rissi, CFA, and Florian Jauch, CFA.
Disclaimer: arvy AG is a manager of collective assets authorised by the Swiss Financial Market Supervisory Authority FINMA under Art. 24 of the Collective Investment Schemes Act (CISA). This article is for information purposes only and constitutes neither investment advice nor tax or legal advice, nor an offer or solicitation to buy or sell financial instruments. The calculations shown are model calculations based on the stated assumptions and are not forecasts; they assume a constant return compounded monthly at the stated nominal annual rate. Past performance is not a reliable indicator of future results. Equity investments are subject to price fluctuations; losses up to the total loss of the capital invested are possible. Tax consequences differ by canton and by individual situation — please clarify yours with a professional.
