Understanding the Third Pillar: Voluntary Private Savings and Insurance Plans
June 16, 2023
4 min read
arvy's Teaser: You can't control the AHV. With the pension fund you have a few levers. But Pillar 3? That belongs to you. Completely. How much you contribute, where you invest it, how you withdraw it — all your decision. And that's exactly why Pillar 3 is the greatest financial lever you have as a Swiss resident. Here's everything you need to know.
CHF 7,258
3a maximum 2026 — fully tax-deductible
CHF 353,000
Difference: invested vs. savings account (35 years, 5% vs. 1%)
CHF 77,000
Tax savings over 35 years in Zurich
Why Pillar 3 exists: The pension gap
AHV and pension fund together cover around 60% of your last income. Most people need 80–90% to maintain their living standard. At CHF 120,000 income, that means CHF 30,000 missing per year in retirement — over 20 years of retirement: CHF 600,000. Pillar 3 is the only way to close this gap.
Pillar 3a vs. 3b: The difference at a glance
| Pillar 3a (tied) | Pillar 3b (free) | |
|---|---|---|
| Tax deduction on contributions | Yes — fully deductible | No |
| Maximum 2026 | CHF 7,258 (with pension fund) | Unlimited |
| Withdrawal | Earliest 5 yrs before retirement* | Anytime |
| Tax at withdrawal | Capital withdrawal tax (reduced) | Tax-free (capital insurance) |
| Wealth tax | Exempt | Normal taxation |
| Returns tax | Exempt | Normal taxation |
*Exceptions: home purchase (WEF), emigration, self-employment, disability
The short version: 3a has the tax advantage, 3b has the flexibility. For most people: max out 3a first, then use free investing.
Pillar 3a: The star of the Swiss pension system
The tax saving — your immediate reward
Every franc you contribute to 3a reduces your taxable income. The effect is immediate, every year:
Tax savings by canton (CHF 7,258 contribution)
Zurich: ~CHF 2,200/year · Bern: ~CHF 2,500/year · Geneva: ~CHF 2,800/year · Zug: ~CHF 1,500/year
Over 35 years (Zurich): ~CHF 77,000 in tax savings — from contributions alone.
New from 2026: Retroactive contributions
One of the most important recent changes: from 2026 you can make up missed years from 2025 retroactively — up to 10 years back. A game-changer for anyone with gaps from studies, time abroad, or part-time work. (→ Retroactive 3a Contributions Guide)
Savings account vs. invested 3a — the CHF 353,000 difference
Over 60% of 3a assets sit in savings accounts at 0.5–1.5% interest. Invested, returns would be 4–6%. Over 35 years at CHF 7,258/year:
| Option | Final value after 35 years |
|---|---|
| 3a savings account (1% interest) | ~CHF 302,000 |
| 3a invested (5% return) | ~CHF 655,000 |
| Difference | ~CHF 353,000 |
CHF 7,258/year, 35 years. Calculation: FV = PMT×((1.05^35−1)/0.05). Illustration, not a guarantee.
CHF 353,000 difference. Same contributions. Same time. The only difference: invested instead of parked in a savings account.
Multiple 3a accounts: The staggered withdrawal strategy
At withdrawal, a progressive capital withdrawal tax applies. The solution: 3–5 separate 3a accounts, withdrawn staggered over different years. Tax savings: CHF 10,000–25,000.
Pillar 3b: The flexible complement
Pillar 3b covers everything private outside of 3a — bank accounts, securities portfolios, life insurance. No maximum, no lock-in, full flexibility. For most modern investors, 3b effectively means free investing: money you invest in a securities portfolio beyond the 3a maximum.
The optimal strategy: 3a + free investing
The Swiss wealth-building plan
Step 1: Max out 3a (CHF 7,258/year = CHF 605/month) — invested, not in a savings account
Step 2: Check pension fund buy-ins (if tax-advantageous)
Step 3: Everything above: free investing via savings plan
Step 4: Tax savings from 3a → directly into free investing
Example (CHF 100,000 income): CHF 605/month 3a + CHF 600/month savings plan = CHF 1,205/month
After 30 years at 6% return: ~CHF 1,220,000
Contributed: CHF 434,000. Compounding return: CHF 786,000.
"Pillar 3a is the only place where you earn returns AND get rewarded by the government. Use it first. Then invest everything above it."
The most common mistakes with Pillar 3
These mistakes cost tens of thousands
❌ Leaving 3a in a savings account — Costs you CHF 353,000+ over 35 years
❌ Taking out a 3a insurance policy — High hidden costs, poor flexibility
❌ Having only one 3a account — Without staggering you pay CHF 10,000–25,000 excess tax at withdrawal
❌ Not contributing the maximum — Every missed year = missed tax saving + missed compounding
❌ Starting too late — Starting 10 years later costs CHF 150,000–300,000
Frequently asked questions about Pillar 3a and 3b
What is the difference between Pillar 3a and 3b in Switzerland?
Pillar 3a is tied: max. CHF 7,258/year (2026), fully tax-deductible, withdrawal only from age 60/65. Pillar 3b is free: no maximum, no tax deduction, accessible anytime. For most people: max out 3a first, then invest freely.
How much tax do I save with Pillar 3a?
At the maximum contribution of CHF 7,258 (2026) and a marginal tax rate of 30–40%: CHF 1,500–2,800 in annual tax savings. Over 35 years in Zurich: around CHF 77,000. The exact saving depends on canton, municipality, and income level.
Should I leave my Pillar 3a in a savings account?
No — that's the most expensive mistake. Over 35 years the difference between a 1% savings account and a 5% invested 3a is around CHF 353,000 (at CHF 7,258/year). Always invest your 3a in securities, not leave it in a savings account.
How many 3a accounts should I have?
Ideally 3–5 separate accounts. At withdrawal a progressive capital withdrawal tax applies — the more you withdraw in the same year, the higher the tax rate. With 3–5 accounts you can withdraw staggered over several years and save CHF 10,000–25,000 in taxes.
Can I make retroactive Pillar 3a contributions?
Yes — new from 2026 for missed years from 2025 onwards. You can make up gaps from the past 10 years (as far as they arise from 2025), fully tax-deductible. You must first contribute the regular maximum for the current year.
What is the Pillar 3a maximum in 2026?
CHF 7,258 for employees with a pension fund. For self-employed without a pension fund: 20% of net income, up to CHF 36,288. The full amount is deductible from taxable income — saving typically CHF 1,500–2,800 in taxes per year.
Take your Pillar 3 into your own hands.
Invest your 3a instead of leaving it parked. Free investing via savings plan. Quality investing in the world's best companies.
Open Pillar 3a | Start savings plan» Compare 3a providers: Bank, Robo or arvy?
Disclaimer: General information only. Figures based on 2026 legal provisions. Tax savings vary by canton. arvy is an asset manager supervised by FINMA.
