Understanding the Third Pillar: Voluntary Private Savings and Insurance Plans
June 16, 2023
3 min read
arvy's Teaser: You can't influence the AHV. With the pension fund you have some levers. But Pillar 3? That's entirely yours. How much you contribute, where you invest it, how you withdraw it — all your decision. And that's exactly why Pillar 3 is the biggest financial lever available to you as a Swiss resident. Here's everything you need to know.
Why Pillar 3 Exists: The Pension Gap
AHV and pension fund together should cover roughly 60% of your last income. Most people need 80–90% to maintain their living standard. That gap — 20–30% of your income — is the pension gap. Only Pillar 3 closes it.
On a last income of CHF 120,000, that's CHF 24,000–36,000 per year missing. Over 20 years of retirement: CHF 480,000–720,000.
Pillar 3a vs. 3b: The Difference at a Glance
In short: 3a has the tax advantage, 3b has the flexibility. For most: max out the 3a first, then invest freely.
Pillar 3a in Detail: The Star of the System
The tax saving — your instant win
Tax savings by canton (CHF 7,258, ~30–40% marginal rate)
Zurich: ~CHF 2,200/yr | Bern: ~CHF 2,500/yr | Geneva: ~CHF 2,800/yr | Zug: ~CHF 1,500/yr
Over 35 years (Zurich): ~CHF 77,000 in tax savings — just from contributing.
New from 2026: Retroactive contributions
A game-changer: from 2026, you can make retroactive contributions for missed years from 2025 onwards — up to 10 years back. Huge for anyone with gaps from studies, time abroad, or part-time work.
Savings account vs. invested 3a — the CHF 200,000 difference
(→ 3a Comparison: Bank, Insurance, or App?)
Multiple 3a accounts: The staggering strategy
Withdrawal tax is progressive — the more withdrawn in one year, the higher the rate. Solution: 3–5 separate 3a accounts withdrawn over multiple years. Savings: CHF 10,000–25,000. (→ Tax Optimisation Switzerland)
Pillar 3b: The Flexible Complement
The 3b covers any form of private saving and investing without the 3a's tax privilege: bank accounts, securities, capital life insurance, investment property. For most modern investors, this simply means "investing beyond the 3a" — no maximum, no lock-in, full flexibility. (→ The Power of the Savings Plan)
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 savings
Step 2: Check pension fund buy-ins (if tax-efficient)
Step 3: Everything above: free investing via savings plan
Step 4: Tax savings from 3a → straight into free investing
Example (CHF 100k income): CHF 605/mo 3a + CHF 600/mo free = CHF 1,205/mo.
After 30 years (~6%): ~CHF 1,220,000. Deposited: CHF 434k. Compound interest: CHF 786k.
"The 3a is the only place where you earn returns AND get rewarded by the government. Use it first. Then invest everything beyond it."
The Most Common Pillar 3 Mistakes
❌ Leaving 3a in a savings account — Costs CHF 200,000+ over a lifetime
❌ Signing a 3a insurance policy — High hidden costs, low flexibility, expensive to cancel. Separate saving from insuring. (→ 3a Comparison)
❌ Having only one 3a account — Without staggering, you overpay CHF 10,000–25,000 in taxes
❌ Not contributing the maximum — Every missed year = missed tax savings + missed compound interest
❌ Starting too late — 10 years later costs CHF 150,000–300,000 (→ The True Cost of Waiting)
Take Pillar 3 into your own hands.
Invest your 3a instead of parking it. Start a free investing savings plan. Quality Investing in the world's best companies. Set up in 10 minutes.
Disclaimer: This article is for general information purposes and does not constitute investment advice. Figures are based on 2026 legal provisions and may change. Tax savings vary by canton. arvy is a FINMA-regulated asset manager.
