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The Swiss pension system is based on the so-called 3 pillar principle. The 3 pillars support each other and even offer scope for tax savings! Today we would like to discuss which pillars are mandatory and which are voluntary, or how they are structured. Because the pension gap in the Swiss pension system is not underestimate why we are focusing particularly on the pillar 3a issue.
If you have any more questions on the topic, we look forward to an exchange in the comments!
The Swiss 3 column system is strongly under pressure. Because more and more older people are to be financed by fewer and fewer younger people in the pension scheme. Personal responsibility is very important to us, as it is in Swiss pension provision. Today you will learn how to optimize your pension provision and save taxes even now. Let us start with an overview of the 3-pillar principle.
The first pillar in the 3-pillar principle of Swiss retirement provision is the state pension scheme. Employed persons are considered to be liable to pay contributions from the age of 18. Are you studying or do you still have no income at this age? For those who are not gainfully employed, the obligation to pay contributions applies from the age of 21. Missing contribution years can lead to a considerable reduction of the AHV or IV pension. The first pillar is intended to secure your existence in old age and consists of
"Intelligent people learn from the mistakes of others".
We have compiled our top selection for you from all our tests and experience reports:
The 1st and 2nd pillar combined cover approximately 30% - 60% of the last wage received. Why the range is so wide here and how to cover the remaining part, we will discuss later. The 2nd pillar is borne half by the employee and half by the employer.
The second pillar covers the following points for employed persons:
By the wayIf you are not gainfully employed or self-employed, for example, you are not compulsorily insured in the 2nd pillar!
The 3rd pillar in the 3-pillar principle can almost be seen as the "golden" pillar in the pension system. Because it is voluntary, it lowers our taxes and we can freely choose with which of the providers we implement it. There are savings and insurance solutions in all shapes and colors. Sustainable pension is also already offered, as well as attractive digital solutions for up to 98% share. Especially for young people with more than 10 -15 years until retirement, this is extremely exciting! The 3rd pillar completes the 3 pillar principle and offers us the possibility to close our pension gap. Especially for high earners this gap is otherwise quickly 50% - 60% compared to their last income.
Within the 3rd pillar there are, by the way, pillar 3a and pillar 3b.
Pillar 3a - tied pension provision for employees subject to AHV: It serves as a retirement provision, but can also be used to finance a mortgage or your self-employment. What is paid in can be deducted from your taxable income.
Pillar 3b - Free provision for all: Pillar 3b can be used to expand the financing of your own retirement on an even broader basis. Various savings and investment solutions as well as insurance solutions are available to you here.
The state and occupational pension schemes do not manage to guarantee a 1001TP1 coverage of your pension. As a Schwiizerfranke reader you probably already take care of your financial situation and invests already. But in the 3rd pillar you can do the same and even save taxes! For example, if you use Frankly or the pillar 3a option from Selma, you can easily invest in securities (for example in shares and precious metals) and can deduct the paid-in capital from tax. To further increase your motivation, let's take a look at the pension gap.
You earn 80,000 CHF per year? Then without the 3rd pillar you will only receive 60% of your last salary in your pension. If you earn more, say 120,000 CHF per year, you will only receive 40% of your last salary. So 60% you either don't need anymore or hopefully compensate with the 3rd pillar.
Where do you stand in the graph?
Source: https://www.raiffeisen.ch/
We have explained the 3 Pillars Principle Switzerland simply, but how do you use this information for yourself?
Of course, you can go into more depth everywhere, but the most important "learning" in this article should be that you are not necessarily covered by all 3 pillars. Rather, they depend on your employment situation and the 3rd pillar is entirely voluntary. In order to be able to close the pension gap and even save taxes, we strongly recommend pillar 3! For this purpose, we have provided you with Pension area our top selection and further knowledge.
Do you have any more questions or suggestions on the subject of prevention?
Leave us a comment there!