Around half of employees and approximately 40 percent of self-employed people contribute to the pillar 3a. Those who do not want the risks that come with investing in retirement funds simply deposit the money into pillar 3a savings accounts. The main reason people use the pillar 3a to save for retirement is that it is tax privileged.
In order to make sure you benefit from the 2024 tax deduction for money paid into the pillar 3a, it is advisable to transfer the money to your pillar 3a account by mid-December 2024. But which is the best pillar 3a account. To follow up its study of pillar 3a retirement funds and pillar 3a robo advisors, moneyland.ch has now analyzed the interest rates and costs of 94 pillar 3a savings accounts.
Interest rates for pillar 3a savings are also going down
“The sinking overall interest rate levels are visible across pillar 3a accounts as well. The sinking interest rates are taking a toll on retirement savers,” observes Benjamin Manz, managing director at moneyland.ch. The average annual interest rate across all of the analyzed pillar 3a savings accounts is 0.74 percent. Pillar 3a savings accounts have somewhat higher interest rates than regular savings accounts for adults outside of the pillar 3a. “Although interest rates are going down across the board, it is still worth comparing offers. There are accounts with interest rates that are nearly twice as high as the average.”
The difference between the pillar 3a account with the highest annual interest rate (1.4 percent) and the one with the lowest annual interest rate (0.25 percent) is 1.15 percentage points. For large amounts of savings in particular, differences like that can have a big financial impact.
For example, if you placed 50,000 francs in a pillar 3a savings account with a 1.4-percent annual interest rate, you would earn 7458 francs of interest after 10 years, thanks to interest compounding. If you put the same amount in an account with a 0.25-percent interest rate, your money would only earn 1264 francs. This example is based on the assumption that the interest rate would remain the same over the 10-year term. In practice, the interest rates of pillar 3a savings accounts change regularly, but regardless of how interest levels change, the difference between the highest and lowest available interest rate remains large.
The highest pillar 3a interest rates
The highest interest rates are currently offered by Cornèr Banca and Crédit Agricole next bank, with 1.4 percent interest per annum. These are followed by Tellco Bank (1.3 percent) and Radicant (1.25 percent).
Pillar 3a service providers that offer 1 percent interest per annum include Bank Brienz Oberhasli, the Caisse d’Epargne d’Aubonne, Bank EKI, Bank CIC, Bank Zimmerberg, Bezirks-Sparkasse Dielsdorf, Ersparniskasse Rüeggisberg, Hypo Voralberg, Saanen Bank, Swissquote, and True Wealth. Bank Wir also has an above-average interest rate, at 0.9 percent per annum.
Some major banks also offer interest rates for pillar 3a savings that are moderately above the average. These include Raiffeisen (rate recommended by Raiffeisen Switzerland), UBS, and Valiant, all with 0.8 percent per annum. Migros Bank currently pays 0.75 percent interest per year, and Postfinance pays 0.6 percent. You can compare the interest rates of 94 different offers using the interactive pillar 3a savings account comparison.
Pay attention to costs
In addition to interest rates, you should also pay attention to costs. Of the possible fees, many apply to withdrawing or transferring your pillar 3a assets. Early withdrawals can be particularly expensive. That is the case with both pillar 3a savings accounts and pillar 3a retirement funds. Most banks do not charge any basic, ongoing account fees.
If you plan to withdraw your pillar 3a savings before retirement to finance self-employment or buy a home, or when you leave Switzerland, then you should look at the possible fees charged for these withdrawals. Depending on the service provider, an early withdrawal for self-employment can cost up to 250 francs, withdrawals for home financing can cost up to 400 francs, and withdrawals on the basis of emigration can cost up to 1200 francs.
Find the right pillar 3a account
Pillar 3a savings accounts are best-suited to more conservative retirement savers who want to save with the smallest possible risk of loss. They are also suitable for holding pillar 3a assets that you want to or have to withdraw in the near future. The best pillar 3a account is the one that yields the most interest and does not generate additional costs.
On the other hand, if you will only withdraw your pillar 3a assets after 10 years or more, then a stock-based pillar 3a investment solution can potentially yield a higher return than a pillar 3a savings account. Historically, stock market investments have delivered much better returns than savings accounts. “A basic requirement is that you are able to sleep calmly even during periods in which your pillar 3a assets are worth less than the amount you invested,” advises Manz. If you decide to invest your pillar 3a savings, you should use the most affordable retirement fund or pillar 3a robo advisor for your needs. The performance and costs of pillar 3a retirement funds and pillar 3a robo advisors are compared here.
Closing gaps in pillar 3a savings is not yet possible
If you do not contribute to the pillar 3a in 2024, or do contribute but use only part of the pillar 3a contribution allowance, you will not be able to close the gap later on. The Federal Council has decided that closing gaps in your pillar 3a will only be possible from 2026. If you fail to make contributions in 2024, you will not be able to make up for them in another tax year.
Pay careful attention to the latest possible date by which contributions must be paid into your pillar 3a account in order to count towards the 2024 tax deduction. Depending on which bank you use, you may have to make the payments by mid-December, at the latest.
Methodology
moneyland.ch analyzed the interest rates and costs of 94 different pillar 3a savings account offers. The average interest rate was calculated using arithmetic averages, with all accounts being weighted equally. You can find the interest rates and fees of all account offers using the interactive pillar 3a account comparison on moneyland.ch.
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Compare Swiss pillar 3a savings accounts now
Compare Swiss pillar 3a retirement funds now
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