Pillar 3a Accounts: 8 Key Tips

The tax-privileged pillar 3a is widely used by residents. According to an evaluation by Switzerland’s Federal Tax Administration, around half of all employees and around 40 percent of self-employed residents use the pillar 3a.

These tips from moneyland.ch can help you choose the right pillar 3a account.

1. Do not underestimate the compounding interest effect

There are big differences in the amount of interest you earn at different pillar 3a account providers. Some banks pay much less interest than other banks. Because the amounts held in pillar 3a accounts are often large, low interest rates can have a strong negative impact. Because of the compounding interest effect, your account balance grows much stronger when you earn interest at a higher rate.

Example: You contribute 6000 francs per year to the pillar 3a over a 20-year period – a total, combined contribution of 120,000 francs. If the annual interest rate was consistently 1.4 percent, your account balance would be 139,000 francs at the end of the 20-year term. If the annual interest rate was 0.25 percent, you would have a much lower 123,200 francs in your account at the end of the term. In the first case, you would earn 19,300 francs of interest, compared to around only 3200 francs in the second case. Note: These simplified examples do not account for changes to your interest rates throughout the term.

2. Pay attention to the costs

Typically, there are no ongoing basic account fees for pillar 3a accounts. Depositing money into a pillar 3a account is also normally free of charge.

But there are certain services for which you may be charged fees. Depending on your account provider, you may have to pay fees for these activities:

• Closing your account.
• Moving your assets to a different pillar 3a provider.
• Early withdrawals to finance a home.
• Early withdrawals when leaving Switzerland.

If you want to be free to move your assets to a different pillar 3a provider in the future without penalties, then you choose an account that does not have any fees for moving your assets.

You can find detailed information in the guide to possible pillar 3a costs.

3. Optimize your tax savings

New money deposited in a pillar 3a account can be deducted from your taxable income. The higher your income is, the bigger the tax savings are. The tax savings are also bigger if you live in a municipality with high taxes, compare to low-tax municipalities.

In 2024, you can contribute a maximum of 7056 francs to the pillar 3a as an employee (2025: 7258 francs). If you are self-employed or employed but do not have an occupational pension fund, the limit is an amount equal to 20 percent of your income, up to a maximum of 35,280 francs in 2024 (2025: 36,288 francs).

You can find detailed information in the guide to pillar 3a tax savings.

4. Only contribute money that you do not need

Money that you contribute to the pillar 3a remains blocked for a long time. Normally, you can only withdraw your money five years before you reach retirement age, at the earliest. That means you generally have to wait until your 60 years old before you can access your money. Withdrawing money before you reach that age is only possible in clearly defined exceptions for early pillar 3a withdrawals.

Avoid putting too much of your savings into the pillar 3a. It is advantageous to also have a sufficient emergency fund outside of the pillar 3a. Ideally, your emergency fund should be kept in a regular savings account that you can access whenever you need to.  

5. Get informed about pillar 3a retirement funds

In most cases, pillar 3a contributions are a long-term investment. Typically, many years pass before the money is withdrawn from the pillar 3a. Over very long periods of time, retirement funds normally yield much higher returns than the interest you earn from pillar 3a accounts.

It is important to understand that the value of retirement funds can go up and down over time, and there is always a risk that you could lose money. That makes retirement funds a poor choice if you have a hard time dealing with fluctuations in the value of your pillar 3a savings.

When considering retirement funds, you should also get informed about the fees charged by the fund (the total expense ratio or TER). You should also look at possible fees for buying and selling shares in the fund, and custody fees for holding your fund shares.

You can find more information in the guide to choosing a pillar 3a retirement fund and the guide to online pillar 3a asset management services.

6. Consider alternative pillar 3a providers

Conventional banks are not the only service providers to offer pillar 3a accounts. Independent retirement foundations and online pillar 3a asset management services also offer pillar 3a accounts. In many cases, these alternative pillar 3a accounts have beneficial terms and conditions, so it is well worth it to include them in comparisons.

moneyland.ch offers a practical, interactive pillar 3a account comparison.

7. Compare interest rates regularly

The interest rates of pillar 3a accounts can change on an ongoing basis. That is why, once you have a pillar 3a account, it is still worth it to compare current offers from time to time. If you find a more favorable offer, you can move your pillar 3a assets to that provider in order to earn higher interest. Always make sure to check whether your existing bank or the prospective new bank charges fees for this kind of transfer.

You can always find the current highest-yield offers using the moneyland.ch pillar 3a account comparison.

8. Open more than one pillar 3a account

It is a good idea to open several pillar 3a accounts. You can generally open multiple pillar 3a accounts with the same service provider.

Pillar 3a accounts normally have to be cashed out in full. You cannot withdraw just part of the money. By dividing up your pillar 3a savings between many different pillar 3a accounts, you get more flexibility because you can withdraw smaller amounts as needed. You can also spread out the withdrawals over different tax years.

More on this topic:
Compare Swiss pillar 3a accounts now
Useful tips for using pillar 3a retirement funds