The Third Pillar: Use the maximum amount of linked provision for tax optimization
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State, company and private pension schemes: This is the basis of the three-pillar principle of Swiss pension provision. But since the 1st and 2nd Pillars are not sufficient to maintain the standard of living, everyone has to make provision for themselves. In particular, people who spend their fortune on retirement stand to benefit from tax privileges in the third pillar. Up to the maximum amount of contributions paid into Pillar 3a are deductible from taxable income. The benefits for you will depend on your employment, your income situation and your assets. Make an appointment at MoneyPark and take advantage of our independent advice to build the best retirement plans for you.
Saving with control of the Third Pillar to the maximum amount of the Pillar 3a
In order to save Third Pillar tax, the maximum amount of Pillar 3a is used. In 2023, this amounted to CHF 7056 for employees subject to AHV who are affiliated with a pension fund. Anyone who is subject to AHV but does not belong to a pension fund can contribute a maximum of 20 percent of the net income to Pillar 3a. For these people, the maximum amount of the 3rd pillar is CHF 35'050 (in 2023).
With the deposit certificate from the bank foundation or the pension insurance, the tax liability can be correspondingly reduced up to the amount of the maximum amount for the past year. Value increases are also tax-privileged as they are free of income, capital and tax. Only a reduced tax rate is applied to capital or pension payments. This is determined by the municipality or by the Canton.
A similar scheme does not exist in Pillar 3b. In contrast to Pillar 3a, it is not funded by the state. In free provision, there are, therefore, no tax exemptions. In the case of life insurance, for example, in certain situations, contributions can not be deducted from the tax liability, the capital is subject to total taxation, and income is also subject to income tax. Payouts are also subject to tax. You can always have your own capital at your disposal.
Payments to the Third Pillar begin early and take place regularly
Payments in the Third Pillar are not regulated. When you deposit the contributions, you are governed by the relevant agreements with a bank, bank foundation, insurance provider or another financial institution. For example, it is customary to transfer the agreed contributions monthly to the retirement account or to the pension fund. An automatic adjustment of the contributions is often included, since each year in November the maximum amount of the Third Pillar is fixed. If you pay early, you can increase your wealth faster by the effect of the compound interest rate.
In Pillar 3b, you can also deposit your contributions regularly by direct debit. The monthly transfer has the advantage that you can plan your budget in advance. Depending on the individual situation, however, an annual deposit is also beneficial, for example, when the dividends of your equity portfolio are distributed or you receive a bonus from your employer. You can also benefit from a long-term deposit in free retirement. Since Pillar 3b is not subject to a maximum amount within the Third Pillar, you can make the deposit according to your financial situation.
Build wealth with MoneyPark beyond the maximum amount of the Pillar 3a
You usually start with the payments to the Third Pillar when you become a professional. As soon as you have your own income, which is subject to AHV, you can start to fill the third pillar up to the maximum amount of Pillar 3a and Pillar 3b. With MoneyPark, you will find the right solution for every aspect of your life. Make an appointment for a consultation and together we will determine the best strategy to maintain your standard of living in old age, financially safeguard your family and save taxes.
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