- Pension planning
- 3rd Pillar
- Pillar 3a
Pillar 3a pensions:
A comparison is crucial
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Everyone would like to make additional pension arrangements in order to maintain a good standard of living in their later years and thus to enjoy a well-earned retirement to the full. As regards pillar 3a regulated pensions , many Swiss already provide for their retirement and secure tax advantages. However, it’s not only the tax benefits which are important but also the investment return. And here, even a few fractions of a percentage point can make a significant difference. So when investing in pillar 3a, a comparison is therefore essential to find the optimum form of retirement provision.
Pillar 3a: The tax advantages of saving for your retirement
Private pension provision pays off in several ways. Not only does it allow you to accrue a decent amount of retirement capital, pillar 3a also offers tax savings, because pillar 3a pension contributions payments can be deducted from your taxable income (up to the pillar 3a statutory maximum amount). Depending on the rate at which your personal income is taxed, this can significantly reduce your annual tax bill. According to the form of investment you choose, your bank or insurance company will issue a certificate for the previous year's contributions, which is then attached to your tax return. You can use a pillar 3a online calculator to assess your personal tax savings and see just how much tax you could save. You can find all the information about contributions on our pillar 3a information page.
Tied pension planning: Insurance versus bank
The pillar 3a scheme can be used by anyone who is insured under the AHV scheme, or who is self-employed. There are different options available under pillar 3a regulated provision. One approach involves arranging your pension provision with Swiss insurance companies in the form of a life insurance and a disability insurance. Another approach involves setting up a regulated pension agreement with a bank in the form of a pension account. Mixed life insurance, for example, is one of the most popular forms of pillar 3a investment, though it is by no means always the best option. The ideal pension package is always governed by personal factors and should focus primarily, though not exclusively, on the investment return achieved via the pillar 3a interest rate. Other elements such as fees, investment terms and minimum deposits can also be decisive in any pillar 3a comparison. Thus, it is always worth checking exactly how a life insurance option compares with pension provision under a bank scheme.
Small fractions can make a big difference
Even the smallest decimal fractions can have a huge impact on long-term returns. Thus, it may well pay to make regular comparisons of your pillar 3a pensions. This allows you to focus on the best offers and switch between different forms of pension provision as well as different providers of savings accounts. In addition, if you can afford to do so, you should always make payments into pension accounts at the beginning of the year. Because of the way compound interest is calculated, this is the most efficient way to ensure you maximize your investment return and thus your final capital sum.
A professional consultation for a pillar 3a comparison
The investment options available to arrange pillar 3a regulated pension provision are extremely diverse, and each will have its own advantages and disadvantages. Voluntary private pension provision under pillar 3a, therefore, requires a comprehensive and diligent process of comparison. At MoneyPark, we can offer you independent advice from our team of pension- and financial experts and help you find the optimum retirement solution. Simply arrange an appointment with a MoneyPark consultant in your area.
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