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- Pension planning
- Third pillar
- Pillar 3b
Close the gaps in your retirement provision with a 3b pension
Unregulated 3b pension provision under the third pillar of the Swiss pension system is a unique and purely voluntary method of accumulating a capital reserve. In particular, it serves to close, or at least minimize, any gaps in your retirement pension provision, so that you can maintain your standard of living as you grow older and can enjoy a retirement free from worries about financial restrictions. Depending upon the financial options chosen, pillar 3b could theoretically cover all your pension requirements, as well as offering additional financial security in respect of incapacity for work and as regards provision for your survivors in the event of your death. Even though pillar 3b is unregulated (i.e., it is possible to withdraw your accumulated balance prior to reaching retirement age), such schemes are nevertheless designed for long-term investment and are not intended to be a means of short- or medium-term investment.
Supplementary pension provision under the Swiss three-pillar scheme
The Swiss model of retirement provision is based on a three-pillar principle, which is intended to cushion the financial consequences of age, death and disability. The first two pillars are compulsory, while the third pillar is a purely private and voluntary arrangement. Unlike pillar 3a, a 3b pension does not enjoy any tax advantages.
- Mandatory pillars 1 and 2
Every Swiss worker automatically pays into the first pillar, which comprises a retirement pension plus survivors' benefits (AHV), disability insurance (IV) and supplementary benefits (EL). It is intended to cover the basic living expenses and is based on the solidarity principle. Employees also contribute to the second pillar, which consists of an occupational retirement pension, survivors' and disability benefits (BVG) and statutory accident insurance (UVG).
- Pillar 3 – Private pension planning
As the first two pillars cover only about 60 to 70 per cent of your former income, contributing to a private pension under the third pillar is a practical way to close any remaining gaps in your retirement pension planning. A distinction must be made between the two forms of investment: Pillar 3a contributions are tax-deductible up to a statutory maximum, while pillar 3b offers no tax advantages.
A 3b unregulated pension for a relaxed retirement
Those who have the necessary financial resources should consider an unregulated 3b pension. Investment options such as a life insurance can be a very fruitful form of saving and, unlike a pillar 3a pension, are usually very flexible:
- Provided contractual conditions such as the deadlines and duration of any chosen pension product are respected, there are no restrictions on how you use the accumulated capital. Early cancellation is also possible, though contractual arrangements may mean this attracts some form of penalty.
- Accumulated capital can be freely assigned or inherited, though any compulsory legal restrictions would still apply.
Individual advice about unregulated pension provision
Finding the best solution for your retirement pension provision is not always easy. There is a broad range of options available for 3b unregulated retirement provision, and the choice of the right pension products will depend upon your particular circumstances (finances, health, age, etc.). MoneyPark are very happy to help you. Our people are financial and investment experts with many years of experience who can provide you with independent, professional advice. We can create a pension plan that meets your needs and offers the best returns to comfortably provide for your twilight years.
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