3rd pillar 3a or 3b: the differences and how to choose?

3rd pillar 3a or 3b: Understanding the main differences

Before you can decide which 3rd pillar is the most advantageous between the Pillar 3a And the Pillar 3b, it is essential to understand the main differences between these two types of private pension plans, which play an essential role in the Swiss pension system. It makes it possible to supplement future income and maintain a comfortable standard of living in retirement. In this article, we will find out in detail what the 3rd pillar is, the differences between pillar 3a and pillar 3b, and the advantages and conditions associated with these two pension options.

1. Recipients and purpose

3rd pillar 3a

Pillar 3a, also known as linked pension, is open to all persons who are gainfully employed in Switzerland, including cross-border workers. Its main purpose is to build up savings for retirement and it is also possible to withdraw it under certain conditions, it offers considerable tax advantages. Pillar 3a is the most popular and the most frequently adopted.

3rd pillar 3b

Pillar 3b, also known as free pension, is open to everyone, regardless of place of residence and professional status. Withdrawing is free, so it is possible to withdraw it without any conditions, so it offers greater flexibility compared to pillar 3a, but does not offer tax advantages except in the cantons of Geneva and Fribourg.

2. Withdrawal period and conditions

3rd pillar 3a

Since pillar 3a is mainly used for retirement, the duration of a pillar 3a is determined by how long you have left until retirement age, i.e. 65 years of age. For example, if you are 30 years old, the contribution period for your pillar 3a will be 35 years.

However, it is possible to withdraw capital from 3rd pillar 3a under the following conditions:

1. Regular withdrawal: at retirement age, at age 65
2. From the age of 60, it is possible to withdraw the capital to retire early
3. The purchase of real estate that will serve as a main residence
4. If you leave Switzerland permanently
5. If you are starting a business as a freelancer
6. If you become 100% disabled

3rd pillar 3b

The main difference between pillar 3a and pillar 3b is the availability of funds. Unlike pillar 3a, pillar 3b funds are available at all times, there are no restrictions on retirement age or other specific conditions.

The duration of a 3rd pillar 3b is free, you define the duration of your 3rd pillar 3b yourself.

You can therefore use your pillar 3b both for your retirement and for other more specific projects, such as a big trip, savings for your children or simply to build up your assets.

3. Taxation and tax deductions

3rd pillar 3a

One of the main advantages of pillar 3a is the tax deduction of premiums paid. Contributions to pillar 3a are deducted from taxable income, which significantly reduces your tax burden.

Deductible amounts The maximums for pillar 3a in 2025 are as follows:

• CHF 7'258 if you are an employee and that you are a member of a pension fund

• CHF 36'288 if you are self-employed (without 2nd pillar), up to 20% of your annual net income generated by your lucrative activity

Please note that contributions in excess of these limits cannot be made.

The capital you accumulated on your 3rd pillar 3a does not enter into your taxable wealth.

A tax is applied when withdrawing Pillar 3a capital. This tax depends on the canton in which you live at the time of the withdrawal and the amount you withdraw, the more capital you withdraw, the greater the tax will be. In general, this tax is between 5% and 12% depending on the cantons and the amounts, luckily even by paying this tax, you still gain a lot in terms of tax savings on your 3rd pillar.

3rd pillar 3b

Unlike pillar 3a, the tax benefits of pillar 3b are limited. Contributions are not deductible from taxable income, except in the cantons of Geneva and Fribourg.

Unlike 3a, pillar 3b capital falls within your taxable wealth, however, this tax is generally non-existent or even very low, depending on your tax situation.

There is no no tax when withdrawing of the capital of the 3rd pillar 3b.

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4. Who inherits the capital in the event of death?

3rd pillar 3a

The beneficiaries of the 3rd pillar 3A in the event of death are appointed in a precise order:

1. The surviving spouse (united by marriage) or the surviving registered partner,
2. Direct descendants, or the person who had formed an uninterrupted community of life with him for at least five years immediately before death or who must provide for the maintenance of one or more common children,
3. The parents
4. The brothers and sisters
5. The other heirs

What can be changed

Point 2: The policyholder can designate one or more beneficiaries and specify the rights of each beneficiary.

Points 3 to 5: The pension holder has the right to change the order of beneficiaries and to specify the rights of each beneficiary.

3rd pillar 3b

For the free 3rd pillar 3b, the law does not impose any specific beneficiary, thus giving you the freedom to choose who will inherit your savings. Whether you choose your spouse, one of your children, or even a friend, the decision is entirely up to you.

How to choose between the 3rd pillar 3a or 3b?

You want to save for retirement, real estate, a departure abroad or become self-employed

In general, if you are certain that your 3rd pillar will be used for retirement, real estate, leaving Switzerland or starting out as a self-employed person, then the 3rd pillar 3a will probably be the most interesting, because you benefit from considerable tax advantages regardless of the canton in which you live.

You want to save as much as possible in taxes

If you live outside the canton of Geneva or Fribourg, then the 3rd pillar 3a will be the most interesting solution, because you can deduct as much tax as possible thanks to tax deductions.

If you live in Geneva or Fribourg, know that it is possible to have a pillar 3a and pillar 3b at the same time and to combine the tax deductions for each solution.

You live in Geneva and Fribourg

If you live in the cantons of Geneva and Fribourg, the question may be more complex, as you also benefit from tax advantages with the 3rd pillar 3b. In this case, you will need to consider various factors in order to make a decision, such as your current and future situation, your projects, the flexibility of solutions and taxation.

We strongly recommend that you contact a pension advisor who can advise you in order to make the best decisions.

Also note that it is possible to have a pillar 3a and a pillar 3b simultaneously in order to combine the tax deductions for each solution.

Comparative table of differences between pillar 3a and pillar 3b

Our comparative table of the differences between the 3rd pillar a and b will allow you to see at a glance the differences between each solution.

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Conclusion

In summary, pillar 3a and pillar 3b are two essential components of private pension provision in Switzerland. Pillar 3a is a linked pension with attractive tax advantages, while pillar 3b offers greater flexibility in managing savings, but without tax deductions except in Geneva and Fribourg. It is important to take these differences into account when planning your pension and to choose the pillar that best fits your needs and goals.

In all cases, it is strongly recommended that you consult a financial advisor to obtain personalized advice based on your financial situation and to put all the chances on your side to successfully carry out your projects.