How does a 3rd pillar work in 2021?

This year 2021 is full of innovations in the field of pension provision and in particular in everything related to the field of 3^th pillar. Two-thirds of working people already have one. Interest in this type of solution is growing.

But how does a 3 work^th pillar and what are the benefits to be derived from it?

The basic principle of 3^th Pillar in 2021

The very principle of a 3^th pillar is to pay an amount to an institution (bank or insurance), to have this money work over a defined horizon and to raise capital from it for a pension objective.

These goals are generally life goals such as buying a house, improving your retirement or starting your own business.

You have the choice of the amount paid and the frequency of the payment. Your budget must be respected and your savings should not be a pain but a pleasure for future investments.

The payments made will work and generate capital. The latter can be invested according to various 3rd pillar investments available on the market. This taking into account your risk appetite and the potential you are aiming for. The interest and gain gained with your investment will thus allow you to achieve your goals in the more or less long term.

The tax advantages of the 3^th Pillar in 2021

One of the main reasons for setting up a 3^th Pillar are the tax benefits granted by the confederation. In fact, they are on average 30% of the sum saved, and can reach a tax reduction of CHF 2,500 per year. (For example: by placing 6000fr per year on a 3^th pillar 3a, you will save an average of 2,000 francs in taxes per year)

Thus, your money works in 2 ways: thanks to the benefits of investments as well as to savings

of taxes generated.

Tax savings depend on the type of 3^th pillar chosen. Among other things, you benefit from a reduction in your income tax, from savings that come out of your wealth tax or from gains not taxed on your income.

This tax advantage is widely used and the returns guaranteed by this advantage have convinced the vast majority of people who now have a 3rd pillar.

The risk coverages of the 3^th Pillar in 2021

The 3^th Pillar is not only savings but a real pension and protection tool. Indeed, there is the possibility of hedging yourself with capital In case of death and/or disabilities.

These covers are most of the time added to savings solutions but can be done separately. They are also tax deductible. Although costly, they protect you and your family and often offer an inheritance tax advantage.

The 3^th Are you interested in a pillar and are you considering launching one?

The opening or the creation of a 3^th pillar

Once you have made your decision to open your 3^th pillar, it is time to study the possible options and the best way to build profitable and advantageous savings that correspond to your situation and your goals. Check out our article on “how to create a 3^th pillar” that will guide you on this process.