You can’t lose by paying into Pillar 3a – Mr and Ms Schweizer are convinced of this. Fifty percent say they have set up a Pillar 3a account. Often, however, the opportunities they provide are far from exhausted. Many workers do not pay the highest amount allowed into Pillar 3a. In 2019 the maximum contribution that can be deducted from your taxable income is 6,826 francs.
Risk protection doesn’t come free
So which solution is better for Pillar 3a: Insurance or a bank? Insurance solutions can be combined with risk protection (such as a lump-sum death benefit), and often automatically include a waiver of premium in the event of disability. Risk protection isn’t free of charge: This additional protection involves paying insurance premiums. At a later date these will be missing from retirement assets. With insurance you have to pay the agreed 3a contributions until the contract term expires, or convert the insurance into a paid-up policy at a loss.
Bank is more flexible
“There is no risk protection if you choose the bank solution, but it offers flexibility. You can take a break from paying into your 3a account at any time, although regular deposits do make sense,” says Nils Aggett, head of UBS Pension Services. He adds: “People often misunderstand, but you can make smaller deposits depending on your financial situation. It doesn’t always have to be the maximum contribution.”
If required, you can make up for the lack of insurance cover with a separate risk insurance policy. Pension savers with a long investment horizon may also be interested in fund solutions, such as a UBS Fisca custody account. This lets you put money into investment funds and improve your return opportunities. This solution is also flexible, and can be closed down free of charge. On retirement, the fund investments can be transferred to your free assets – i.e. they don’t have to be sold at an unfavorable time.