Pillar 3
Save on taxes with multiple pillar 3a accounts
By having several 3a accounts, you can save tax when withdrawing your retirement assets. What should you watch out for? How much tax can you save? Find out in the article.
Content:
Content:
- To break tax progression later in life, you should open a new pillar 3a account or custody account for assets of 50,000 francs or more.
- In most cases, having two or three 3a accounts per person is a good solution.
- You can’t withdraw assets from a 3a account in partial amounts – except when making an advance withdrawal for financing residential property under the home ownership promotion scheme.
- Avoid making simultaneous withdrawals from your pension fund and pillar 3a in the same year.
- To the conclusion
Taxes play a major role in pillar 3a retirement savings – not only when paying money in, but also when withdrawing assets. Here too, you stand to benefit if you anticipate during your working life and divide your pillar 3 assets between several accounts. The aim is to break the tax progression by staggering the withdrawal of your assets from different accounts.
When you withdraw your assets, they are subject to capital withdrawal tax. Compared to income tax, the tax rate is lower. However, you will still be subject to tax progression, at least in most cantons. The more assets you withdraw in a year, the higher the tax rate. The level of progression varies from canton to canton.
Worth knowing
It’s important to remember that pension fund assets are included in the tax progression calculation when they are paid out. That’s why you shouldn’t withdraw a pillar 3a credit balance in the same year as receiving a lump-sum payment from your pension fund, if possible.
Tip: If the balance of your pillar 3a account reaches a certain sum, you should open a new retirement savings account and/or custody account. Then you can close this second account in another year. It’s advisable to open another account once you have saved around 50,000 francs. Having a new retirement savings account and/or custody account is worthwhile for assets in excess of this account balance. Incidentally, it is not possible to transfer only part of your savings from one 3a account to another.
Laws and ordinances leave the number of possible 3a accounts open. However, the tax authorities in some cantons restrict the number of capital withdrawals. Providers of retirement savings solutions also usually limit the number of accounts and custody accounts you can have. The maximum is usually around five. You should always check the current legislation and usual practice in your canton before withdrawing any funds.
The general rule is that two to three pillar 3a retirement savings solutions make sense per person in employment. Whether or not you should have even more accounts depends on various factors, including the tax progression in your canton of residence. However, focusing solely on this issue when deciding on the number of accounts is risky. If you move to another canton, the situation may be different, and your strategy may no longer be suitable – by which time it may already be too late to change course.
Incidentally, the number of accounts makes no difference to the tax savings you will achieve during the deposit phase.
Having several accounts allows you to plan your liquidity flexibly in old age.
Example calculation of tax savings without a pension fund
Example calculation of tax savings without a pension fund
Pillar 3a retirement assets can reach different amounts depending on the depositor. Women received 46,610 francs and men 57,742 francs from their restricted private retirement savings on average in 2022. The effects of tax progression increase with the amounts withdrawn.
Withdrawal in years | Withdrawal in years | First 3a account | First 3a account | Second 3a account | Second 3a account | Third 3a account | Third 3a account | Tax savings in CHF | Tax savings in CHF |
|---|---|---|---|---|---|---|---|---|---|
Withdrawal in years | Withdrawal in one year | First 3a account | 150,000 | Second 3a account | - | Third 3a account | - | Tax savings in CHF | 0 |
Withdrawal in years | Withdrawal in two years | First 3a account | 75,000 | Second 3a account | 75,000 | Third 3a account | - | Tax savings in CHF | –2,400 |
Withdrawal in years | Withdrawal in three years | First 3a account | 50,000 | Second 3a account | 50,000 | Third 3a account | 50,000 | Tax savings in CHF | –3,700 |
Calculation for a single, childless man, non-denominational, resident in Olten (SO), born in 1980, withdrawal at age 65, 2024 tax rate. Tax burden without staggered withdrawal: 8,973 francs. Tax savings rounded up or down.
How much can I save on taxes with pillar 3a?
You benefit twofold when you pay into pillar 3a because you are providing for the future and reducing your tax burden. Calculate how much you can save on taxes.
Example calculation of tax savings if you have a pension fund
Example calculation of tax savings if you have a pension fund
People generally accumulate much higher savings in their pension fund than in pillar 3a. In 2022, the average occupational benefits payment was 130,082 francs for women and 281,470 francs for men. If you have such high amounts to pay tax on, it is even more worthwhile staggering the withdrawal of the assets from your pillar 2 and pillar 3a accounts.
Withdrawal in years | Withdrawal in years | Pension fund | Pension fund | First 3a account | First 3a account | Second 3a account | Second 3a account | Third 3a account | Third 3a account | Tax savings in CHF | Tax savings in CHF |
|---|---|---|---|---|---|---|---|---|---|---|---|
Withdrawal in years | Withdrawal in one year | Pension fund | 500,000 | First 3a account | 150,000 | Second 3a account | - | Third 3a account | - | Tax savings in CHF | 0 |
Withdrawal in years | Withdrawal in two years | Pension fund | 500,000 | First 3a account | 150,000 | Second 3a account | - | Third 3a account | - | Tax savings in CHF | –3,400 |
Withdrawal in years | Withdrawal in three years | Pension fund | 500,000 | First 3a account | 100,000 | Second 3a account | 50,000 | Third 3a account | - | Tax savings in CHF | –5,700 |
Withdrawal in years | Withdrawal in four years | Pension fund | 500,000 | First 3a account | 50,000 | Second 3a account | 50,000 | Third 3a account | 50,000 | Tax savings in CHF | –7,300 |
Calculation for a single, childless man, Evangelical Reformed Church, resident in Olten (SO), born in 1980, withdrawal at age 65, 2024 tax rate. Tax burden without staggered withdrawal: 53,741 francs. Tax savings rounded up or down.
Withdrawal in years | Withdrawal in years | First pension fund | First pension fund | Second pension fund | Second pension fund | First 3a account | First 3a account | Second 3a account | Second 3a account | Third 3a account | Third 3a account | Tax savings in comparison with withdrawal in one year in CHF | Tax savings in comparison with withdrawal in one year in CHF |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Withdrawal in years | Withdrawal in one year | First pension fund | 450,000 | Second pension fund | 200,000 | First 3a account | 150,000 | Second 3a account | 50,000 | Third 3a account | - | Tax savings in comparison with withdrawal in one year in CHF | 0 |
Withdrawal in years | Withdrawal in two years | First pension fund | 450,000 | Second pension fund | 200,000 | First 3a account | 150,000 | Second 3a account | 50,000 | Third 3a account | - | Tax savings in comparison with withdrawal in one year in CHF | –8,600 |
Withdrawal in years | Withdrawal in three years | First pension fund | 450,000 | Second pension fund | 200,000 | First 3a account | 100,000 | Second 3a account | 50,000 | Third 3a account | 50,000 | Tax savings in comparison with withdrawal in one year in CHF | –11,300 |
Withdrawal in years | Withdrawal in four years | First pension fund | 450,000 | Second pension fund | 200,000 | First 3a account | 100,000 | Second 3a account | 50,000 | Third 3a account | 50,000 | Tax savings in comparison with withdrawal in one year in CHF | –14,000 |
Withdrawal in years | Withdrawal in | First pension fund | 450,000 | Second pension fund | 200,000 | First 3a account | 100,000 | Second 3a account | 50,000 | Third 3a account | 50,000 | Tax savings in comparison with withdrawal in one year in CHF | –16,800 |
Calculation for a married, childless couple, non-denominational, resident in Zurich (ZH), born in 1980, withdrawal at age 65, 2024 tax rate. Tax burden without staggered withdrawal: 62,067 francs. Tax savings rounded up or down.
Start today, relax tomorrow
Have you already given thought to your retirement? Excellent – the sooner, the better. With time, even small amounts can grow into significant sums. And best of all: paying into pillar 3a also means paying less tax.
If you want to take advantage of the tax benefits of pillar 3a by making regular deposits, then it’s best to start considering now how you plan to withdraw the assets later in life. Opening several accounts gives you the opportunity to mitigate the impact of progressive tax when withdrawing funds. The simple rule is to open a new account or custody account for every 50,000 francs. This assumes that you have given careful thought to the matter in good time during your working life. We can help you.
Disclaimer
Disclaimer
