Are you in the middle of your career with retirement just a distant dream? Then now is precisely the right time to take a moment to think about how you can most easily safeguard your standard of living after you retire. In addition to the old-age and survivors’ insurance (OASI) and the occupational pension plan, private occupational pension benefits with the third pillar are becoming increasingly important as a source of retirement funding. We summarised the key points of the third pillar for you in our brief video. You can also read the blog post to find out why it is worth maintaining more than one pillar 3a account. 

The third pillar explained in a straightforward manner

Even if you don’t have any concrete plans today about what you want to experience or be able to afford in the time after you retire, a pillar 3a is a secure asset that can allow you to do so much more. This video explains for whom the third pillar is suited, what the difference is between an account at a bank and an insurance company and how you can reduce your tax burden with the third pillar.

Why is it more worthwhile to maintain more than one third-pillar account?

Perhaps you are already putting money aside in a pillar 3a account of your private occupational pension benefits. Perhaps you’re wondering if there is more you could be doing? Yes, there is, and it’s certainly worth doing. You can open another pillar 3a account and take advantage of additional benefits:

You can benefit even more thanks to a variety of different investment strategies:

The investment options in the third pillar vary greatly depending on the provider. From a classic savings account to an investment in securities with potential for return that is above average. Since investments in the third pillar are for the long term, a riskier investment strategy with greater prospects for profit is often worthwhile.

Tax advantages upon payout: You’re familiar with the basic pillar 3a advantages:

You can deduct your third-pillar contributions from your taxable income up to the maximum amount permitted each year. You also don’t need to pay any taxes on the account as an asset. You only pay reduced income tax on the capital you put aside in the third pillar at the time the money was deposited. But here’s the big advantage if you have more than one pillar 3a account: Within the statutory time limit, you can decide for yourself when you want to withdraw which pillar 3a capital – which means you can save a lot on your taxes. Because income tax is progressive, you pay less tax overall if you withdraw smaller amounts on three separate occasions than if you withdraw the entire amount in one account all at once.

The most important summarized
  • Pillar 3 in simple terms
  • Why having a pillar 3 account makes sense
  • Opportunity for profits
  • Tax benefits
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Private pensions Pension asset 3a Private individuals
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