More Return Potential with Pillar 3a Funds
Saving on taxes and building a substantial retirement fund in the long term – this is what contributions to Pillar 3a funds can offer. In the interview, René Nicolodi explains the approach and which investment strategies should be considered for different life phases.
Interview with Dr René Nicolodi
Martin Spieler: Contributions paid into Pillar 3a are tax-deductible. How much tax can one approximately save?
René Nicolodi: The tax-saving effect depends, among other things, on the place of residence, income, and the amount of the contribution. For example, a single, childless person with an income of 80,000 francs who pays the maximum amount would save around 1,500 francs per year in the city of Lucerne.
However, the accumulated retirement savings in Pillar 3a must be taxed upon withdrawal. Does the calculation still work out?
Yes. However, we recommend opening several Pillar 3a investment solutions. This way, savers do not have to withdraw everything at once but can do so in stages. Such staggered withdrawals bring tax advantages.
In 2025, employees with a pension fund connection can pay 7,258 francs into the third Pillar 3a. Are smaller contributions also worthwhile?
Absolutely. On the one hand, this makes a long-term contribution to private retirement provision. On the other hand, if the money is invested long-term, for example in Pillar 3a funds, even many small contributions can add up to something substantial. It is important to create a budget and only pay in as much as one can afford. This is because the contributions are generally tied up until retirement.
What is the potential difference if savers leave the money in a Pillar 3a account with relatively low interest rates or invest in Pillar 3a funds?
This can make a big difference. For example, a 25-year-old who invests the maximum amount annually in a balanced Pillar 3a fund until retirement can expect a return that is 250,000 francs higher than with a pure account solution.
Investment solutions also carry risks. What investment strategies are sensible for the third pillar?
Contributions to Pillar 3a funds are generally of a long-term nature. This is especially true for younger people, with an investment horizon of 20, 30, or even 40 years. Here, a high equity proportion can be worthwhile, as price corrections in the stock markets tend to be balanced out over time. As one approaches retirement age, it may be worthwhile to reduce risk, i.e., to invest more in bonds.
Fund fees reduce returns. How can one achieve the best possible return after deducting fees?
It is important to look closely at the return after costs and compare Pillar 3a funds. One should also keep an eye on the providers of such products and consider established providers. Nowadays, there are also digital solutions like frankly.ch, which allow easy and relatively inexpensive investment in high-quality solutions.
Conclusion on investing with Pillar 3a Funds
- Pillar 3a funds offer more return potential than Pillar 3a account solutions.
- The investment risks with Pillar 3a funds are higher. A long investment horizon can offset value losses.
- Select Pillar 3a funds according to your personal risk profile and pay attention to costs and providers.
This interview (in Swiss German only) was first broadcast in slightly modified form on 21 February 2025 in the programme "Geld" on Tele 1, Tele M1 and TVO.
