3e pilier infos
My goal · Retirement

At retirement, your income will drop by about 40%. Here is how to plan ahead

It is the reality few people calculate before it is too late: at retirement, the state pension and pension fund together cover on average only about 60% of your last salary. The missing third is exactly what the 3rd pillar is designed to fill. Here is how to measure your gap and reduce it, year after year.

Pension gapCapital or annuity1st, 2nd and 3rd pillar

The problem: the well-known pension gap

The Swiss system rests on three pillars. The first two — the state pension (1st pillar) and the pension fund (2nd pillar) — are mandatory, but they were designed to cover about 60% of your last income, not the whole. For many, this means a drop in standard of living of 30 to 40% overnight.

This gap is all the larger if your income is high (the 2nd pillar is capped), if your career had interruptions, or if you are self-employed. This is precisely the role of the 3rd pillar, the optional individual provision: to fill that missing third.

The solution: build your 3rd pillar early and regularly

Pillar 3a lets you save each year, deducting your contributions from your tax, to build capital available at retirement. The strength of this tool is time: thanks to compound interest, starting at 30 rather than 45 radically changes the final capital, for the same savings effort.

The effect of time, in one figure

Paying CHF 300 a month from age 30, at an average return, can represent more than CHF 300,000 at 65. Starting the same contributions at 45 gives a result two to three times lower. Every year counts.

Capital or annuity: what to choose at the end?

At retirement, your 3rd pillar is paid out as capital (a single sum). This capital can then be drawn down gradually, reinvested, or converted into a life annuity depending on your needs. The trade-off between security (a guaranteed lifetime annuity) and flexibility (available capital) depends on your situation, your health and your other income — a decision best prepared several years ahead.

What to aim for?

~60%of last salary covered by the first two pillars
30–40%less income without a 3rd pillar
Compound interesttime is your best ally

*Estimate depending on your retirement age, savings effort and an average return. The simulator projects your personalised capital at 65 in two minutes.

Staggering withdrawals to pay less tax

An often-ignored point: 3rd pillar capital is taxed on withdrawal, at a reduced but progressive rate. By opening several 3rd pillar accounts and staggering withdrawals over several years, you limit this progression and reduce the total tax. This strategy is set up years before retirement: hence the value of planning ahead.

Our role, as an independent broker

We calculate your real pension gap and build a 3rd pillar savings strategy suited to your horizon, optimising the tax on withdrawal. Free of charge, with no obligation.

Project your retirement capital in 2 minutes

Simulate your pension gap and the capital to build by 65. An adviser then presents the best strategy, free of charge.

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Frequently asked questions

What share of my salary will I receive at retirement?

On average, the state pension and pension fund together cover about 60% of your last income. This proportion falls for high incomes and interrupted careers. The 3rd pillar serves to fill the missing third to maintain your standard of living.

Why start a 3rd pillar early?

Because of compound interest: the earlier you start, the more time your capital has to grow. For the same savings effort, starting at 30 rather than 45 can double or triple the final capital. It is the most decisive factor.

Is it better to take my 3rd pillar as capital or annuity?

The 3rd pillar is paid out as capital. You can draw it down, reinvest it or convert it into a life annuity. The annuity offers lifetime security; the capital, more flexibility. The right trade-off depends on your health, other income and plans.

How can I reduce the tax on my 3rd pillar withdrawal?

By opening several 3rd pillar accounts and staggering withdrawals over several years, you limit the progressive tax on capital benefits and reduce the total paid. This strategy is prepared several years in advance.

Do the self-employed have a bigger gap?

Often yes, because they have no mandatory 2nd pillar. Their retirement then rests mainly on the state pension and on what they save themselves. The 3rd pillar, with its high ceiling for the self-employed, becomes their main provision tool.

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