Women and money
The most common money traps with pillar 3a – and how to avoid them
Which mistakes are most common with pillar 3a, how to avoid tax traps and get the most out of your pillar 3a.
In addition to the pension fund and AHV, pillar 3a is a flexible option that you can use for a wide variety of purposes, e.g. for owner-occupied residential property (home ownership promotion – WEF) such as purchase, repayment of the mortgage and / or renovation, for self-employment and in the event of disability .
With pillar 3a you can save income taxes, but there are also a number of traps that can cost you money unnecessarily. I spoke to experienced pension experts here are the most common pillar 3a money traps and how to avoid them in order to get the most out of your pillar 3a:
Deposit missed before the end of the year – maximum amount not exhausted
Although many people have saved enough money, they miss the deposit before the end of the year. Christian Ribeiro, who has been a pension product expert for 10 years, says:
“For many people, the uncertainty about the various expenses during the year plays a major role in how they pay into pillar 3a. In the hustle and bustle towards the end of the year, payments into pillar 3a are sometimes forgotten. “
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Annoying – with the missed deposit, the income tax benefits for the year are lost. What helps: budget planning, standing order or setting a payment reminder for December. The deadline for 3a is December 31st.
Invest in securities, but only pay in in December
If you have invested your 3a in securities, it can make a difference of several hundred or even more francs whether you pay in in January or not until the end of the year in December.
Illustrative calculation example: Deposit in January with an assumed return of 5% brings you 341 francs by December. Of course, this effect increases the more return your securities investment generates: with a 15% return, you would have 1,024 francs more at the end of December than if you made the deposit at the end of the year.
Of course, when it comes to securities, the costs for the investment solution are also very important, and a comparison of providers and funds is always worthwhile.
In addition to possible future income, a 3a in securities can also have a positive effect on the environment. Pension specialist Ivan Sosio says:
“In contrast to the 1st and 2nd pillars, the 3rd pillar also offers the option of investing directly in thematic funds such as green tech, equality or green bonds. The focus is not necessarily on costs, but on the desire to be able to influence the world of tomorrow yourself. “
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(Spouses) partners do not fully utilize the potential of Pillar 3a
Christian Ribeiro says:
“I see that from time to time, for example, that there is only one pillar 3a account and that payments are only made there.”
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Pillar 3a is particularly helpful for married couples or couples living in a partnership:
- To build up additional provisions, e.g. if a person works part-time.
- To smooth out the tax progression of couples a little when both deposit.
- Possibility to save for a home with tax relief.
Why pillar 3a is particularly important for women and yet is not always fully used
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Save for your own home instead of using Pillar 3a
Studies show that More than 7 out of 10 young people aged 18-29 in Switzerland save for their own home, mainly in their savings account.
If you are saving for your own home, then Pillar 3a is a very good alternative to get more out of your savings:
- You immediately save taxes on the deposit and you can then withdraw the money for your home at a reduced tax rate, for example at 35 or 40.
- Your money, for example with securities, has higher potential returns than on the savings account.
If you already have your own home and a mortgage, given the current low mortgage interest rates, it may be more advantageous to invest your money in a pillar 3a, save taxes and then make a reference to repaying the mortgage. You can also achieve a similar effect if you invest the money to repay the mortgage for a period of time instead of repaying it, but then the tax advantages of pillar 3a are eliminated.
Just one 3a account instead of staggering multiple accounts
Partial withdrawals are not possible with pillar 3a. This means that if you want to use your pillar 3a, you can only close the entire savings or securities account. You then pay taxes on the entire amount that you withdraw from this account and because of the tax progression you pay more, the larger this amount is. That’s why it’s worth:
- To have several, ideally the same size, 3a accounts and to dissolve them in stages. As a rule, providers offer up to five 3a accounts.
- Allowing an account to grow up to a maximum of 50,000 francs – this is the amount that has been calculated approximately as optimal for the tax progression.
If you invest in securities, you can have different strategies for the different accounts, depending on the purpose. A pillar 3a, which you have primarily for the promotion of home ownership and perhaps want to draw at the age of 40, can be invested differently than pillar 3a for your retirement provision.
Planning the move in too late or not planning it can lead to unfavorable “clashes”
When you are old, you can withdraw pillar 3a a maximum of 5 years before retirement (women 59 and over, men 60 and over). If you have several 3a accounts, you can cancel them in stages over 5 years, tax them individually and thus save taxes due to the lower tax progression. The most important thing is:
- Plan the payments in good time and get one Avoid a “collision” with the payment of the pension fund. If you draw the pension fund and your pillar 3a in the same year, you pay a higher tax rate, as both amounts are added together.
- Plan the payments as a couple, these are added together. If you want to use the money for home ownership, for example, it is worthwhile to close one pillar 3a account in one tax year and then the other in the next.
With a few simple measures, you can make a lot out of Pillar 3a not only for life in old age, but also for your own home.
