Saving for Pillar 3a

Facts and Wishful Thinking about Pillar 3a

The Swiss pension system is going to face real problems if it is not reformed. In the meantime, the occasionally heated debate in the Federal Parliament revolving around the 2020 pension reform is also being discussed among the general Swiss population. Nonetheless, when it comes to our personal pension provision, we are looking through powerful rose-colored glasses.

For the first time, the number of retirees exceeds that of young people under 20. Switzerland is getting older and the financing problems of our pension system are getting more serious, but the average Swiss citizen doesn't want to look these unpleasant facts in the eye. Two-thirds of the population "calculates" that it will receive more than 71% of its current salary upon retirement. An extremely optimistic half of that category even expects more than 90% of their current salary upon retirement. But the fact is that the AHV and the pension fund will, at best, only cover between 60%–70% of a person's last salary before retirement.


About Only Half use the 3rd Pillar

One could conclude from this that the 3rd pillar is so broadly and firmly anchored among the population that there is no need to worry, even in the case of decreasing state benefits. But the fact is that a little more than half of Swiss citizens use Pillar 3a for personal retirement provision and around a third of them mainly use it to save taxes. Only 29% of Pillar 3a account holders use the instrument in a conscious and calculated manner, as a complement to AHV and a pension fund. Those with no Pillar 3a solution claim they do not have enough money or do not find it worthwhile. A minority (5%) has never even heard of the 3rd pillar. However, the trend has been confirmed that more and more 3a contributors are starting to save before they reach the age of 25.

Main Reasons for Private Retirement Provision

Source: ZHAW (2016), p. 27

Securities for Retirement Provision

Only around one-fifth of 3rd pillar contributors rely on securities. Despite record-low savings rates, many Swiss citizens consider securities investments too risky or have simply never looked into the subject. Younger people in particular, despite their considerably longer investment time horizons, prefer 3a savings accounts. But the fact is that owners of 3a securities solutions have achieved significantly better returns over the past few years than holders of 3a savings accounts. Younger people in particular, thanks to their risk-reducing long investment time horizons, could benefit from higher return opportunities.


The Swiss population must expect that, without private supplementation, retirement pension gaps are more likely in their old age. The importance of the 3rd pillar for a relaxed life in old age increases accordingly. Contributors to 3a should also learn more about the options of securities investments.