Bank or insurance: The differences in pillar 3a

Before you weigh up the differences between banks and insurance in pillar 3a, you should know what the two solutions have in common:

• You can use both solutions to save for your old age.
• With both solutions, you can deduct a certain amount from taxes.
• Your money is restricted in the case of both solutions. You can only have your pillar 3a credit paid out prematurely if you are acquiring residential property, taking up self-employment or leaving Switzerland for good.
• In both solutions, you can invest your retirement assets in funds and benefit from higher returns.

The biggest differences between a bank and an insurance solution in pillar 3a relate to the following points:

If you take out your pillar 3a solution with an insurance company, you conclude an insurance contract at the same time. In this contract, you define your saving goal and thus the volume of contributions that you have to pay into pillar 3a each year. In return, the insurance contract includes insurance coverage in the event of disability and/or death. This means that if you are unable to work any longer, your insurance will pay the amount due annually into pillar 3a for you. Depending on the retirement provision solution you choose, you will also receive a disability pension until retirement, ensuring that you reach the saving goal that you defined at the start in full. In the event of death, your surviving dependents will receive a lump-sum death benefit depending on the contract, so your loved ones will at least be protected from the financial consequences of this misfortune. You pay for this insurance coverage with a portion of your annual premium. 

If you open your pillar 3a with a bank, you are not obliged to pay a certain amount into your pillar 3a. Taking into account the maximum amount, you decide independently how much money you pay in each year, and anything that you pay in will be available to you after retirement. You can open several bank accounts or custody accounts and split up the amounts. With our pension funds 3a for example, you can combine bank and securities saving and take advantage of higher return opportunities. In addition, you can optimize taxes in this way if you close your pension accounts gradually from the age of 60. Further information on this can be found in the article "Pillar 3a: Save taxes on withdrawals". 

While you are more flexible with a bank solution, you also have to be more disciplined to achieve your saving goals. In addition, you and/or your family will not be protected against the financial consequences of disability or death. If you are no longer able to work, you are no longer allowed to pay into pillar 3a. 

Insurance contracts have a fixed period of insurance, which usually lasts until regular retirement. You undertake to pay a certain amount into the pillar 3a policy annually. After the third insurance year, however, you have the option of pausing payments for up to three years. Insurance coverage does not expire in this case, meaning that you will be fully insured even if, for example, you go on parental leave or spend time abroad. The only consequence is that your final amount will be reduced. The final amount is the amount that is paid out to you upon the expiry of the policy. 

As you are not obliged to pay in money with a bank solution, there is also no fixed term. You can redeem your pillar 3a assets a maximum of five years before your retirement. 

What better suits your requirements? If you consider security to be crucial, you should choose an insurance solution. If you wish to save flexibly, you should choose a bank solution. 

Our tip: Do the one but don't reject the other! Insurance and bank solutions can be combined with each other. We offer a wide range of retirement provision solutions. You can also take out a disability pension and/or term life insurance separately. In this way, you can deduct these risk premiums from your taxes.