When and how should you pay the third column?

“It is not for nothing that Switzerland has three pillars of old-age insurance, because in most cases the first two are not enough to ensure a decent pension,” explains Frédéric Giroux, Allianz sales manager and third pillar specialist. He estimates that around 30 percent of Swiss residents are not fully aware of this.

“Today, more than ever, paying a third column is crucial,” says Giroux.

Which type 3rd column should you choose?

“In Switzerland there are two types of third pillars: 3a and 3b. Figure 3a provides an advantageous tax exemption. It can be obtained through the bank or in the form of insurance (life and/or disability and/or loss of earnings insurance). In the first case, you do not have to deposit money every year. In the latter case, you are obligated to do so for a contractually agreed amount. This is binding, but in return you are insured against death and disability. 3b is not tax deductible, but unlike 3a where withdrawal is only possible in certain circumstances (see below), money in the account can be withdrawn at any time without having to pay taxes on interest.»

How much can be deducted from taxes?

«This year you can pay up to 7056 francs for your 3a. This amount is deductible from taxable income and is therefore completely tax-free. The maximum allowable amount is usually increased every two years by the Federal Council, which tries to compensate for inflation. An employee can save roughly between 1,400 and 3,200 francs in taxes (depending on his income). Self-employed people can deduct up to 35,280 francs in 2023, potentially saving them between 7,000 and 12,000 francs in tax.”

Who can contribute?

“Anyone with income subject to OASI can open a 3a or 3b bank account, including trainees, students, interns, cross-border commuters and the unemployed. But to get 3a or 3b insurance, you must complete a definitive health questionnaire. In practice, very few people make deposits before they turn 30. In the end, the best fit and most forward-thinking employees save a maximum of CHF 300,000. That’s why I recommend starting with the third column as early as possible. Let’s say a 20-year-old decides to pay CHF 3,000 a year for his third leg. With an interest rate of 4 percent, he would have saved CHF 377,611 by the time he retires. Assuming that the same person does not save the same amount by age 30, they will save only CHF 229,794. A person who has paid contributions since the age of 20 must pay 4,925 francs per year to reach the same amount at age 65, and the same CHF capital from the age of 30. 377,611. »

Real Estate and Mortgage

«When you buy a property, your bank can take your 3rd column as a deposit. Either to use it as equity or to pay off that debt. But be careful: in this case, you will no longer have money when you retire! »

What happens to the third column in the event of death?

«The capital of 3a-Bank or 3b-Bank (amounts paid + interest earned over the years) is paid to the legal heirs, i.e. spouse and children. In 3a insurance, this is primarily the spouse, ie the person who was married, had a life partner, or lived with for at least five years just before death, or with whom he lived immediately before death, in first place. responsible for the care they need to take care of the children together. Next come the children, then the parents, then the siblings and other heirs whose order can be changed at any time. With 3b insurance, heirs are free to choose.”

What happens to the third column if I have financial difficulties? devices?

“Whether you’re divorced, sick, unemployed, underpaid or whatever, if you can no longer pay your 3a insurance, the money stays with the insurer and continues to grow there. No matter what happens in retirement or other designated situations, you will definitely get it. You will not be entitled to any insurance benefits until payments due through a health survey continue. Things were stricter in the past and you’ll lose more if you don’t make your annual payments. 3b insurance can be withdrawn at any time. By its nature, 3b bank does not require regular deposits.”

Will the third column still exist 20 years from now?

“New work patterns, which are more prevalent in the younger generation, such as the spread of part-time work and the decline of marriage, did not affect the third pillar system, unlike the first and second pillar systems that came into play after transplants. Work. Thus, those who pay the third pillar will earn as much as before. But less Those who have worked face low first- and second-column incomes and risk of being dependent on their dependents or social services at retirement.”

Source :Blick