Pillar 3a or 3b: what is the difference?

Taxes in detail: deduction today or freedom later

With pillar 3a the tax advantage works at PAYING IN: the contribution reduces taxable income and the savings grow tax-free — in return, the payout is later taxed separately at a reduced rate (lump-sum withdrawal tax, differing by canton).

With pillar 3b it is the other way round: no provision deduction when paying in (3b premiums only fall under the general insurance deduction, which is usually already used up by health-insurance premiums; a few cantons — such as Geneva and Fribourg — allow limited deductions for 3b insurance). In return, the PAYOUT is generally tax-free.

For 3b life insurance, conditions apply: lump-sum benefits from surrenderable policies with periodic premiums are tax-free. With single premiums, the payout is only tax-free if it occurs after age 60 from a contract that ran at least five years and was concluded before age 66 — and single premiums carry a federal stamp duty of 2.5 percent.

On an ongoing basis, 3b assets are subject to wealth tax (insurance: on the surrender value) and returns to income tax — both of which do not apply to 3a during its term.

Beneficiaries and death

Pillar 3a: the statutory beneficiary order applies (BVV 3) — first the spouse or registered partner, then descendants, life partners and substantially supported persons, then other heirs. From 1 June 2027 the order becomes more flexible.

Pillar 3b: with insurance solutions the beneficiary can be chosen freely and revoked at any time; without a designation, the spouse and descendants are deemed beneficiaries. With bank solutions, inheritance law simply applies. Free beneficiary designation is subject to forced-heirship shares.

Typical situations

Descriptive, not a recommendation — this is how many people use the two vehicles:

• Those who want to use the tax deduction and can forgo availability find in pillar 3a the tax-privileged vehicle.
• Those who need access to their savings at any time — or have no income subject to AHV contributions — only have pillar 3b open to them.
• Many use both in sequence: first 3a up to the maximum, beyond that 3b.
• Those who want to shape beneficiary arrangements freely (for example for cohabiting partners outside the 3a order) find more room in 3b — within forced-heirship limits.
• For covering risks (death, disability), insurance solutions exist in both pillars; their suitability is an individual question.

Whether and in which combination the two pillars fit your circumstances is best clarified in person — we are happy to do so in a no-obligation conversation.

Common misconceptions

• "Pillar 3b is tax-free" — no: in principle only the payout is tax-free (for insurance, subject to conditions). Wealth and income taxes apply on an ongoing basis, and there is no provision deduction.
• "Pillar 3a is always better" — 3a is tax-privileged but tied; without income subject to AHV contributions it is not accessible at all. What fits depends on the situation.
• "3b means life insurance" — 3b covers any free saving: account, securities or insurance. Tax authorities treat '3b' in the narrower sense mainly as insurance solutions.
• "With 3a I can choose the beneficiaries freely" — no, the statutory order applies there (with more room from 1.6.2027); free designation exists only in 3b.