Pillar 3a for entrepreneurs
Pillar 3a: how much self-employed persons can pay in
Read about the benefits of paying into pillar 3a as a self-employed person and what you need to be aware of when you start your private retirement provision.
Content:
Content:
- Self-employed persons are only automatically insured via the first pillar (OASI/IV).
- Pillar 3a (third pillar, private retirement provision) also offers tax advantages.
- As an entrepreneur without a pension fund, you can pay up to 20 percent of your net annual income (max. CHF 35,280) into pillar 3a.
- Advance withdrawals are permitted under specific circumstances that are regulated by law.
- To the conclusion
One in four self-employed persons is insured only in the first pillar – so they do not have a pension fund, nor do they pay into pillar 3a. The OASI/IV (first pillar or state pension) only covers the minimum basic standard of living when you retire or in the case of disability or death.
This makes it all the more important for you to plan ahead when it comes to your financial future. But let’s start at the beginning: if you have a sole proprietorship, general partnership, or limited partnership, you must ensure that you have enough money to maintain your desired standard of living when you retire.
Hoping to sell your company at some point for the desired amount and thus finance your livelihood is justified – but also risky.
If you retire or something happens to you, you won’t have much money to live on from your first pillar. In a best-case scenario, entrepreneurs therefore make sure that they not only have social insurance, health insurance, loss of earnings insurance and accident insurance (occupational and nonoccupational accidents), but also that they make provision for their retirement.
The first advantage is that you have more financial security. The second advantage is from a tax perspective, because you can deduct the amount paid in from your taxable income in full. Payouts are subject to a one-time tax at a reduced rate. Until that point, pillar 3a assets are not subject to income tax or wealth tax. Income tax and wealth tax are only due on the amount paid out once the payment has been made. In addition, pillar 3a offers a high degree of flexibility, for example, in the use of the capital saved, and can be adapted to your personal needs.
Plan your retirement at an early stage
When you think about your retirement, you are faced with some important decisions. Let’s draw up a plan together based on your personal wishes, so that nothing stands in the way of a relaxed financial future.
You have chosen a pillar 3a solution. The next step is to think about when, where and how.
First, when: the sooner the better. The ideal time to do something about your private retirement provision is now. Next comes the where: you'll find many providers, from insurance companies to banks. First of all, talk to people you know and do your own research. You will find an overview of our pillar 3a solutions here.
That only leaves how: there is no single best solution. “The best” is individual, so it’s mainly dependent on your own situation and how much risk you are willing to accept. Once you have found your provider and the right pension solution, you can start paying in. In today’s digital age, you almost always have the option of transferring your deposits via E-Banking.
Who can pay into pillar 3a?
In principle, all taxpayers with an income subject to OASI contributions are allowed to pay into pillar 3a. Self-employed persons (e.g., sole proprietors) also have the option of saving in the third pillar.
As an entrepreneur, the amount you can pay into pillar 3a is determined by the legal form of your self-employment and recognition by the OASI compensation office. For OASI recognition, you need to work
- under your own name,
- for your own account,
- in an independent position (without instructions from third parties) and
- at your own financial risk (costs, losses).
Whether you transfer individual amounts throughout the year or the whole amount at once is up to you – and may also depend on your pillar 3a solution. In order for the amount to be booked in the same year (and tax deductible), it must be credited no later than 31 December.
An advance withdrawal is only possible under specific circumstances that are regulated by law. Strict regulations have been adopted because tax-privileged pillar 3a accounts are intended as personal retirement provision.
Residential property: if you are planning to build or buy residential property that serves as your primary residence, you can use your pillar 3a assets to finance it under the promotion of home ownership program (WEF). This type of advance withdrawal is possible every five years (per pension fund) and is subject to further restrictions. The withdrawal amount is subject to tax.
Other reasons for an advance withdrawal include: unexpected events such as disability or death, emigration, renovation and refurbishment (for the purposes of maintaining or increasing the property’s value) and repayment of your mortgage. In these cases, early payouts are only possible every five years too.
Start today, relax tomorrow
Have you already given thought to your retirement? Excellent – the sooner, the better. With time, even small amounts can grow into significant sums. And best of all: paying into pillar 3a also means paying less tax.
Entrepreneurs are automatically insured via the first pillar (OASI/IV). However, very few people are able to enjoy the desired standard of living after retirement with only the state pension. There is also a lot of uncertainty involved if you intend selling your company at a certain point in time for a certain amount.
All the more reason to start building wealth over the long term as soon as possible through private retirement provision (third pillar). Pillar 3a pension solutions are an attractive way to improve your financial future.
Disclaimer
Disclaimer
