Pillar 3a is one of the best tax deals in Switzerland: what you pay in comes straight off your taxable income. But a large part of the gain often disappears again unnoticed, through fees. And fees work differently from how most people picture them.
Why 0.7% matters so much over time
The fee is charged every year on your entire balance, not just on the new contribution. Over a working life of 30 or 40 years, that effect compounds into a large number. A gap of just 0.7% a year can add up to tens of thousands of francs on a well-funded 3a account. Not because you paid more in, only because one provider is more expensive than another.
The kinds of Pillar 3a, and what they cost
- 3a savings account (interest): barely any fees, but barely any return either. Over the many years to retirement you give up real growth here.
- 3a securities at a bank: invested in funds, but often 0.8% to over 1.2% total cost a year, hidden inside the fund.
- Digital providers: finpension, VIAC or frankly invest your money broadly diversified for well under 0.5% a year.
Be careful with the 3a insurance policy
A 3a policy mixes saving with insurance. It sounds convenient but has real downsides: high costs in the early years, little flexibility, and sometimes steep losses if you have to get out early, for example after losing a job. Keeping your retirement saving and your insurance separate is almost always cheaper and more flexible.
What actually matters
- Total fee: not just the admin fee, but all costs together, including the cost inside the fund.
- Invested, not cash: over many years a broadly diversified securities 3a clearly beats a pure interest account.
- No commissions: don't let anyone sell you something that earns the seller a commission. The cheapest solutions have none.
How to switch to lower fees
An existing 3a balance can be transferred tax-free to a cheaper provider. You open an account with a digital provider and request the transfer, and the providers handle the rest between them. Tip: keeping several 3a accounts over the years and withdrawing them in staggered steps saves extra tax at payout.
billfox works out how much your current fee costs you by retirement and what switching would save. Free, no account.