Anyone who has earned income that is subject to AHV contributions can pay into the tied pension plan (pillar 3a) and deduct the payments from their taxable income. Payments can be made from the year you turn 18 until you reach the regular AHV retirement age.
Anyone who can prove that he or she is in gainful employment beyond the normal retirement age can continue to pay in pillar 3a for a maximum of five years beyond the normal retirement age and continue to pay in during this period.
You can pay into the pillar 3a until you reach the regular AHV retirement age. Beyond that, payments can only be made if you can prove that you are still employed. At the latest, however, at the age of 69 or 70 (women/men), the pillar 3a must be dissolved and the credit balance withdrawn.
Yes, provided both partners have an income from employment subject to AHV contributions, both can pay into pillar 3a and thus build up a private pension plan. However, if one partner's income is settled in the simplified settlement procedure, he or she cannot make a payment.
No, the law does not permit the splitting of credit balances on a 3a account among several 3a accounts. Partial withdrawals are only possible for residential property. In all other cases, only the entire balance can be withdrawn at once. If you would like to be able to withdraw retirement assets in stages at a later date, you must therefore open several 3a accounts.
A distinction is made between persons who are affiliated to a pension fund (2nd pillar) and those who are not affiliated to a pension fund. For people with a pension fund, the maximum payment for one year is limited to 6,883 francs. Without a pension fund, you may pay up to 34,416 francs into a pillar 3a, but no more than 20% of net earned income (gross income less AHV, IV, EO and ALV contributions).
A major advantage of pillar 3a is the tax savings. Payments can be listed in the tax return under «deductions», which leads to a reduction in taxable income. If you have little income and therefore pay relatively little tax, it is not so interesting to pay into pillar 3a. It is more interesting to make a deposit in the years when you earn full. In this case, the tax deduction is more effective and you save the most tax.
Yes, you can also enter a standing order and thus make regular deposits. We do not charge any fees for deposits. We credit the deposits to the respective portfolio free of charge and invest the amount at the beginning of the month in the chosen strategy.
The money is credited to the portfolio the day after it is credited to the finpension 3a Retirement Savings Foundation. Immediately after the crediting, you can see the deposit in your portfolio.
On the first banking day of the next month, the money is invested in the index funds underlying the selected investment strategy. If the chosen strategy does not (no longer) suit you, you can adjust it at any time free of charge.
Always on the first banking day of the month, we buy or sell the fund units required to implement your chosen investment strategy (Note: The settlement of trades usually takes place two days later). But before we do so, we check whether other customers within the finpension 3a Retirement Savings Foundation client base have orders to the contrary. In the end, we only trade what is necessary below the line. The rest is charged internally at the currently valid price. Fund units are moved from client X, who wishes to sell, to client Y, who wishes to buy the same fund units. Of course, this internal settlement, which is called netting, is fully automated.
Through this internal settlement, we can often settle purchases and sales at better prices than other providers can do. We can optimise any spread costs between the buying and selling price.
Due to price fluctuations, the effective weightings of the fund units may deviate from the specified target weightings of the investment strategy. If the weighting of a fund deviates from the target weighting by more than one percentage point, your entire portfolio will be realigned. Investments are sold and purchased to restore the target weightings of the individual index funds. This process is called rebalancing. It is performed monthly on the first banking day of the month, always before trading. There are no transaction costs involved.
In the application you can create a request that you want to receive the portfolio. You will then receive an e-mail with the form which you must fill in and return signed for the purchase. As soon as the form has been completely filled in and signed, we will set your investment strategy to "in liquidation". At the beginning of the next month the fund units will then be sold and the proceeds will be credited to your account. Afterwards the payment will be made.
If you would like to reduce the investment risk immediately, you can of course do this free of charge. We recommend that you choose a strategy with a low equity component. The change of strategy will be implemented on the first bank working day of the following month.
The payment must be recorded in the tax return under "deductions". In addition, the payment certificate from the pension foundation must be enclosed with the tax return. The payment certificate can be downloaded from the app under Documents.
3a assets do not have to be declared in the tax declaration. The assets are tax-free. Income from the retirement assets (dividends and interest) does not have to be declared either. They are also tax-free.
No, dividends and interest earned on pension assets are not taxable as income. The assets do not have to be listed in your tax declaration either. Pension assets are tax-exempt until they are withdrawn.
Yes, withholding tax is generally deducted on foreign dividend and interest income. However, as the index funds used can only be subscribed by pension funds, the funds can reclaim a large part of the withholding taxes.
Yes, there is a tax on the withdrawal of pension benefits. However, it is a reduced tax. This means that the tax rate is lower than income tax. With a staggered withdrawal, the tax can be further reduced on withdrawal.
3a credit balances must be withdrawn at the latest when you reach your normal AHV retirement age. However, if you can prove that you are still in gainful employment, you can continue your pillar 3a credit balance for up to five years beyond that date. During this period you can continue to pay in your contributions. Once you reach the regular AHV retirement age, you can close 3a accounts at any time and withdraw the credit balance.
The finpension 3a Retirement Savings Foundation does not engage in proprietary trading. Purchases and sales of securities are made exclusively on behalf and for the account of the account holder.
The business risk lies with finpension AG. Example employees: they are not employed by the Retirement Savings Foundation, but by finpension AG. If finpension AG were to go bankrupt, this would not affect the retirement savings held by finpension 3a Retirement Savings Foundation. The board of finpension 3a Retirement Savings Foundation would then have the task of transferring the management to another company.
Account balances are privileged up to CHF 100’000 per account holder. In a bank bankruptcy they fall into the second category not the third. And securities balances are even better off than account balances. Securities are not shown on the bank balance sheet. They are regarded as special assets and, unlike account balances, do not fall into the bankruptcy assets of the bank. So with finpension 3a Retirement Savings Foundation, your pension provision is as secure as possible.
Since 2019, Credit Suisse Index Funds (CSIF) have been accumulating. This means that interest and dividends are generally retained in the fund and reinvested.
And yet there is a distribution, which we have credited to you as follows:
Details of dividend credits can be found in the Transaction Report or the Performance Report.
The fund pays the withholding tax to the Swiss Confederation
These dividend credits are the withholding tax that the fund must deliver to the Confederation. This means:
35% of the income earned by the fund from investments in shares or bonds must be delivered by the fund to the Confederation (withholding tax).
65% of the income is retained in the fund and invested in «new» shares or bonds.
We receive the withholding tax statements from Credit Suisse towards the end of May each year.
We use the Credit Suisse statements to reclaim the withholding tax from the federal government after the end of the tax year.
We prefinance the withholding tax refund for you
As soon as we receive the statements from Credit Suisse, we credit your portfolios with the withholding tax as a «dividend». In January of the following year, we then claim the withholding tax back from the federal government in bundled form.
On the one hand, this «prefinance» has the advantage for you that the withholding tax can already be reinvested in the selected investment strategy on the next trading day.
On the other hand, with this procedure you also benefit from the distribution if you leave us between the time of settlement by Credit Suisse and the refund by the Federal Tax Administration.
If we only credited the withholding tax once the refund had been made by the Federal Tax Administration, you would be left empty-handed if you left us in the meantime. This is despite the fact that you would be legally entitled to the dividend portion because you were in possession of the funds at the time Credit Suisse made the distribution to the Federal Tax Administration.
So as you can see, there are good reasons why we have decided to prefinance the withholding tax refund. Because it is in your interest.
What influence does the distribution have on performance?
The distribution in and of itself has no influence on performance. The reason is as follows: on the day when the dividend is paid out, the price of the fund falls by the value of the distribution.
The following chart illustrates the above with a dividend of two francs:
This does not mean that dividends do not have a positive influence on performance. They very much do. However, this positive influence is distributed over the entire year because the dividends are increasingly priced into the market price of the shares and bonds and thus also into the value of the fund as the dividend date approaches.
The positive impact is therefore not linked to the distribution. Otherwise, you could buy funds shortly before the distribution and sell them again shortly afterwards and thus achieve a relatively risk-free return. But of course that is not possible.
How high is the dividend yield?
We will show you how to calculate the dividend yield. Again using the example of the print screen at the beginning of this article with the portfolio with the strategy finpension Global 100.
1. Add up the dividends paid out:
Dividend in CHF
CSIF (CH) Equity Switzerland Large Cap Blue ZB
CSIF (CH) III Equity World ex CH Blue – Pension Fund ZB
CSIF (CH) III Equity World ex CH Blue – Pension Fund ZBH
CSIF (CH) III Equity World ex CH Small Cap Blue – Pension Fund DB
CSIF (CH) Equity Switzerland Small & Mid Cap ZB
CSIF (CH) Equity Emerging Markets Blue DB
Extract from the Transaction Report
2. Extrapolate the withholding tax advance to 100%:
If you earned a gross amount of CHF 120,000 or more in one year, you will be assessed retrospectively. This means that you first pay the tax at source, but this is subsequently revised through an ordinary tax procedure (with the submission of a tax return). Within the framework of this subsequent ordinary assessment, you can deduct your payment into pillar 3a.
If you earn less than CHF 120,000 gross, you will not automatically be assessed retrospectively. Until now, you could apply for a retrospective rate correction of the withholding tax for the 3a deduction. This retrospective rate correction is no longer possible from the 2021 tax year. However, you can now voluntarily apply for a retrospective ordinary assessment. You must observe the following points:
The application for a retrospective ordinary assessment must be submitted by 31 March of the year following the tax year.
If you are subject to a subsequent ordinary assessment, this system also applies to the following years (until the end of the withholding tax liability in Switzerland).
A retrospective ordinary assessment can lead to both a higher and a lower tax burden. You should therefore clarify in advance whether it is worthwhile for you to switch to the retrospective ordinary assessment because you can deduct the payment into pillar 3a or voluntary purchases into the pension fund.
Also for persons without tax residence in Switzerland (e.g. cross-border commuters to Germany with a weekly stay in Switzerland), a subsequent tarrif correction of the withholding tax is no longer possible from the tax year 2021.
Weekly residents can now also be subject to retrospective ordinary assessment. However, this is only the case if they generally earn and pay tax on at least 90 per cent of their worldwide income in Switzerland. Then they are considered "quasi-residents" by law.
As with residents, the question arises as to whether a subsequent ordinary assessment is worthwhile. Unlike residents, however, quasi-residents have the option of deciding each year new whether they want a subsequent ordinary assessment or not (cf. page 669 of the dispatch). This does not automatically apply to subsequent years as well.