How many pillar 3a accounts make sense? Since you are asking yourself this question, you probably know that a staggered withdrawal of pension assets can be interesting from a tax perspective. We explain what you need to know about multiple 3a accounts.
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How many pillar 3a accounts can I have?
In principle, the number of pillar 3a accounts is not limited. You can open a maximum of five accounts at the same time with many providers. However, if you choose several providers, you can have as many 3a accounts as you like.
How many 3a accounts make sense is another important question. You can approach the answer to this question from two different directions:
- Either from the question of at what amount the tax starts to increase when you withdraw from the 3a account,
- or from the maximum number of years available to a 3a saver for the staggered withdrawal of pension assets from pillar 3a.
Let’s take a closer look at the two cases.
1. From what amount does the tax increase when withdrawing from the 3a account?
The rule of thumb is: as soon as CHF 50,000 has been saved in the 3a account, it makes sense to open a new account. This rule of thumb is not necessarily wrong, but it is not correct for all cantons of residence. Why? Capital withdrawal tax is due on the withdrawal of funds from pillar 3a. The tax progression varies depending on the canton of residence. The amount from which you should open a new 3a-account to save tax on withdrawals therefore differs from canton to canton.
We have analyzed the capital withdrawal tax of all cantons and calculated how high the taxes are for capital withdrawals of CHF 10,000 to CHF 100,000. Three groups have emerged that differ from one another in terms of tax progression.
First group: hardly any tax progression
In the chart below you can see the cantons that have hardly any tax progression for pension assets up to CHF 100,000. As long as you do not want to move to another canton, it is not so important from a tax point of view in these cantons to divide your assets into several 3a accounts.
Please note: In these cantons, it is also advisable not to withdraw the 2nd and 3rd pillar in the same tax year.
Second group: Relatively strong progression right from the start
This chart shows the group of cantons with strong tax progression. Here, the capital withdrawal tax increases relatively sharply even for smaller withdrawals of CHF 10,000 to CHF 20,000. In these cantons, it is important for tax optimization to build up as many 3a accounts as possible. In this way, you can keep the tax on withdrawals from pillar 3a accounts as low as possible.
Third group: Increasingly progressive, but not right from the start
In the third group, the tax does not increase right from the start, but only from medium amounts of around CHF 50,000. From CHF 50,000, it makes sense to have several pillar 3a accounts in the cantons in the following chart.
2. What is the maximum number of years over which I can stagger my pillar 3a withdrawals?
In the previous chapter, we analyzed the cantons in which multiple 3a accounts make the most sense. Now we want to find out how many years are actually available for staggered pillar 3a withdrawals.
How many 3a accounts make sense for a staggered withdrawal?
Pillar 3 can be withdrawn up to five years before reaching the normal retirement age. Here is an example. If the normal AHV retirement age is 2030, you can withdraw pillar 3a in the following years:
- 2025 (from date of birth to the end of the year)
- 2026
- 2027
- 2028
- 2029
- 2030 (from the beginning of the year to the date of birth)
A maximum of six tax years are therefore available. Anyone who continues to work beyond the normal retirement age can postpone the withdrawal of pillar 3a. This by a maximum of five years:
- 2031
- 2032
- 2033
- 2034
- 2035
In this case, there is a maximum of eleven years in which you can make staggered withdrawals from pillar 3a. You might think that six or eleven 3a accounts would make sense for staggered withdrawals.
But beware: If you draw from the pension fund and a 3a account in the same year, the amounts are added together for tax purposes. As a rule, this increases the tax progression. If you want to avoid this, do not withdraw your pillar 3a and pension fund in the same year. This is relevant for anyone who wants to withdraw all or part of their pension fund as a lump sum. One year is omitted for the lump-sum withdrawal from the pension fund. A further year for each vested benefits account.
Practically every 3a saver has a pension fund. This reduces the reasonable number of 3a accounts for a staggered withdrawal to:
- A maximum of five 3a accounts at ordinary retirement age;
- a maximum of ten 3a accounts for a deferral of pillar 3a withdrawals.
Sensible number of 3a accounts for spouses
Pension withdrawals made by spouses in the same year are added together and taxed jointly. This applies as long as the tax system in Switzerland is not switched to individual taxation.
For married couples and persons in registered partnerships, the reasonable number of 3a accounts is therefore halved:
- a maximum of two or three 3a accounts per person at ordinary retirement age;
- a maximum of five or six 3a accounts per person in the event of a deferral of Pillar 3a benefits.
Do several pillar 3a accounts make sense for a WEF advance withdrawal?
An advance withdrawal of Pillar 3 for home ownership (WEF advance withdrawal) is possible every five years per pension foundation. However, this does not require several pillar 3a accounts. Reason: With a WEF advance withdrawal, it is permitted to withdraw only a partial amount of the assets from a 3a account. Would you like to find out more about WEF advance withdrawals? You can find more information in our article on Pillar 3a withdrawals for home ownership.
Note the fees when closing 3a accounts
As a rule, closing a 3a account costs nothing. Does your provider charge balancing fees? If so, it is not worth keeping 3a accounts with small savings amounts. An example to illustrate this: Let’s assume your provider charges a 1 percent fee for balancing the account. If you have a balance of CHF 10,000, you will pay exactly CHF 100 to close the 3a account. You can find out more about current interest rates and fees for 3a accounts in the linked article.
Read more about pillar 3a.