Pillar 3a into two places

Is it not that you can pay in as much as you want, but can only get the tax deduction for the max prescribed amount?

Edit: Nope. Thanks for the correction :slight_smile:

5.1, it’s very clear this isnt allowed.

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Absolutely not. You are not allowed to pay more to 3rd pillar and if you overpay, 3a foundation must reimburse the excess. And I guess if you invest these money, then it’s getting really messy.

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The pros of using more than one retirement foundation (in my opinion):

1. Diversification

Pillar 3a assets enjoy only modest protection from Swiss depositor protection, because they are classified as privileged assets, but are not covered by the Esisuisse guarantee. That sets them apat from pension benefits, which are protected against pension fund bankruptcy by the LOB Guarantee Fund, to some extent.

Holding your pillar 3a assets at more than one retirement foundation can help minimize the risk of losses resulting from bankruptcies. This risk may be relatively small right now, but when it comes to retirement savings, it pays to think long-term.

  1. Portfolio variables (if you invest)

Factors which affect overall performance vary between service providers. Although the flat fees, and the instruments (e.g. ETFs) used are a good indicator of performance, there are other things like the way currency conversions are handled, how frequently portfolios are rebalanced, etc. which are much more difficult to track.

Unless you can access and carefully analyze all relevant information, it can be better to put your eggs in more than one basket and then compare performance across all portfolios after a given time frame.

The cons of using more than one retirement foundation (in my opinion):

1. Tracking payments

The main con of using more than one foundation is the possibility of confusion with regards to pillar 3a limits. But if you track your payments and assets in an Excel sheet or similar, this shouldn’t be an issue.

2. Withdrawal fees

If you use service providers which charge a fee for early withdrawals (for home purchases, for example), you may end up having to pay multiple withdrawal fees instead of just one.

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in fact, you need to work 100% to pay the maximum otherwise the tax authority will give you a letter to take it back.

I don’t know where you have this information from, but I have tons of empirical evidence of the opposite.

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I’m not sure I understand you correctly, but you can also put the maximum amount (6883 CHF) when you’re working part time.

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sorry I mean employed.
Not sure if you stop working or go to the RAV, you cannot send the maximum

„Arbeitnehmer und Selbständigerwerbende können bei den direkten Steuern von Bund, Kantonen und Gemeinden ihre Beiträge an anerkannte Vorsorgeformen in fol­gendem Umfang von ihrem Einkommen abziehen:

a.
jährlich bis 8 Prozent des oberen Grenzbetrages nach Artikel 8 Absatz 1 BVG, wenn sie einer Vorsorgeeinrichtung nach Artikel 80 BVG angehören; (CHF 6’883)
b.
jährlich bis 20 Prozent des Erwerbseinkommens, jedoch höchstens bis 40 Pro­zent des oberen Grenzbetrages nach Artikel 8 Absatz 1 BVG, wenn sie keiner Vorsorgeeinrichtung nach Artikel 80 BVG angehören.“ (CHF 34’416)

Verordnung über die steuerliche Abzugsberechtigung für Beiträge an anerkannte Vorsorgeformen

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I don’t see any salary dependence for people with the 2nd pillar.

Thank you guys.

So all in all I cannot invest maximum amount in two 3a places. Right? I can only put half in one and half in other. Even if I do that one has to give me back the 3a amount?

Hope I grasped the answers right.

Correct. The legal maximum applies to the sum of contributions across all accounts. You can split it up but not exceed it.

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What do you mean exactly?

It doesn’t say that one is not allowed to contribute max amount to 3a if one is not 100% employed or if the income is below a certain threshold.

Anyone who earns an OASI-eligible income can use the pillar 3a, and can contribute up to the maximum annual contribution.

Your work-hours have nothing to do with eligibility.

If you earn a salary of 2300 francs per year or more, you (and your employer) have to pay OASI contributions. If you are a domestic worker, you have pay OASI contributions from the first franc, as the 2300-franc exemption does not apply.

So if you earn more than 2300 francs per year from one employer (or any amount from one employer per year if you are a domestic worker), then you can pay into the pillar 3a, up to the annual maximum limit.

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…which does seem to depend on your employment income (unless you’re subject to pension fund insurance).

Put differently, if you earn, for example, 300 CHF/month, you can only contribute much less than 6883 CHF to pillar 3a.

…unless I am missing something? Sure, this will be irrelevant for almost anyone anyway - unless you’re indeed semi-retired early and trying to optimise your taxes - then again that’s what this forum is about, isn’t it?

In theory, you can pay into your 3rd pillar account with funds coming from your wealth, received donation, capital gains, etc. However, in practice you would have no tax benefits (even a tax penalty when withdrawing) so it would be silly.

Yes, that’s exactly what I was thinking about and referring to.

“Fired” Mustachians may want to reduce their tax burden. And they also may be working a minimum job rather than doing nothing. Working a minimum and/or part-time job often comes with disproportional social security and tax benefits compared to doing nothing (below the age of retirement).

However, in practice you would have no tax benefits (even a tax penalty when withdrawing) so it would be silly.

Depends. We’ve been discussing withdrawals at very low or even zero tax rate in the the other thread. :wink:

The situation you are describing only applies to self-employed people who do not have a pension fund (pillar 2).

If you are self-employed and do not have an occupational pension fund, you can only contribute up to 20% of your net annual income to the pillar 3a, up to the maximum limit (35,280 francs in 2023).

So yes, if you are (legally registered as) self-employed and earn 300 francs per month, you could theoretically only contribute up to 720 francs per year. However, if you were able to sign up to a pension fund (through an industry association, etc.), you would get the pillar 3a limit for people with a pillar 2, which in this case would be higher (7056 francs in 2023).

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The only relevant condition is whether you’re contributing to pillar 2 / BVG. This applies to self-employed without a pension fund but also to employees without BVG (income below BVG minimum). E.g. if you work part-time and your income is only 20k (and your employer doesn’t opt-in to pillar 2), you can contribute only 4k to pillar 3a (20% of 20k).

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