I had a fully loaded 3a for a few years too but then decided to forgo the tax credits in favour of investing in fully liquid assets, and not have ex-CH taxation worries. I now believe that the benefit of 3a for non-Swiss and/or people who never intend to buy property here, or do not intend to leave their bones here is between marginal and non-existent.
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I don’t get your assessment. It’s basically a one-time 30% risk-free return + same annual return as your other ETFs. There is no better investment.
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And you can deduct it from your taxation.
Best investment (if you choose the “correct” 3a provider/solution)
If you plan to withdraw early when moving abroad, Newcountry could consider the payment as regular income. And then slap 40% or more on it, possibly even on top of the CH exit tax.
As for Sparrow, maybe the 3a is fully stacked with ETFs, and therefore included in those bars? Who knows.
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No third pillar for him
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I’ve been through this 100 times already in excel, your numbers are right, guaranteed ~30% return on the annual payment, and IIRC it’s disregarded from wealth tax. But it’s locked, and more importantly:
I don’t intend to stay in CH forever, I intend to move back to Greece in 5-10 years max. The laws about withdrawing foreign assets differ by country, and aren’t always easy to understand. Greece could slap a >40% tax on the 3a withdrawal under some circumstances. This is a valid risk I don’t want to take. Then the Finpension SZ 5% exit tax can be reclaimed from CH but by that point you’ve burnt all savings from having a 3a in CH, and then some. Add on to this the fact that the 3a is locked and it becomes far less favourable than putting everything in totally liquid ETFs. In Greece specifically capital gains and dividends from UCITS ETFs are tax-free, so my plan before leaving is to basically move all my assets into UCITS ETFs, then move them to DEGIRO, declare properly in Greece and call it a day 
I agree, if you’re Swiss or intend to buy property here, or intend to stay here until at least the normal withdrawal time, or want to try to game or take chances with another country’s tax system - but I am not Swiss and don’t want any of the following options!
I think 3a is meant as retirement asset. So if someone doesn’t plan to retire in Switzerland and plan to withdraw early, it can become problematic due to lumpsum tax issues in another country.
Having said that, if that is not the plan, then it’s definitely difficult to beat 3a
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The downsides include illiquidity and tax on the back end.
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Isn’t it 7%, which would then make 3a the better option? Anyhow I would not want to move to a socialist state which does not differ between income and one-time (pension) payment anyway though.
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I don’t recall, need to look it up again, it’s not clear what rate they apply, ok what caps (eg first X0,000 taxed at a lower rate, then anything above by a lot more). Still doubt I’d lock money up.
People who retire in Switzerland also have a risk: the risk that, by the time they withdraw their 3a savings, the tax treatment will have changed from what it is today (I consider this risk negligible).
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I am pretty sure that the staggered withdrawal window will be closed eventually.
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As of now we’re going in another direction though.
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What are your indications for this assumption?
That the state is losing tax revenue through a loophole, so they should have credible reason to plug it. Either way don’t care about it personally.
My canton is very favorably developing in terms of both economic growth as well as taxation. I still find it fascinating that Switzerland is basically the only country in Europe where politicians are successfully lobbying for tax cuts. I personally very much beleive in our principle of self responsibility, instead of constructing an abusive nanny state - like Germany for example.
On the topic in general: the top tax rate where i live is like 9.x% on capital withdrawals over 20M… funnily enough it’s at 7% or so for 250K. If my marginal tax rate when paying in is > 10% this is already worth it. If the state changes the rules, I expect a few lawsuits, as it’s not really clear if this is possible in the way the federal council wanted - maybe they can change them form now on, but for payments in retrospect, this is a legal gray area.
Note that this completely ignores drag from wealth tax, dividend withholding tax (which is more favorable for 3a providers as well) and costs of the 3rd pillar.
All in all, imho the difference needs to be significant for me to be worth it to lock the money away. I expect to pay about 1/3-1/2 my marginal tax rate on the wirthdrawal, making it worth about 1-2 additional years of compounding. I think this is worth it, because my wife and me still save a ton outside of 3a anyway - but it’s not as much as I tought.
We may withdraw smaller sums for our property though. I feel like this is the smartest thing you can do - that allows us to stretch the 3a withdrawals over > 20y or so - meaning even lower marginal tax rates. I can then refinance and put it into privat stocks, etc. But there’s no free lunch - all the money will get taxed as wealth then - grr…
Does that include at the Federal tax level?
Yes, it’s based on the table from finpension
[if we’re starting the off topic aside]
I wonder if there’s a reason why smaller countries can take advantage of the global system and not larger countries?
hint: the fact that smaller countries tend to be tax haven is not random, it also happens at the cantonal level in CH though it’s somewhat countered by the financial equalization system (perequation in fr). If you’re small you can lower taxes, as you become more attractive, you can “steal” income relocating from elsewhere and still be out ahead because your existing tax base is small enough that you gain more than you lost.
If a jurisdiction has already many companies/large population, because it’s mostly a zero sum game, they will not be able to attract enough to make up for the loss (the loss is much bigger than the loss of a canton like Zug or a country like Monaco).
I’m not going to complain about it because I benefit a lot personally. But I think it’s unfair to expect larger economies to use the same playbook.
And fwiw some larger European countries tried this trick, but they usually only lower the tax for newly arrived companies/people and it’s often time limited (example: Italy).
To take it to the logical extreme, let’s say I create my own 27th canton, population 1.
I charge only 0.1% tax. I attract 10 multinationals which relocate there and pass through 1 billion in profit each.
that gives me 10 million per year in tax income, enough to fund my canton. I lose the existing local tax (rounds to zero, so I don’t care).