3a & Vested Benefits: Implementation Options

The 3rd pillar has been designed by the legislator as a tax-privileged savings vehicle. The contribution you pay into the 3rd pillar can be deducted from your taxable income up to a maximum of CHF 7,258 (2026). For self-employed individuals without occupational pension coverage, the limit is 20% of income (up to a maximum of CHF 36,288).

A vested benefits solution is required by anyone who leaves their job and receives their accumulated pension fund assets from their previous employer's pension fund — or who is unable to transfer their full pension fund balance to a new employer.

The implementation options provided by the legislator for the 3rd pillar and vested benefits look remarkably similar: there is the account solution with interest credits, securities-based savings, or the insurance solution. This is regulated by the legislator in Art. 1, 5 BVV 3 (3rd pillar) and Art. 10, 19 FZV (vested benefits) respectively.

A special feature in the vested benefits area is the account solutions offered by the Stiftung Auffangeinrichtung (substitute occupational benefit institution). If no transfer instructions are provided when changing jobs or leaving a pension fund, the accumulated pension assets are automatically transferred to this institution after a certain period of time.

Looking at the development of implementation options over time, it is clear that securities-based solutions are gaining ground. This is linked, among other things, to the rise of digital, cost-efficient investment solutions, which we described in detail in Flashes 53–56 and which can be easily and transparently compared on the Economico 3a and vested benefits marketplaces.

Bank account solutions are losing some ground in both the 3rd pillar and vested benefits. In the current low-interest environment, these accounts yield virtually no interest. When — as happened in 2022 — even Switzerland experiences a small bout of inflation, these account solutions effectively result in a loss of purchasing power.

Insurance solutions are also barely making progress, despite insurance agents remaining as active as ever. The price-performance ratio of many 3a and vested benefits insurance policies is often the result of opaque actuarial calculations, which has already led to disappointment for many policyholders.

Finally, with regard to vested benefits, it is notable that a significant amount of money flows into the account solutions of the Stiftung Auffangeinrichtung. Whether this involves forgotten pension assets or deliberate decisions is a political issue that is regularly and intensely debated in Bern.