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Third Pillar – Bank VS Insurance – Which one is for you?

By now I am sure you are very familiar with the Swiss pension system and the three pillars.  Should you require additional information on this topic simply click here

A common question we hear a great deal when advising clients on their tax relief and third pillar accounts is which account should they open?  The decision to open a third pillar account is an easy one due to the tax relief we benefit from.  However, do we choose to stay with our bank such as UBS or Credit Suisse or do we take out a policy with an insurance company such as AXA or Swiss Life.

Utilising your bank

In our experience for most international workers utilising your bank is the most suitable option and here is why.

  • The account is very simple to open up via your internet banking application or in a web browser
  • No long term commitment – You can contribute as much or as little as you wish without any contractual obligations
  • No penalties for not contributing
  • Investment options are also available to help your pension grow
  • Still benefit from tax relief

If you are unsure how long you plan to stay in Switzerland, opening your account with the Bank is the most flexible option.

Using an insurance company

If you plan to stay in Switzerland until retirement and wish to make the maximum contribution each and every year to maximise your pension income then an insurance option maybe an attractive option.

  • You need to agree how much you wish to contribute each year from the outset
  • You will also benefit from life insurance – amount will depend on your plans term and contribution amount
  • Insured amount can be used when applying for a mortgage
  • Investment options are also available to help your pension grow
  • Payments must be made every year
  • You may receive less than you have invested if you cancel your policy before the end date

How and when to make your contributions

We always recommend that you make your contributions on a monthly basis rather than a one off payment each year.

Contributing 573.58 per month is much easier than 6,883.00 as a one off.  Not only is it a disciplined way to save but if you do choose to invest your contributions it also helps mitigate market risk.

If you need further information

If you are still unsure what policy is right for you, please do feel free to complete the below form and one of our advisors will contact you and help you choose the right one for your circumstances.

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