Pillar 3a: ETF and funds or savings account? Horizon decides
Updated · 2 sources
Direct answer
The tax deduction is identical either way, so the choice is purely about horizon and risk: money you will not withdraw for 10+ years has historically been better served invested in low-cost 3a funds or ETFs, while money you will take out within about 5 years (retirement date, home purchase) belongs in the 3a savings account where a market drop cannot force a loss. Returns are never guaranteed; the account pays little but cannot fall.
Key facts
- Tax treatment is identical: deduction on the way in, separate reduced tax on withdrawal
- Illustration only: CHF 7,258/yr for 25 years is CHF 181,450 paid in; at 1% it grows to about CHF 205,000, at 4% to about CHF 302,000
- Those figures assume a constant return and ignore fees and withdrawal tax; real markets do not move in straight lines
- Total cost of invested 3a (fund TER plus provider fee) is the number to compare between providers
What the illustration does and does not say
Compounding is the whole argument: over 25 years of maximum contributions, a 3 percentage-point return difference is worth roughly CHF 97,000 on CHF 181,450 paid in. That is why long-horizon 3a money left on a near-zero-interest account quietly loses purchasing power to inflation.
It is not a forecast. The same equity exposure that produces the higher long-run outcome can be down 20–30% in the year you planned to withdraw, and 3a withdrawals cannot be timed freely: an account is withdrawn whole, at permitted events. Near a known withdrawal date, professionals de-risk in steps rather than switching everything the week before.
| 3a savings account | Invested 3a (funds/ETF) | |
|---|---|---|
| Value falls possible | No (deposit protection rules apply) | Yes, market risk is yours |
| Expected long-run return | Low, often below inflation | Higher over 10+ years, not guaranteed |
| Fits money needed | Within ~5 years | 10+ years away |
| Costs | Usually none visible | Fund TER + provider fee, compare total |
A workable default
Match each account to its withdrawal year. Accounts earmarked for a home purchase in the next few years, or for the first withdrawal tranche at 60, stay in cash; later tranches stay invested longer. Because each 3a account is withdrawn in a different tax year anyway, assigning horizons per account costs nothing extra and turns the staggering strategy into a risk strategy too.
FAQ
- Is the tax deduction bigger if I invest my 3a?
- No. The deductible amount is your contribution up to the annual limit (CHF 7,258 in 2026 with a pension fund), independent of whether it sits in cash or funds.
- Can I switch a 3a savings account into funds later?
- Yes. You can transfer a 3a balance to another 3a provider or solution without tax consequences, as long as the money stays inside Pillar 3a.
- What return should I assume when comparing providers?
- Compare costs, not promised returns: the all-in fee (fund TER plus custody/provider fee) is certain, the market return is not. Run your own assumption, for example 1% vs 4%, in a compound-interest calculator and look at the fee drag over your horizon.
Related guides
- Pillar 3a: bank or insurance? The flexibility test that decidesFor most employees a bank or securities Pillar 3a is the better default: you can pause, reduce or move contributions at any time and transfer the balance to another provider without loss. An insurance 3a bundles saving with risk cover but commits you to premiums for decades, and leaving in the first years usually means a surrender value well below what you paid in.
- Pillar 3a vs Pillar 3b: locked and deductible, or free and taxedPillar 3a gives you a tax deduction today (up to CHF 7,258 in 2026) but locks the money until 5 years before AHV retirement age, then taxes the payout at a reduced separate rate. Pillar 3b is simply your free savings: no deduction and no lock, interest and dividends are taxed as income yearly, while private capital gains are generally tax-free. Fill 3a first for retirement money; keep everything you may need earlier in 3b.
- Pillar 3a maximum for 2026: CHF 7,258 or 20% of incomeIn 2026 you can pay up to CHF 7,258 into Pillar 3a if you have a pension fund. Without one, the limit is 20% of net earned income, up to CHF 36,288.