The third pillar: Private pensions

Entrepreneurs should acquire national insurance for themselves and any employees. But what about the third pillar?

The third pillar comprises private pension plans. It is, in part, supported by tax benefits. Thanks to the third pillar, employees can make up shortfalls in their pension plans or respond to subsequent claims. The third pillar can also ensure benefits in the event of death or disability. A distinction is made between restricted private pension plans for persons earning an income (pillar 3a) and unrestricted pension plans for everyone (pillar 3b).

For businesses, private pension plans are very important. Ultimately, not all types of social insurance are mandatory for self-employed persons, and they need to set up their old-age and disability cover, in large part, themselves.

Make the most of pillar 3a: the best strategies for deposits and withdrawals:

1. Make maximum use of deposits – regular pillar 3a deposits improve your retirement provision and reduce your tax bill.
2. Catch up on missed deposits – from 2025, it will be possible to make back payments for up to ten years if certain conditions are met.
3. Continue contributing in retirement – Those who are still working after retirement age can continue contributing for up to five years.
4. Securities instead of interest-bearing accounts – In the long term, 3a securities solutions achieve higher returns than savings accounts.
5. Extend investment horizon – Securities can be transferred to the private portfolio after retirement to offset market fluctuations.
6. Compare interest rates – differences between banks can have a significant long-term impact on the balance.
7. Make an early deposit – those who pay in at the beginning of the year benefit more from the compound interest effect.
8. Choose a bank over an insurance company – insurance companies are usually expensive and opaque; banking solutions are more flexible and cost-effective.
9. Phase capital withdrawals – Simultaneous payment of 3a and pension fund assets increases the tax burden.
10. Open several 3a accounts – Staggered payments over several years reduce the tax burden in retirement.

 

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Last modification 11.03.2025