3rd Pillar A
The Pictet Individual Pension Foundation (3rd Pillar) was created on 1 January 1990 and enables individuals to build up their own personal capital as pension provision and to benefit from the tax exemptions applicable to individual pension accounts (3rd Pillar A).
Through a rigorous approach to investment and professional management, and by taking advantage of all the investment possibilities allowed under Swiss law, the Foundation's aim is to increase individuals' pension assets.
The Foundation allows overall management of all of an individual’s tied retirement savings as well as offering the following advantages:
- lower fees;
- greater possibility for diversification (because of larger sums available);
- less overall risk as a result.
Furthermore, it is up to the individual to decide how much and how often they pay into their 3rd Pillar A pension account. If an individual chooses to make regular, fixed payments, the so-called “average price” method will be applied. This means that when the NAV of a share is low, the individual will be able to acquire more shares; when it goes up, this number will decrease. Depending on how the markets are behaving, you can thus optimise the average cost of your investments.
The Pictet Individual Pension Foundation (3rd Pillar A) is aimed at:
- anyone taxed in Switzerland whose income derives from gainful employment, whether a salaried employee or self-employed, and who has to pay OASI/DI social security insurance;
- any person wishing to improve the financing of their retirement;
- tax payers who would like to take advantage of the tax breaks offered by the Confederation and the cantons;
- anyone already paying into a 3rd Pillar A account or policy, but who has not yet reached the statutory limits;
- pension fund members who already have a tied pension account (3rd Pillar A), and wish to transfer their assets to a different pension account.
Tax advantages of a 3rd Pillar A account
Payments into a tied pension account (3rd Pillar A) may be deducted from taxable income, according to the provisions of Art. 7, OPP3. The maximum contributions permitted by law are determined by the Federal Council, and rise regularly in line with inflation.
All the income is exempt from income tax and is not subject to withholding tax, either by the Swiss Confederation or by the cantons, until such time as the capital is withdrawn. Furthermore, no wealth tax is deducted from the capital until the latter is withdrawn.
If assets are withdrawn, or in the event of death, the Confederation and the cantons tax capital payments as income, as a general rule separately from other income, at a special rate or at the pension rate.
In some cantons, however, the lump-sum benefits paid out to certain beneficiaries may be subject to inheritance tax rather than income tax; in some circumstances, they may even be subject to both inheritance tax and income tax.