Are you close to retirement and wondering how to guarantee yourself a fairly usual standard of living? Well, the third pillar is this notion that you need to be aware of. The latter is indeed a component of the system of 03 pillars, which is set up in relation to old age provision, survivors and disability. Returning to the third pillar in question, there is an optional private pension that has many advantages. Read on to find out why you need to subscribe to it.
Preparing for your retirement
On retirement, you are bound to lose approximately 40% to 50% of your income by subscribing only to the 1st and 2nd pillar. The 1st pillar, compulsory for all Swiss, is only used to cover vital needs once you retire. It partially compensates for the loss of work income. The 2nd pillar is compulsory for all employees, from a well-defined salary. Thus, the 1st pillar being insufficient, the 2nd aims to complete it.
But still, it’s not enough, since the first two pillars only cover 60% of your last income. Therefore, you need to know more about the Swiss 3rd pillar. For the simple reason, it’s actually the one that gets you closer to a percentage of 80% of your last earnings. This is when you can hope to find a decent and comfortable life in retirement.
Protect your family
If you are concerned about the future of your family, you must therefore protect it by subscribing to the 3rd pillar. In doing so, your relatives or your heirs will receive a capital if unfortunately you die. It is obviously the 3rd insurance pillar that is involved in this case. In fact, it protects your loved ones in the event of disability or death, by giving them access to an income.
Also, it allows you to finance your projects, to plan the expenses of your offspring, and to put money aside which you can touch at any time.
Save on your taxes
The 3rd pillar allows you to make huge savings on taxes. However, you will have on this subject, the choice between the 3rd pillar 3A bound and 3B free. Indeed, by opting for the linked 3rd pillar 3A, the insured obtains a tax deduction of the amount he saves each year, and his contributions can be deducted from taxable income.
With the free third pillar 3B in addition, you certainly benefit from a deduction from taxable income, but this would depend on the cantons like Geneva and Fribourg. On this subject, it is preferable to seek the help of a trustee in Geneva for extensive knowledge of your taxation.
Become your own owner
The third pillar does not only allow you to prepare for your retirement or to protect your family. It also allows you to finance your real estate project. In fact, you have two options in this regard. These are the pledge and the advance payment.
We speak of pledging when your third pillar capital serves as collateral for obtaining real estate. In this respect, you benefit from a higher tax deduction. With regard to the advance payment, your capital is used, and you benefit from a not too high mortgage, as well as low interest charges.