A few clarifications :-)

1) You can have a 3rd pillar account with either a Bank or an insurance company. In a bank it works pretty much like a standard account but with higher interest rates. You can have different types according yo your risk profile. Coop and Migros Bank were the best ones for just a basic account last time I checked. You do not need to have other accounts with them.

2) You can deduct the amount you put into your 3rd pillar from your taxable income whether you are a tax declarer or a tax at source person. Just the way to do it is different: a tax declarer willinclude this in his/her declaration whilst a tax at source needs to fill in the approriate form.
http://www.steueramt.zh.ch/html/form...ntrag-e01r.pdf

3) You will pay some tax upon withdrawing this amount (this is to avoid tax evasion) The amount depends on Canton etc but it is still lower than income tax

4) You can withdraw the amount if you are buying a houise, setting up a business or leaving the country

5) There is no minimum amount you will pay each year. the maximum amoutn is 6365 for year 2007 if you belong to a second pillar (your company pension fund) If not, the max amoutn is around 30 K.

Cheers,
Cristina