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Old 23.11.2021, 19:33
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2nd or 3rd pillar independent

Hi all at EF!

Have a question regarding pensions in Swiss.
Short summary: I am employed and put money in my 2nd and 3rd pillar as one is allowed to do.

My wife is self-employed, with a 'small' revenue/income of 40-50k a year. She has an existing 2nd pillar at SwissLife with some money in it from former job. But hasn't put anything in this since years.

She pays her 3rd pillar, ~6600 CHF this year, as that's linked to our mortgage. (Same as i do)

I have understood that as independent you can up to a certain percentage of your revenue/income, put more into the 3rd pillar. We have some savings to use.

i have the feeling we don't use this enough in our 'advantage'.

What should we best do? pls don't hesitate if more info is needed.

Thanks !!

Patrick
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Old 23.11.2021, 21:43
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Re: 2nd or 3rd pillar independent

A 2nd pillar would be more beneficial
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Old 23.11.2021, 22:24
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Re: 2nd or 3rd pillar independent

as self employed she has no 2nd Pillar - self-employed persons without a 2nd pillar can pay 20% of their income, but no more than CHF 34,416.
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Old 23.11.2021, 23:57
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Re: 2nd or 3rd pillar independent

You can pay on 2nd pillar OR increase third pillar to max 20% of income.
Which one to choose largely depends on your other insurances (you don't want to be over insured for e.g. disability or death), if you want a fixed pension, how much return you want, if you are keen on investing in the stock market, etc. this also depends on possible scenarios that she may want to cover (divorce, your death, etc.).
Personally I would invest in stocks 3rd pillar and leave it there until retirement, or 2nd pillar and consider it a bond-like safe investment in my portfolio.
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Old 24.11.2021, 03:33
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Re: 2nd or 3rd pillar independent

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as self employed she has no 2nd Pillar - self-employed persons without a 2nd pillar can pay 20% of their income, but no more than CHF 34,416.
It can be “arranged” and it is more advantageous as it can be paid forward in multiples of years. It’s about the only serious tax planning advantage.
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Old 24.11.2021, 10:06
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Re: 2nd or 3rd pillar independent

To have 2 pillar, it means you need to be employed, if OPs wife structures her income like that mightn’t it result in OP’s wife having to pay higher social security and admin costs ? 3 pillar might be simpler and cheaper

3rd pillar has fewer restrictions on withdrawal, how it can be invested and use for property purchase.

I would say which one is better depends completely on personal circumstances
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Old 24.11.2021, 12:53
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Re: 2nd or 3rd pillar independent

This is very helpful! thanks so much

I was thinking as well about the 3rd pillar as there is a bit more flexibility in investing instead of just locking the money in an account

regarding the 3rd pillar : '20% of their income, but no more than CHF 34,416'

maybe a stupid remark, but for an independent: revenue - cost = income ?
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