The benefits of a third pillar B
The benefits of a third pillar B
"I read your contribution of 24 October 2016 about the third pillar "A", I'd like to build up a pension but I've also been told about a third pillar "B" and frankly I don't quite understand the difference. Does it offer the same benefits, particularly tax benefits?"
Jacques, Carouge
Like Pillar 3A, Pillar 3B is designed to cover any gaps in the first and second pillars. Anyone can decide to set up a pillar 3B, whether or not they are employed.
This third pillar "B" is a free pension plan that offers a great deal of flexibility. Unlike the third pillar "A", the amount of the premiums is free, so there is no limit on the annual amount you can pay in. You therefore have a free choice as to how much of your savings you want to allocate to your pension.
What's more, under Pillar 3B, the policyholder, the insured person and the premium payer can be different people, allowing for interesting combinations depending on your needs.
It is also important to note that there are no legal restrictions on beneficiary clauses for Pillar 3B: you can therefore designate whoever you wish to receive the proceeds of your savings, for example a person outside your family circle. Free choice of beneficiary can be particularly welcome if you wish to give preference to an heir or a third party at the time of your inheritance, while respecting the hereditary reserves laid down by law. This is a fundamental difference from Pillar 3A, where the circle of beneficiaries and their order of priority is strictly defined by law.
Lastly, pillar 3B is an available form of pension provision, meaning that you can access it at any time by requesting an advance payment, without having to justify the reason or the destination of the amount. Unlike pillar 3A, this amount can be used to finance a trip or buy a boat!
However, at federal level, there are no tax advantages for Pillar 3B. On the other hand, most cantonal laws provide for a tax deduction for premiums paid, subject to certain restrictions. In Geneva, the law only allows a deduction for life insurance premiums of up to CHF 2,200 per year for a single person, while a married couple can deduct up to CHF 3,300 (art. 31 of the Personal Income Tax Act: LIPP).
It follows from the above that Pillar 3B offers more flexibility than Pillar 3A, but does not provide the same tax benefits.
