The swiss three pillar principle
Your future retirement pension is based on the three pillar system, and it aims to ensure the security and quality of your life in retirement.
Occupational pension provision for the self-employed Pension provision for the self-employed
You have consciously made yourself independent, so now organise your pension provision independently too!
When you're self-employed, you should take your pension provision into your own hands!
The company is my pension
Not only did your blood, sweat and tears (hopefully only metaphorically) go into establishing your company, but also your money. And who has kept on investing in the business and their own future? You, of course! But let’s be honest – what about your personal pension?
Logically you have the feeling that your company represents your pension – after all, it’s all your money in there. But after mustering up enough courage to set up your own business and deciding to live your life independently of others, are you suddenly handing over the reins?
You may be certain that you can hand over your company to a successor or sell it at a profit if you want to step down, that’s quite possible - but placing your hopes in someone who will one day “pay back” your invested retirement capital of their own free will is certainly not the best strategy.
You purposely set up your own business, so now you can also shape your own pension!
3+1 reasons why entrepreneurs should make their own pension provision
The system of retirement benefits in Switzerland basically consists of three pillars: the state AHV, the occupational BVG and the private pillar 3. Pillar 1 is mandatory and, put very simply, is intended to secure a basic standard of living in retirement. However, in very few cases is it enough to maintain the accustomed standard of living.
As stressful as the operational demands of everyday life may be, you should simply think about your distant future too. At what age do you want to retire and what should your life be like then? Depending on the answers to these questions, there needs to be a supplement in the form of an occupational and/or private pension.
Tax savings for the self-employed
Pillar 3a is a great way for self-employed persons to save on taxes. Even if you’re not in a position to max out your contribution, every little you pay into pillar 3a counts. Take a look at our tax calculator.
The amount of taxes you can save depends also on your marital status, place of residence, taxable income and denomination.
Calculate your tax savings potential using the Zürcher Kantonalbank tax calculator.
Joining a collective foundation (pillar 2)
Unlike paid employees, self-employed persons are not required to join an occupational pension scheme. To ensure you build up sufficient retirement savings, however, it can make sense to explore your options – and maybe join a scheme independently. In this case as well, the amounts you pay into the voluntary occupational pension scheme are exempt from tax. You can deduct them from your income on your tax return and save on taxes. Remember, when you pay money into an occupational pension scheme, the amount you can pay into your pillar 3a is limited to the maximum amount for employees affiliated to a pension fund.
So as a self-employed person you can make voluntary contributions to an occupational pension scheme:
- Your professional organisation has a collective foundation that insures you and can you can pay into.
- If you have employees, you can join a collective foundation together with them.
- You can insure the mandatory BVG component with the Stiftung Auffangeinrichtung BVG
This is what you can deduct from your taxes
Deduct your home office from your taxes
A lot of people who are self-employed don’t have their own office but instead work from home. For example, if you’ve set up a room in your apartment as an office, you can deduct this room from your taxes. To qualify, you must conduct a significant portion of your work from this room. The tax office of your canton of residence will tell you how to calculate the deductions for your home office. If you operate your own workshop or store for your business, you can deduct the costs of these premises from your taxes instead.
Incidental costs and money you spend on your laptop, etc. are also tax deductible. This applies equally to your tools, devices and equipment – and also to their maintenance costs.
Offsetting training costs
There are lots of options for further education as well when you’re self-employed. Courses, books and other learning materials are often really expensive. As a self-employed person, you can deduct the associated costs from your taxes. Magazine subscriptions and specialist literature you need for your work are also tax deductible.
You are legally bound to offer pillar 2 (a company pension plan) if you employ staff, but even if you're on the go as a one-woman or one-man business, there are many options available to you. You can, for example, set up a limited liability company (GmbH) or a public limited company (AG) and be employed by this legal entity. If you have a family, one advantage of pillar 2 is that it also covers death and disability. However, you should carefully consider which specific legal form is best for you and your requirements, as it's not only your pension that's a factor here.
But it's reassuring that you can be flexible. If you still don't save on a regular basis or don't have many savings to invest in your pension, pillar 3a is an ideal alternative. In this case you can also cover yourself by taking out separate insurance.
Pillar 3 in the Swiss pension system is designed to enable people to save money so that they can maintain their accustomed standard of living later on. Perhaps you used your previous pillar 3a funds to start your own business or buy your own home. In any event, you can save your assets for retirement with tax relief:
As a self-employed person unaffiliated to a pension scheme, you may pay in up to 20% of your annual earned income, up to a maximum of CHF 35280 (applies to 2024).
The tax authorities also support your pension provision, in that you can deduct all your deposits up to the maximum amount from your taxable income!
Saving is a good thing in itself, but with current interest rates you also need perseverance - this is why securities saving might be the better option for you. The good thing about pillar 3 is that you can determine your own investment strategy!
With the frankly pillar 3a, it's easy to invest your retirement capital as you wish. It only takes a few minutes to open it, and you'll benefit from the advantages for the rest of your working life:
You can make deposits from as little as CHF 1 and you have a choice of high-quality investment products with attractive yield opportunities, all at radically low prices. Digital, simple and easy to understand: making more of your pension is literally in your hands.
Do you already have a 3rd pillar? That's no problem either, as you can change it to frankly directly in the app in just a few steps. This way you benefit from frankly's attractive conditions, because frankly is half the price of comparable securities savings offers.
