Swiss 3a Retirement Accounts: Historical Interest Rate Comparison

Independent online comparison service moneyland.ch compiled the historical credit interest rates applicable to the 3a accounts offered by 32 Swiss banks, with data for some banks tracked as far back as 1987.

As part of the analysis, moneyland.ch calculated the average annual interest rates for each 3a account per year and the historical overall performance. The exact dates on which interest rates changed are accounted for. You can obtain a free copy of the comparison as a PDF using the request form at the foot of this article.

Dwindling 3a interest rates: from 7% to 0.275%

Interest rates have dwindled steadily – apart from a few minor reversals – since 1992. The average annual interest (median) for that year was 7% per annum. “That is a credit interest rate which today’s savers can only dream about,” says moneyland.ch CEO Benjamin Manz. Rates declined rapidly in the following years, with the average interest rate falling to just 2.79% by 1999. That decline was followed by a period of fluctuation, with 3a interest rates settling at an average of 2.27% by 2008. Since 2008, interest rates have declined year on year without fail to where the average interest rate (median) for 3a accounts is now only 0.275%. That is a historical low.

Interest rates vary widely today

 “Even at the current low interest levels, there are still major differences between the interest rates offered by different banks,” according to moneyland.ch analyst Michael Burkhard. While the 3a retirement accounts offered by J. Safra Sarasin Bank currently do not pay any interest at all, Bancastato, the cantonal bank of Ticino, pays 0.75% interest per annum to 3a account holders with Bancastato private accounts. Relatively high interest rates are also offered by Crédit Agricole next bank (0,7% per annum for 3a customers with private accounts) and WIR Bank (0.45% per annum).

...and in the past

Major differences in interest rates offered by different service providers are nothing new. The analysis of historical interest rates shows a certain level of continuity in the rankings of individual financial services providers over time. As a general rule, banks which are rated highly or poorly in current 3a interest rate comparisons will show similar ratings in past years. But there are also exceptions to this rule. One of these is Postfinance, which currently offers below-average 3a interest of 0.2% per annum even though it has paid out higher-than-average interest at some points in the past.

Cornèr Bank tops; ABS, Swiss Life, ZKB and UBS flop

Using exact historical interest rates, moneyland.ch calculated the performance of the analyzed 3a accounts based on a modeled scenario in which an account holder deposited 5000 Swiss francs per year in a 3a retirement account over a 10-year period (starting 2009). Total deposits, in this case, come to 50,000 francs. The differences in the returns (including compounding interest) delivered by different banks over the 10-year term are substantial. Based on the modeled scenario, the average return for all accounts over the 10 years is 2549 francs.

The Alternative Bank Switzerland (ABS) had the poorest performance, with total interest of 1498 francs over the modeled term. Swiss Life performed only marginally better (1913 francs), as did the Zürcher Kantonalbank (2024 francs) and UBS (2150 francs).

Cornèr Bank had the highest performance over the 10-year comparison, with total credit interest of 3431 francs. It is followed by Bank CIC with 3395 francs, Bancastato with 3363 francs, the WIR Bank with 3246 francs and the Banca Populare di Sondrio with 3039 francs. The difference in interest earned between the highest yield retirement account and the lowest yield retirement account is a hefty 1933 francs.

3a savings account tips

Currently, the applicable tax deduction is the primary financial benefit of saving using a 3a retirement savings account. Depending on your income, the canton you reside in and the amount of money which you deposit in your 3a account, the tax deduction can save you more than 1000 francs. But comparing interest rates before parking your retirement savings in a 3a account makes financial sense even though interest rates are generally low. Just note that interest rates can be changed by the bank at any time. “But historical data shows that many banks have consistent policies with regards to the interest they pay on 3a accounts,” says Benjamin Manz.

More on this topic:
Interactive 3a retirement account comparison