Third Pillar Account or Retirement Fund?

Which is the better third pillar retirement savings solution: a retirement account, or a retirement fund?

Hi there,

Whether a 3a retirement account or a 3a retirement fund would work best for you depends on your risk tolerance.

Assets held in Swiss pillar 3a retirement accounts are insured by the depositor protection guarantee from Esisuisse. 3a accounts do not normally have an annual fee. The chances of you losing money held in 3a retirement accounts are small. You can use the moneyland.ch 3a retirement account comparison to find the account which pays the highest interest.

Assets invested through a 3a investment fund can potentially earn higher returns than you would earn as interest with 3a retirement accounts. However, you need to consider the total expense ratio (TER) of the retirement fund, as well as fees associated with buying shares in the fund (the "front end load") and fees associated with selling your fund shares (the "back end load"). You should also look out for possible transaction and rebalancing fees.

Fees will apply whether or not the fund performs well. In the worst case, the costs associated with a 3a retirement fund may be higher than the fund's investment returns. In that case you will actually lose money. In the best case, the return on investment will be high enough to cover costs and still deliver a better yield than you would earn in interest from 3a retirement accounts. There is no way to predict a fund's future performance, so the key factor when choosing a fund are the fees charged. You can request an overview of the fees charged by major Swiss retirement funds on the moneyland.ch guide to 3a retirement funds.

Best regards from Moneyguru