Banking News

Pillar 3a: Major Differences in Interest Rates

November 19, 2019 - Benjamin Manz

A comparison of the interest rates of Swiss pillar 3a savings accounts shows major differences between banks. But a 3a savings account can still be a good choice in spite of historically-low interest rates.

A comparison of pillar 3a retirement accounts from 91 Swiss financial services providers by provides useful insights for retirement planners. The average median interest rate of Swiss pillar 3a accounts is 0.2%. The arithmetic average interest rate is 0.19%.

That is a historically-low interest rate. By comparison, in 1992, the average interest rate was 7% per annum. In 2008, the average interest rate was 2.27% per year.

The highest- and lowest-yield pillar 3a accounts

Currently WIR Bank offers the highest interest rate, at 0.4% per annum. Bancastato, the cantonal bank of Ticino, also pays 0.4% interest per annum, but pillar 3a accounts are only available to its private account holders. These are followed by a number of other banks which pay 0.3% interest per annum, including the Neue Aargauer Bank (NAB) and Cornèr Banca.

On the bottom of the list is Bank J. Safra Sarasin which pays no interest on pillar 3a accounts at all. Other less-generous financial services providers include Swiss Life, the Zuger Kantonalbank and UBS – which pay 0.1% interest per annum. These are subceded by banks like the Zürcher Kantonalbank, the St. Galler Kantonalbank and Baloise Bank SoBa – which pay just 0.05% interest per annum.

The interest rates of pillar 3a accounts can change at any time. Currently, changes are almost invariably downward. However, the currently most favorable banks have generally delivered above-average interest for many years.

This example shows just how stark the differences in interest paid are: If a retirement planner held 50,000 francs in the pillar 3a over 10 years, they would earn 2036.40 francs of interest if they held that money in the account with the highest current yield. If they were to put that money in the current lowest-yield account with 0.05% interest per annum, they would earn just 250.55 francs of interest over the same term.

A pillar 3a account can still make financial sense

 “Although the interest rates are at an all-time low, pillar 3a accounts can still pay off,” states Benjamin Manz, CEO of the online comparison service Contributions to the pillar 3a are tax deductible. Depending on the canton, the amount and the size of a taxpayer’s income, the tax saving can exceed 1000 francs.

Over the past 10 years, pillar 3a retirement funds have delivered significantly higher returns than pillar 3a savings accounts. The rule of thumb here is: The greater the stock component of a pillar 3a fund, the better that fund will have performed in recent years. But it is safe to say that the stock market will decline at some point in the future. There is no accurate way to predict when this will happen, or how sharp the decline will be. When that happens, pillar 3a retirement funds will perform worse than pillar 3a savings accounts. For this reason, pillar 3a accounts are better suited to risk-averse retirement planners.

Use the interactive pillar 3a comparisons now:
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Expert Benjamin Manz
Benjamin Manz is CEO of and an independent expert on banking and finance.