Interest yield rates are, by far, the most important criteria to look at when choosing a 3a retirement saving solution. The rates offered by the most generous accounts are twice as high as those offered by the least generous accounts.
3a retirement accounts are not always free
In addition to interest rates, it is also important to compare fees and charges. Unlike 3a retirement funds – which have regular, ongoing fees attached – you do not pay ongoing account fees for 3a savings accounts. Banks also do not charge account opening fees when you open a 3a retirement account.
But withdrawing assets from 3a retirement accounts can involve charges. A growing number of Swiss banks and insurance companies now charge fees when you withdraw your retirement savings ahead of retirement (for the purpose of purchasing a home, for example).
In light of the current trend towards higher fees and charges in Swiss banking, it is likely that withdrawal fees will continue to climb over the coming years.
Pre-retirement closure of 3a accounts
Most banks do not charge you fees when you withdraw 3a savings after reaching legal retirement age. However, many banks and insurance companies charge fees when you close your account before you retire.
Reasons for closing your 3a account ahead of retirement may include: migrating assets to a different 3a account, fund or life insurance; death; receiving disability benefits; becoming self-employed; buying or building a home as your primary residence; amortizing a mortgage; leaving Switzerland for good; dividing assets during a divorce. Each bank has its own terms and conditions which determine the fees that apply in each situation.
Major differences in fees and charges
Fees and charges vary greatly between different banks and insurance companies. You can find all relevant fees and charges shown in detail on the info pages and cost breakdowns of the interactive Swiss 3a solution comparison.
Charges for migrating 3a assets to another service provider
Increasingly, Swiss banks and insurance providers are charging fees for the transfer of 3a retirement savings to other banks or insurance companies. This is important because as interest rates or performance change, you may choose to move to a different 3a solution to take advantage of better returns. Financial service providers impose these fees in order to increase the cost of migration and thus discourage you from moving to other service providers. Account termination and transfer charges can be as high as 100 francs at some service providers.
Pay attention to notice periods
Some banks impose notice periods for account termination. These are typically between 3 and 6 months. Heavy charges may apply if you close your account or withdraw assets without giving due notice.
Charges for home-purchase withdrawals
Charges for withdrawing pillar 3a assets for use towards purchasing a home or paying off a mortgage are less common. However, some banks and insurance companies do charge administrative fees for withdrawal of assets towards purchasing a home.
Fees levied range between 100 and 400 francs. Additional fees may apply if you purchase a home outside of Switzerland. Fees may be reduced or waived altogether when assets are pledged but not withdrawn (indirect amortization).
Fee-free 3a retirement solutions
There are other fees which may apply to pillar 3a account. These include fees for locating account holders when contact information is not up to date, and fees for other types of pre-retirement account terminations. However, there are still several Swiss banks and insurance providers which do not charge any fees at all for their 3a savings solutions.
You can easily find all completely free 3a solutions on the results page of the 3a retirement account comparison by using the filter criteria. Fee-free 3a solutions include all 3a savings accounts managed by the Privor pillar 3a foundation.