Why is it recommended to open multiple Pillar 3A accounts?

Why the Number of 3A Accounts You Hold Makes All the Difference When You Withdraw Funds

In Switzerland, the money you withdraw from your Pillar 3A account is taxed separately from your income, at a reduced rate. However, this taxation is progressive: the more you withdraw in a single year, the higher the tax.

The key point is thata Pillar 3A account must be withdrawn in a single lump sum. You can’t simply withdraw part of the principal and then withdraw the balance a few years later from the same account.

This is where the multi-account strategy comes into play: by spreading your savings across multiple accounts, you can schedule your withdrawals over several different tax years. Since each withdrawal is smaller, the applicable tax rate may be more favorable, potentially reducing your overall tax bill.

Be careful, however: emptying multiple accounts in the same year offers no tax advantage, as the amounts will be combined. For this strategy to work, you must therefore spread out your withdrawals over time.

A concrete example
Imagine you retire with CHF 150,000 in a single Pillar 3A account. If you withdraw the entire amount in the same year, it is taxed all at once—usually at a fairly high rate.
Conversely, if that CHF 150,000 is spread across three accounts of CHF 50,000 each, you can withdraw the amount from one account per year over three different tax years. Each withdrawal is then taxed separately, often at a more favorable rate.

Taxation of Pillar 3A withdrawals also depends on your canton of residence

One point that’s often overlooked: Taxes on Pillar 3A withdrawals aren’t the same throughout Switzerland.
Each canton applies its own rules and tax brackets for the taxation of lump-sum pension benefits. The amount of tax you owe therefore depends, among other things, on your canton of residence, the amount withdrawn, and your personal circumstances.

This is why a strategy of staggered withdrawals can have a different impact depending on where you live. In some cantons, spreading withdrawals over several tax years can result in significant tax savings, while the effect will be more limited elsewhere.

Before determining your withdrawal strategy, it is therefore important to consider the tax rules applicable to your canton of residence and your personal circumstances.

Other Benefits of Holding Multiple Accounts

The tax aspect is the best known, but it is far from the only one.

Greater flexibility in the event of early withdrawal.
Whether you’re buying a home, becoming self-employed, or leaving Switzerland permanently: when you withdraw your^3rd pillar savings, you’re required to withdraw all the funds from your account. Having multiple accounts allows you to withdraw only the capital you need, without touching the rest of your savings.

Diversification.
If you have multiple 3A pillar accounts, you can adopt a diversified approach that aims to put your money to work in different ways to maximize its potential.
You can choose a more dynamic investment strategy if you’re looking for a potentially higher return over the medium to long term, or opt for a more conservative strategy with a fixed-rate savings account.

If you’re unsure which strategy to choose, check out our dedicated article on the topic: Saving or Investing with Your Pillar 3A: Which Should You Choose?
If you’d like to learn more about how investment strategies are designed, we explain everything here: How Pilla’s 3A pillar investment strategies are designed.

A clearer view of your savings.
You can dedicate one account to retirement, another to a real estate project, and another to starting your own business, for example. This structure makes it easier to track the progress of each project.

But then, how many Pillar 3A accounts can you open?

Swiss regulations do not impose a maximum number of Pillar 3A accounts you can hold. However, each financial institution may set its own conditions.
At Pilla, you can open up to five different portfolios.

Do you have to open multiple Pillar 3A accounts in every situation?

Not necessarily. Here are a few guidelines that might help you make the right decision.

You don’t have to plan everything out today. Your strategy can evolve over the years, depending on your plans and your savings pace.

Mistakes to Avoid When Opening Multiple 3A Accounts

Waiting until the last minute.
The sooner you spread out your savings, the more flexibility you’ll have to organize your withdrawals over several years.

Withdrawing from multiple accounts in the same year.
In many cantons, pension fund withdrawals made during the same tax year may be aggregated for tax purposes. To get the most out of this strategy, it’s best to schedule withdrawals across different calendar years.

Choosing the same risk profile across the board.
Not all your goals have the same investment horizon. Savings intended to finance a home in two years will generally not be invested in the same way as retirement savings planned for twenty years from now.

Forgetting to take your canton into account.
The savings achieved through staggered withdrawals vary depending on cantonal tax rates. Before defining your strategy, it’s therefore a good idea to check the rules that apply to your place of residence.

Quick FAQ: Your Questions About Multiple Pillar 3A Accounts

Can I transfer part of my existing savings to a new portfolio?

Yes. You can divide your existing capital among several accounts, according to the terms set by your financial institution.

Does splitting my savings result in higher fees?

At Pilla, fees remain the same regardless of the number of portfolios you open. If you’re comparing multiple financial institutions, be sure to check their fee structures.

How many accounts should I have before retirement?

There’s no “ideal” number. Many strategies recommend three to five accounts to facilitate staggered withdrawals, but it all depends on your accumulated capital, your canton, and your personal situation.

Can I merge multiple accounts later on?

No. Once opened, two Pillar 3A accounts generally cannot be merged. It’s therefore best to plan their structure from the start.

In summary

Opening multiple Pillar 3A accounts is a simple strategy that can help you optimize your future withdrawals while gaining flexibility for your various projects.
The tax impact, however, depends on several factors, including your canton of residence, the amount accumulated, and how you plan your withdrawals.

At Pilla, you can spread your savings across up to five portfolios, each with its own objective and investment strategy, while managing everything centrally through a single app.