Are you self-employed and not a member of a pension fund? We’ll show you why a pillar 3a makes sense for you and the easy way to get started. The following example refers exclusively to private retirement planning.
Let’s assume you are Max, an independent contractor with a sole proprietorship.
Max is 35 years old and single. He works as an architect in Zurich-Wollishofen and is not a member of a pension fund. He has another 30 years until retirement. That’s a long way off, which means that it’s all the more important for him to make the right decisions now.
Max opts for a sustainable, active investment product that contains a high equity component (75%). The objectives of the investment product are to achieve long-term capital growth and to generate income. In exchange, Max is willing to take a higher risk. Active investment products are also designed to “beat the market”, i.e. to achieve a better investment performance than the market average.
Tip: Compare fees and performance. We advise Max to check the fees and performance of the providers of his current pillar 3a assets! frankly is 60% cheaper than comparable securities savings offers (source: moneyland.ch). Compare for yourself, and switch your current pillar 3a assets to frankly now.
Based on the initial situation, Max could achieve the following retirement savings with frankly compared to a traditional pillar 3a banking product:
If Max were to leave his money in a normal 3a account, in 30 years’ time, assuming interest rates remain low at 0.05%, he would have CHF 825,595. However, if he were to save in securities with a 75% equity component, with a hypothetical return of 4.90% this could rise to CHF 1,633,600.
The possible savings with securities are worth much more than just a few hundred francs. Max, for example, is 35 years old, self-employed and not a member of a pension fund. In the future he pays CHF 24,000 each year into his pillar 3a account with frankly, and he chooses an investment product with an equity component of 75%. He transfers an additional CHF 98,500 from his previous pillar 3a over to frankly.
Assumptions: equity component 75%, hypothetical return per year 4.90% (net after costs). The future returns and risks presented here are for illustrative purposes only. Securities savings may fluctuate, the hypothetical return cannot be guaranteed, and tax effects are not included in this forecast.
Economic models and statistical methods are used for calculation purposes. The forecast corresponds with the most likely performance, and can be predicted for an investment horizon of up to 10 years. In the event of a longer investment horizon the calculations are continued using the same values, whereby no statements can be made about the probability of the calculated results occurring. In the event of very unfavourable market developments, the performance may be lower than the nominal savings value. The calculated values are net of the frankly all-in fee, and are based on an interest rate on the pillar 3 account of 0.05%. Please note that inflation and the taxes payable when the balance becomes due are not included in this forecast.
Based on the above values and a possible taxable income of CHF 120,000, with a pillar 3a solution Max can save CHF 6,993 per year in taxes! Source: Zürcher Kantonalbank tax calculator, 2021
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