With Pillar 3a into self-employment

This is how to make use of Pillar 3a for your self-employment.

 Here we explain how – and would like to give you the courage to realize your dreams! Here are the key points about  self-employment, funding and Pillar 3.

The self-employed can draw their accrued capital from Pillar 3 early

When founding a company, you normally need startup capital to finance your plans. If, however, your savings are insufficient, you can make an advance withdrawal of your savings from Pillar 3a to take up self-employment (or even if switching to a different self-employed activity). Be aware that advance withdrawal is only possible within the first twelve months of becoming self-employed/changing your self-employed activity. In addition, the entire balance must be drawn; a partial withdrawal is not permitted.

The self-employed may (and should!) pay into Pillar 3a 

Good news: In Switzerland, if self-employed, you are permitted to pay into Pillar 3a – which is not the case in all countries. This is a big advantage for you as founder of a business. Essentially, anyone who earns an income subject to AHV is permitted to make contributions. If you are not insured in a pension fund, you can pay 20% of your net earned income into Pillar 3a – up to a maximum of CHF 34,128  per year (status as at 2019). If you are insured in a pension fund, you can only pay a maximum of CHF 6,826 into Pillar 3a (status as at 2019). Many people believe that the comfortable situation of enjoying financial provision ends when you become self-employed – but this is untrue! Preferential saving for your pension can be continued – You just have to set the ball rolling yourself! An initial effort that is worthwhile!

That's all well and good  – but what does it mean for me as an entrepreneur in actual financial terms? 

It means you can save money. If you are self-employed and decide to pay into Pillar 3a, what does it mean for you and your finances?

• The payments you make into Pillar 3a can be fully deducted from taxable income up to the maximum amount specified above.
• Interest is paid on your Pillar 3 capital. The interest you earn is tax-free.
• The assets saved in Pillar 3a are not subject to wealth tax. Tax only becomes due when the assets are paid out.

Protection against risk  – a further benefit of Pillar 3a for the self–employed 

When founding a company, the current order book is often foremost in your thoughts – which is understandable. How high are my earnings, is my business succeeding, am I making a profit? Topics concerning life's risks often take a back seat in the heat of entrepreneurial activity and dynamism. That doesn't make them less important, as they can impact anyone at any time. Here too, Pillar 3a can help: Risks such as disability and death can be co-insured. You should take advantage of this and be aware of your responsibilities, in other words protect yourself against these risks.