Pillar 3a is a tied personal pension plan, part of the three-pillar concept of retirement, survivors, and disability funds.
The main goal of the 3rd pillar is to promote personal pension funds by implementing tax measures and policies that make it easier for individuals to become homeowners.
Two types of personal pension funds
There are two types of personal pension funds:
- Unrestricted individual pension funds made up of personal savings.
- Tied individual pension fund (3rd pillar A), which is encouraged by tax measures and a policy to facilitate access to home ownership.
The key features of Pillar 3a are its tax advantages: contributions are tax-deductible, while benefits are taxed in full, as with the 2nd pillar. The tied pension fund permitted under Pillar 3a are the tied pension policy with an insurance company and the tied pension account with a bank foundation.
Anyone in gainful employment can set up a Pillar 3a, whether employees see it as an attractive supplement to the 1st and 2nd pillars or self-employed people who can act as a 2nd pillar. People who receive daily benefits from unemployment insurance can also set up a Pillar 3a for their tied personal pension fund.