3rd pillar in case of death: beneficiaries and inheritance

In case of death, the 3rd pillar provides essential financial protection for your loved ones. However, the rules of transmission differ considerably between pillar 3a and pillar 3b. Understanding these mechanisms allows you to effectively protect the people dear to you.

Pillar 3a beneficiaries in case of death

The ordinance on tax-deductible contributions to recognized pension plans (OPP3) defines a strict beneficiary order for pillar 3a:

Beneficiary order (pillar 3a)

1. 1st rank: the surviving spouse or surviving registered partner
2. 2nd rank: direct descendants, or dependents of the deceased, or the person who lived in a common-law partnership with the deceased during the last 5 years or who is caring for common children
3. 3rd rank: parents
4. 4th rank: siblings
5. 5th rank: other heirs

Important: you can modify the order of beneficiaries within the same rank via a beneficiary clause filed with your pension institution. However, you cannot exclude a higher rank in favor of a lower rank.

Pillar 3a beneficiary clause

The beneficiary clause allows you to:

• Specify the distribution between beneficiaries of the same rank (e.g., 60% to spouse, 40% to children)
• Give priority to a cohabiting partner within the 2nd rank, under certain conditions
• Exclude certain beneficiaries of a rank in favor of others of the same rank

Pillar 3b beneficiaries in case of death

Pillar 3b offers total freedom in the choice of beneficiaries. You can designate:

• Your spouse, partner or cohabiting partner
• Your children or grandchildren
• Any other person of your choice
• An association or foundation

This flexibility makes pillar 3b a valuable tool for unmarried couples and complex family situations. However, be mindful of the forced heirship rules under Swiss inheritance law, which protect certain heirs.

Taxation in case of death

Pillar 3a

Pillar 3a benefits paid in case of death are taxed as follows:

• Capital benefits tax: reduced rate, separate from ordinary income (same system as retirement withdrawal)
• No inheritance tax in the majority of cantons (3a benefits are outside the estate)
• The tax rate varies by canton and amount; use our withdrawal tax calculator to estimate

Pillar 3b

The taxation of pillar 3b in case of death depends on the form of the contract:

• 3b life insurance: the death benefit is generally exempt from income tax for the beneficiary, but may be subject to inheritance tax depending on the canton and degree of kinship
• Free 3b savings: the assets enter the estate and are subject to ordinary inheritance rules
• The surviving spouse is exempt from inheritance tax in all cantons

Comparison of beneficiary rules: 3a vs 3b

This table clearly shows that pillar 3b offers superior flexibility in designating beneficiaries. For those wishing to protect a cohabiting partner, a close friend or an organization, pillar 3b is often essential. See our pillar 3b guide for more details.

Cantonal differences in inheritance taxation

The taxation of the 3rd pillar in case of death varies considerably from one canton to another. Swiss cantons have broad autonomy in matters of inheritance tax, which creates significant differences.

General principles

• Surviving spouse: exempt from inheritance tax in all cantons
• Direct descendants: exempt in the majority of cantons (notable exceptions: Vaud, Neuchatel, Appenzell Innerrhoden)
• Cohabiting partners and unrelated persons: high rates in most cantons, potentially exceeding 40%

Examples by canton

For CHF 200'000 of 3b capital transmitted to a cohabiting partner, the approximate inheritance tax varies enormously:

• Schwyz: no inheritance tax (canton without inheritance tax)
• Obwalden: no inheritance tax
• Lucerne: moderate rate for unrelated persons (~15-20%)
• Geneva: rate that can reach 54% for unrelated persons
• Vaud: progressive rate that can reach 40-50% for unrelated persons
• Neuchatel: progressive rate similar to Vaud for non-family persons

Strategy: if you wish to pass on 3b capital to a cohabiting partner or a third party, the choice of canton of domicile at the time of death has a major tax impact. It is also possible to use a 3b life insurance contract with an irrevocable beneficiary clause, which protects the capital against claims from legal heirs. For more on withdrawal taxation, see our page on 3rd pillar withdrawal tax.

How to protect your loved ones with the 3rd pillar

1. Draft a beneficiary clause: even if the legal order applies by default, a written beneficiary clause clarifies your wishes and speeds up payment
2. Combine 3a and 3b: use pillar 3b to protect a cohabiting partner or a beneficiary not covered by the 3a legal order
3. Opt for a mixed life insurance: certain 3a or 3b contracts include a guaranteed death benefit, offering immediate protection even if you have just subscribed
4. Update regularly: review your beneficiary clause after every important event (marriage, divorce, birth, death of a beneficiary)
5. Inform your loved ones: make sure your beneficiaries know about the existence of your 3a and 3b contracts

Steps for beneficiaries after a death

If you are a beneficiary of a 3rd pillar following a death, here are the steps to follow:

1. Contact the pension institution (bank or insurance) with the death certificate
2. Provide identification documents and a civil status document proving the relationship
3. The institution verifies the beneficiary clause and the rights of the entitled parties
4. The capital is usually paid within a few weeks
5. Declare the benefit in your next tax return

To optimize the protection of your loved ones, request a personalized offer and compare the 3a and 3b solutions suited to your family situation.

Related guides

• Complete 3rd pillar guide — understand all available options
• 3rd pillar insurance — the solution with integrated death cover
• 3rd pillar life insurance — protect your family in case of death
• Pillar 3b — freely designate your beneficiaries
• 3rd pillar and couples — pension strategies for married and cohabiting couples