3rd pillar transfer: practical guide

No longer satisfied with your 3rd pillar? Fees too high or returns too low? Transferring to another provider is a common and generally advantageous option. Here is how to proceed depending on your situation.

Why transfer your 3rd pillar?

Several reasons may motivate a transfer of your pillar 3a:

• Fees too high: a provider with lower fees improves your net return over the long term. A 0.5% TER difference can represent tens of thousands of francs over 30 years.
• Better investment funds: you want to access more performant funds or low-fee ETFs not available with your current provider.
• Service dissatisfaction: inadequate mobile app, insufficient customer service, lack of transparency.
• Consolidation: grouping several small accounts with a single provider to simplify management (note: keeping multiple accounts remains recommended for tax optimisation).
• Strategy change: switching from insurance 3a to bank 3a, or vice versa.

Bank to bank transfer

This is the simplest and most common case. The process is generally as follows:

1. Choose your new provider: compare offers (fees, funds, service) with our comparator.
2. Open a 3a account with the new provider: complete the usual opening formalities.
3. Request the transfer: the new provider will generally provide you with a transfer form. They will contact the former provider to organise the transfer.
4. Fund liquidation: if your old account contained investment funds, they will be sold and the amount transferred in cash. At the new provider, the capital will be reinvested according to the chosen strategy.
5. Verification: ensure that the transferred amount corresponds to your old account balance (less any fees).

Bank transfer fees

• Former provider: closing fees of CHF 0.- to CHF 100.- depending on the institution
• New provider: generally no entry fees, some even cover the former provider's fees
• Fund redemption fees: if the funds have redemption fees (redemption commission), they apply

Point of attention: timing

When funds are liquidated, your capital is temporarily in cash. If markets rise during this period, you lose returns. If markets fall, you are protected. To minimise this risk, ensure the new provider reinvests quickly after receiving the transfer.

Insurance to bank transfer

This transfer is more complex as it involves cancelling (surrendering) the insurance contract. This is a crucial point to evaluate carefully.

The process

1. Request the surrender value: contact your insurer to find out the current surrender value of your contract. Compare it with total premiums paid.
2. Evaluate the opportunity: if the surrender value is significantly lower than premiums paid (often the case in the first years), the transfer can be costly. Calculate whether the better future return compensates for the surrender loss.
3. Cancel the insurance contract: send a registered cancellation letter. Respect the cancellation deadlines (generally 3 months before the annual anniversary).
4. Receive the surrender value: the capital is paid into a bank 3a account (not your personal account, otherwise it would be taxed).
5. Transfer to the new provider: the capital is transferred directly from one 3a to another, without tax consequences.

Important precautions

• Surrender value vs premiums paid: in the first 5 to 10 years, the surrender value is often lower than cumulative premiums due to acquisition costs amortised at the start of the contract.
• Loss of risk coverage: by leaving insurance, you lose death and disability coverage. Assess whether you need to subscribe to separate coverage.
• Cancellation penalties: some contracts provide for specific penalties in case of early surrender.

Bank to insurance transfer

This transfer is rarer but possible. The bank 3a capital is transferred to a life insurance 3a contract. The process:

1. Subscribe to a 3a insurance contract
2. Request the transfer of bank capital to the new contract
3. The transferred capital can be used to finance part of the initial premium

Warning: once the capital is in an insurance contract, you are committed for the long term. Make sure this is the right choice before proceeding. See our guide bank or insurance.

Insurance to insurance transfer

It is also possible to transfer your 3a from one insurance company to another. The process is similar to an insurance to bank transfer:

• Cancellation of the existing contract (surrender value)
• Direct transfer of capital to the new 3a contract
• No taxation if the transfer remains within the pillar 3a framework

When is a transfer worthwhile?

A transfer is generally advantageous when:

• The new provider's fees are significantly lower: a TER difference of 0.5% or more generally justifies a transfer.
• The surrender value is close to premiums paid: for a transfer from insurance, wait if possible until the surrender value catches up with premiums paid.
• Your horizon is still long: the more years you have until retirement, the more potentially beneficial the transfer (fee savings accumulate).
• You wish to change investment strategy: switching from a savings account to funds, or vice versa.

Tax rules for transfers

The transfer of a pillar 3a to another pillar 3a is tax neutral:

• No tax on the transfer (it is not a withdrawal)
• The capital retains its tied pension status
• No impact on your annual tax deductions
• Future contributions remain deductible under the same conditions

Warning: if the capital is paid into a personal account (even temporarily), it is considered a withdrawal and will be taxed. Ensure the transfer is made directly from 3a to 3a.

Need help with your transfer?

If you do not yet have a 3rd pillar, discover how to open a 3rd pillar. Otherwise, request a free personalised quote. Our advisors will evaluate the transfer opportunity for your situation and guide you through the process. The comparison service is entirely free and without obligation.