Hello everyone,
The question is slightly provocative, but still serious: is it really worth it investing in a 3d pillar, where your money is blocked and that will eventually be taxed when withdrawed, while you can benefit from no tax on capital gains on your direct investments in Switzerland?
Of course, by investing in a 3d pillar, you "win" a tax deduction on your annual 7k, and dividends if any aren't taxed annually, but does this really offset the withdrawal tax ?
I've made a few simulations, and the conclusion was that the 3d pillar was better than investing in large ETFs directly only if reinvesting the tax returns each year, and not by far. Have you asked yourselves this question and what were your conclusions?
Note that I made my simulation with the canton Zurich tax rates, which are probably the most defavorable to the 3d pillar, having a pretty low tax revenue rate and the highest withdrawal tax on retirement savings - the result would probably be different otherwise.
Also note that I considered a 3d pillar with similar average annual returns than regular large ETFs (around 8%), which is probably an hypothesis very favorable to the 3rd pillar, this kind of full equity plan being pretty rare.
The question is slightly provocative, but still serious: is it really worth it investing in a 3d pillar, where your money is blocked and that will eventually be taxed when withdrawed, while you can benefit from no tax on capital gains on your direct investments in Switzerland?
Of course, by investing in a 3d pillar, you "win" a tax deduction on your annual 7k, and dividends if any aren't taxed annually, but does this really offset the withdrawal tax ?
I've made a few simulations, and the conclusion was that the 3d pillar was better than investing in large ETFs directly only if reinvesting the tax returns each year, and not by far. Have you asked yourselves this question and what were your conclusions?
Note that I made my simulation with the canton Zurich tax rates, which are probably the most defavorable to the 3d pillar, having a pretty low tax revenue rate and the highest withdrawal tax on retirement savings - the result would probably be different otherwise.
Also note that I considered a 3d pillar with similar average annual returns than regular large ETFs (around 8%), which is probably an hypothesis very favorable to the 3rd pillar, this kind of full equity plan being pretty rare.
