News and Guide

News from DL and information on the financial market and Swiss romande real estate

Published by : dl

Indirect amortisation

The basic principle of indirect amortisation is to maintain a constant level of mortgage debt throughout the entire loan term. Instalments are not paid directly to the mortgage account, but rather to a private 3rd pillar linked pension plan and/or private 3rd pillar linked insurance.

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3rd pillar bank deposit

The 3rd pillar bank deposit is a private pension account that is blocked under certain conditions. This plan offers more flexibility regarding contributions as well as a low administrative fee because it does not include any insurance benefits.

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3rd pillar insurance

In the case of disability or death following and illness, the 1st pillar (old age and survivors' insurance (AVS), disability insurance (AI), and income compensation (APG)) and the 2nd pillar (occupational pension fund (LPP)) usually provide only part of the previous income. There are multiple variations, which are all dependent on pension fund benefits. To address these deficiencies, an insurance product is even more desirable if the pension plan has been withdrawn to purchase a property.

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Linked 3rd pillar A

An employee subject to the occupational pension plan (LPP) can sign up for the linked 3rd pillar A up to CHF 6,826 /year from 1 January 2019 . For workers and the self-employed without LPP, it is 20% of net profit from activities up to a maximum of CHF 34,128 /year starting in 2019 .

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Private 3rd pillar B

The possibility of taking out a private 3rd pillar B (or unrestricted) pension insurance is o offered to everyone who lives in Switzerland or abroad, whether employed or not. Such insurance is ideal for a housewife or an employee who intends to terminate his or her gainful activity in the near future.

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