Pillar 3b covers everything an individual saves on top of state (1) and occupational (2) pensions outside the tax-privileged Pillar 3a. It includes bank savings, ETFs, individual stocks, real estate, classical life insurance and endowment policies. There is no contribution cap.
Unlike Pillar 3a, contributions are not deductible from income tax, and the assets count toward annual wealth tax (Vermögenssteuer). Capital gains on directly held securities remain tax-free for private investors. Dividends and interest are taxable as income.
Pillar 3b is most useful for goals before retirement (a sabbatical, a child's education, an early property purchase) and for amounts beyond the Pillar 3a cap. Specific 3b life-insurance products can offer tax advantages on payout in some cantons if held at least 5 years and paid before age 66.
A Swiss couple maxing out both Pillar 3a accounts (2 × CHF 7,258 = CHF 14,516) and still wanting to save CHF 1,000 per month invests the surplus in a 3b ETF portfolio — fully flexible, taxable on wealth and dividends but not on price gains.