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Swiss Pillar 3a Comparison – Which is best for your pension?

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In Switzerland, the third pillar (also known as a ‘Pilar 3A’ or ‘Säule 3a’) forms part of the pension system and is an optional private plan to supplement your state (aka – the first pillar) and company (aka – the second pillar) pension plans.

Moving money into your third pillar has several benefits, from being tax deductible to having the option to pledge against a property purchase in the future. However, the money you put in the third pillar is locked in, and not as flexible as cash and other investments. But that’s to be expected for a pension fund.

That said, contributing toward a third pillar plan is generally regarded as a good move – and there are plenty of options to do so in Switzerland. Lets dive deeper.

Investing with a Pillar 3A

You have a few options when it comes to your Pillar 3A account. You can typically either have:

  1. A simple free ‘sparkonto’ which will generate close to 0% interest, like a bank account. These are handy when you’ve just opened or moved funds into a new account and you are planning your next steps, but terrible to keep up with inflation and generate any growth.
  2. An insurance backed Pillar 3A account – Stay away from these at all costs. Do not ever bundle life/death/disability insurance into a pillar 3A, no matter what your financial advisor says. These are the worst deals ever. You can read more about my personal experience on that here and here.
  3. An invested Pillar 3A account – A lot more interesting! For most of us reading this blog, 60-65 years old is a long way away. With such a 20-30 year time horizon, it makes a lot of sense to have your Pillar 3A invested in equities and generating a long term return. And history says that could be around 7%. Usual disclaimers apply 😉

As you can imagine, there are a huge number of different funds, platforms and providers operating in the pension space. And lots of middlemen and sales sharks looking to make a fat commission. It’s best to go direct to any pension platform, avoid the salesman, and do your own research.

The good news is, technology and rapidly reduced investment costs are enabling new players to offer great options for consumers. Below I’ve listed most of these, and you can see the fee comparison to the traditional players such as UBS and Credit Suisse.

Below the table, you will see how a 1% fee difference makes an impact to your pension over 30 years – its worth checking (just make sure you are sitting down).

Take a look at some of the more popular Pillar 3A options in Switzerland via the comparison table below.

Swiss Pillar 3a Comparison

 

Provider IH Rating Management Fee Product Fees Additional Fees Bank/Fund Provider Comment Current Offers Open Account
Finpension
Finpension
4.8
⭐⭐⭐⭐⭐
“Market Leader”
> Read review
0.42% Inclusive None related to investment portfolio. Credit Suisse Market leader with long track record in the pension industry. Fantastic prices and transparency. 25 CHF
Fee credit + entry to prize raffle with code HEROBB
VIAC
VIAC
4.8
⭐⭐⭐⭐⭐
“Market Leader”
> Read review
0.00% – 0.47% Inclusive – 0.05% Foreign currency conversion. WIR Bank &
Credit Suisse
Pioneers of the digital pension and a market leader. Cheaper than Finpension with a lower allocation of stocks. 1500 CHF
Managed free for life with codes
Frankly
Frankly
4.0
⭐⭐⭐⭐
“Best Customer Onboarding”
> Read review
0.45% Inclusive Additional fees apply but not all are disclosed:
– Stamp duty
– Foreign currency conversion
ZKB Strong option and come from an established traditional cantonal bank. Limited customization available and funds are hedged. 50 CHF
Fee credit with code ‘INVESTINGHERO’
Selma Finance
Selma Finance
4.0
⭐⭐⭐⭐
“Top Allrounder”
> Read review
0.47% – 0.68% 0.22% 0.075% – 0.15% Stamp duty
0.25% Foreign currency conversion
Saxo Bank & VZ Excellent option if you want to bundle the convenience of your roboadvisor investments all under one roof. Transparent. 5000 CHF
amount of assets managed for free
Inyova
Inyova
3.5
⭐⭐⭐
“Best for Impact Investing”
> Read review
0.80% 0 – 0.24% Additional fees apply but not all are disclosed:
– Stamp duty
– Foreign currency conversion
Saxo Bank &
Liberty
Strong focus on investing sustainably, although very new to the pillar 3A scene. None
No promotion currently offered
Yappeal
Yappeal
One to watch
Not yet reviewed
0.47% Inclusive Additional fees apply but not all are disclosed:
– Stamp duty
– Foreign currency conversion
Yappeal &
Vontobel
Young startup partnered with established Vontobel, however very limited portfolios and stock exposure. One to watch. 30 CHF
Free bank account credit with code YAPS-8IEH-D705.
Freya
Freya
No Rating
Not yet reviewed
0.55% 0.30% – 0.11% Stamp duty
– 0.3% Foreign currency conversion
Graubündner Kantonalbank Not the cheapest, but transparent with pricing and has a strong sustainability focus. None
No promotion currently offered
Sparbatze
Sparbatze
No Rating
Not yet reviewed
0.39% 0.38% – 0.50% – Foreign currency conversion Zug Kantonalbank Innovative offering of ‘themed funds’ however these all carry a price premium. None
No promotion currently offered
Vontobel Volt
Vontobel Volt
No Rating
Not yet reviewed
0.48% 0.23% – 0.42% Additional fees may apply but not all are disclosed:
– Stamp duty
– Foreign currency conversion
– Entry, exit and/or redemption fees
Vontobel Trusted and established. Provide a bespoke investing experience, which comes at a cost. None
No promotion currently offered
Descartes Vorsorge
Descartes Vorsorge
No Rating
Not yet reviewed
0.20% 0.45% – 0.65% None related to investment portfolio. Lienhardt & Partner Privatbank & UVZH Long track record and looks like a great alternative to the traditional banks. None
No promotion currently offered
VermögensZentrum
VermögensZentrum
No Rating
Not yet reviewed
0.68% Inclusive Additional fees may apply but not all are disclosed:
– Stamp duty
– Foreign currency conversion
VermögensZentrum Established yet not overly expensive. Good blend of a traditional and modern pension platform. None
No promotion currently offered
Post Finance
Post Finance
No Rating
Not yet reviewed
0.75% 0.82% – 1.01% Additional fees may apply but not all are disclosed:
– Stamp duty
– Foreign currency conversion
– Transaction costs
– Entry, exit and/or redemption fees
Post Finance & UBS Traditional Swiss bank which brings peace of mind, however this comes at a significant cost over the long term. None
No promotion currently offered
Raiffeisen 'Futura'
Raiffeisen ‘Futura’
No Rating
Not yet reviewed
1.05% – 1.29% Inclusive Additional fees may apply but not all are disclosed:
– Stamp duty
– Foreign currency conversion
– Transaction costs
– Entry, exit and/or redemption fees
Raiffeisen & Vontobel Traditional Swiss bank which brings peace of mind, however this comes at a significant cost over the long term. None
No promotion currently offered
UBS
UBS ‘VitaInvest’
No Rating
Not yet reviewed
0.15% – 1.29% 0.25% – 1.67% Additional fees may apply but not all are disclosed:
– Stamp duty
– Foreign currency conversion
– Transaction costs
– Entry, exit and/or redemption fees
UBS As above. The active investment products in particular are very expensive and haven’t been able to consistently beat the MSCI World benchmark. None
No promotion currently offered
Credit Suisse
Credit Suisse ‘Mixta’
No Rating
Not yet reviewed
Inclusive 0.90% – 1.43% Additional fees may apply but not all are disclosed:
– Stamp duty
– Foreign currency conversion
– Transaction costs
– Entry, exit and/or redemption fees
Credit Suisse As above re the other big Swiss banks, and like UBS the active funds carry a price premium. None
No promotion currently offered

What should you look for with a Pillar 3A?

Remember, it’s up to you to decide on the important factors for you before you get started.

That said, considering the reliance of the pension in old age and the duration you’ll be investing. For me, security and fees are top of my list.

Security

In Switzerland it’s difficult to go wrong from a security stand point – regulation covers the banks and the securities should be in your name. However take your time to check any contracts, and be very careful dealing with financial advisors pushing insurance backed pensions. You’ll see from the comparison table above, even the ‘new players’ are partnering with established financial partners, so security and peace of mind are generally pretty high.

Fees

If you want to have your pension with one of the big banks, that’s totally fine. But you’ll be paying indirectly for those onsite meetings and ‘free’ coffees, ‘personalized investing plans’ and those nice glossy paper folders. In my humble opinion, it’s worth the effort to really quantify what those extra fees mean over the long term to your nest egg.

Here’s an example from the VIAC homepage, which shows the impact of having an average fee of 1.24% from the big banks.

Which is approx. 0.8% more than with VIAC:

Who would of thought a 0.8% difference in fee could make such an impact? And that’s for an individual.. not a couple.

Certainly brings some perspective on those free coffees at the bank. Try the calculator yourself. And in full disclosure – VIAC haven’t paid me to write this, nor do I receive any commission from them.

In the spirit of the pareto principle and focusing on the biggest impacts, here are some other important things to check from a fee standpoint:

  • Transaction fees – Basically charged when you buy and sell. It is tricky to get transparency on these. Sometimes included in the product fee, sometimes not. Remember to ask.

 

  • Foreign currency exchange – Just like on holiday you’ll get a certain currency conversion rate. If you are investing in currencies other than CHF, you’ll be paying currency conversion fees every time you buy and sell. And the banks add their fee on top, sometimes up to 1%+. Worth asking as it’s rarely published.

 

  • Entry, exit and/or redemption fees – When you start an investment, the bank might take a 1-5% entry fee to cover their bonuses costs and could also charge an ‘exit’ or ‘redemption’ fee when you cash out your pension. Unfortunately these fees are often buried on the page 2 of the fund factsheet, and will vary based on your personal contract. So check your contract.

Closing thoughts

This blog isn’t here to instruct you to ditch the bank pension fund, but hopefully the general pointers here enable you to make a more informed choice and consider the long term view.

In the end, its ok if you don’t have the best pension fund on the market. You still have a pension, which is a privilege many people don’t have. The fact you’ve made it this far reading my blog about boring pensions, means you care and want to make the right decisions with your finances. And that’s an awesome first step.

So whatever you decide, all credit to you for looking at your future wealth – good luck and thanks for reading!

📝 Note – If you are interested in broader topics, check out my investing in Switzerland and tax guide, and the roboadvisor comparison for more.

Regards
Mr. IH