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-   -   Pillar 3a - Funds and shares supermarket (https://www.englishforum.ch/finance-banking-taxation/300617-pillar-3a-funds-shares-supermarket.html)

GlobalTraveller 11.10.2020 12:23

Pillar 3a - Funds and shares supermarket
 
Hi all

From what I've understood so far Pillar 3a is the closest possible to a UK SIPP. No taxes on dividends, not part of wealth tax, tax deduction at marginal tax rate, ability to take out funds when property is purchased, leave the country, potentially if you lose your primary income.

Is there a good funds & shares supermarket in CH, similar to Hargreaves Lansdown?

I'd ideally like to purchase individual shares, indexes and funds (hold likes of Baillie Gifford, Fundsmith, Lindsell Train etc). Cognizant i might not find the same here, but keen to find the closest possible.

Many thanks!

eyebeebe 11.10.2020 13:23

Re: Pillar 3a - Funds and shares supermarket
 
Sorry it doesn‘t work like that. There are legal limitations one the currency and equity %s in the account and adding individual securities isn‘t allowed.

The best you can do is use VIAC, which get around some of the restrictions by looking at everyone‘s portfolio as a whole for the ratios. So some people using it to keep their pillar 3 in CHF cash allows another to have more equity exposure.

It‘s all app based and their management fees are the lowest I‘ve found for pillar 3. I have a TER of 0.59% on the raciest portfolio I could create (89% equities o/w 20% Emerging Markets, 54% developed - mainly US and 15% CH), 5% PE, 4% HF and 2% liquidity.

If you search for VIAC on the forum you should find a long thread about them.

Sorry if the above sounds like a bit of an advert! Compared to the others on the market it seems to be the best, as you‘ll see in the thread, for both investment choices and fees. The funds are in custody with Credit Suisse and the foundation that administers the plan is long standing.

There‘s also a referral bonus which means you don‘t pay an admin fee on the first 500 of assets for life. I just checked and have some codes free. PM me if you want one.

gipfelisturmer 12.10.2020 10:55

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by eyebeebe (Post 3225414)
The best you can do is use VIAC

And consider alternatives that are currently out - such as Finpension (backed by CS) and Frankly (backed by ZKB).

VIAC (backed by WIR) was first to the market, and now it's great to see competition building up (and costs going down). :msnnerd:

GlobalTraveller 18.10.2020 14:19

Re: Pillar 3a - Funds and shares supermarket
 
@eyebeebe and @dbucar

Thank you for your response and suggestion of VIAC.

Shocking to see how we don't have more flexibility to invest where we want our money in CH... With the UK SIPP you can invest in pretty much any asset class incl. single name stocks, actual property and in more exotic stuff such as art, cars, watches (not in a fund but directly)..

I'll go for VIAC and chose the S&P500 tracker.

@eyebeebe I will message you directly for the code. Thank you for kindly offering it.

Many happy returns guys!

eyebeebe 18.10.2020 14:58

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by dbucar (Post 3225637)
And consider alternatives that are currently out - such as Finpension (backed by CS) and Frankly (backed by ZKB).

VIAC (backed by WIR) was first to the market, and now it's great to see competition building up (and costs going down). :msnnerd:

Thanks. I wasn‘t aware of Finpension. Frankly doesn‘t seem that great to be honest. Is Finpension backed by CS or does it just use them as a custodian (like VIAC), as they say on their website that they are independent.

While they don‘t have the same range of funds and they choose for you, their pre-defined 100% equity mix isn‘t too far away from what I would choose myself and they appear to be cheaper than VIAC and have some tax advantages too. I may put next year‘s pillar 3 contributions with them.

ETA I see now that you can indeed choose your own funds with Finpension, although it‘s not as obvious or intuitive as with VIAC.

HickvonFrick 18.10.2020 21:51

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by GlobalTraveller (Post 3228120)
@eyebeebe and @dbucar

Thank you for your response and suggestion of VIAC.

Shocking to see how we don't have more flexibility to invest where we want our money in CH... With the UK SIPP you can invest in pretty much any asset class incl. single name stocks, actual property and in more exotic stuff such as art, cars, watches (not in a fund but directly)..

I'll go for VIAC and chose the S&P500 tracker.

@eyebeebe I will message you directly for the code. Thank you for kindly offering it.

Many happy returns guys!

It's almost unbelievable isn't it when you consider that this is your own money and an entirely optional saving. The Swiss really short change their pensioners with these unnecessary and unhelpful rules.

Personally I wouldn't use 3a unless you are close to being able to cash it out (ie by retiring, leaving Switzerland, or buying a house). The tax savings aren't worth the poor investment performance otherwise. In the uk you get used to thinking pensions are the best means to invest. They aren't here! Just invest in your fund and share.

Dr Mick 18.10.2020 22:29

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by dbucar (Post 3225637)
And consider alternatives that are currently out - such as Finpension (backed by CS) and Frankly (backed by ZKB).

VIAC (backed by WIR) was first to the market, and now it's great to see competition building up (and costs going down). :msnnerd:

Thanks. I was not aware of Finpension nor Frankly.
I have taken a quick look, and:
- Frankly: I can't seem to find the list of available funds :confused:
- Finpension: bear in mind the 250CHF early withdrawal charge https://finpension.ch/app/uploads/20...ordnung_EN.pdf

Also, while VIAC allows up to 97% equities, Finpension seems to allow up to 99% equities https://finpension.ch/en/3a/strategies/

HickvonFrick 18.10.2020 22:48

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by Dr Mick (Post 3228314)
Thanks. I was not aware of Finpension nor Frankly.
I have taken a quick look, and:
- Frankly: I can't seem to find the list of available funds :confused:
- Finpension: bear in mind the 250CHF early withdrawal charge https://finpension.ch/app/uploads/20...ordnung_EN.pdf

Also, while VIAC allows up to 97% equities, Finpension seems to allow up to 99% equities https://finpension.ch/en/3a/strategies/

VIAC is 300 CHF early withdrawal

newtoswitz 18.10.2020 23:12

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by HickvonFrick (Post 3228300)
Personally I wouldn't use 3a unless you are close to being able to cash it out (ie by retiring, leaving Switzerland, or buying a house). The tax savings aren't worth the poor investment performance otherwise. In the uk you get used to thinking pensions are the best means to invest. They aren't here! Just invest in your fund and share.

Another use of 3a is mortgage backing - I pay into a 3a instead of paying down the mortgage.

So I save tax, don't reduce my mortgage so save capital, and even though the 3a return is crap it's still higher than my really low mortgage rate.

gipfelisturmer 19.10.2020 10:41

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by eyebeebe (Post 3228148)
Is Finpension backed by CS or does it just use them as a custodian (like VIAC), as they say on their website that they are independent.

Perhaps a poor/ambiguous choice of words on my end.
Indeed I only read they "keep the accounts" i.e. use custody services of those banks; not sure about other linkage.
As you said, they seem to be independent as in managing the funds.

I am for now staying with VIAC, giving them some time and see how they adapt to the competition.
The others still need to prove themselves in my eyes.

Enohzee 19.10.2020 11:15

Re: Pillar 3a - Funds and shares supermarket
 
I use VIAC. I'm quite happy with it.

3a is restricted but it's a limited amount per year and it can be a part of our overall portfolio. For example, I own no Swiss shares in my "usual" portfolio and not much European in general. Viac helps fill that gap a bit.

Depends alo on your canton & income tax rate of course. I'm in tax land of Neuchatel.

HickvonFrick 19.10.2020 12:18

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by newtoswitz (Post 3228338)
Another use of 3a is mortgage backing - I pay into a 3a instead of paying down the mortgage.

So I save tax, don't reduce my mortgage so save capital, and even though the 3a return is crap it's still higher than my really low mortgage rate.

Thanks for this - wasn't aware of this as an option (only moved here this year and don't own any Swiss properties). As I'm not interested in 3a in it's intended purpose - retirement savings, this looks to be a good option for me.

HickvonFrick 19.10.2020 12:33

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by newtoswitz (Post 3228338)
Another use of 3a is mortgage backing - I pay into a 3a instead of paying down the mortgage.

So I save tax, don't reduce my mortgage so save capital, and even though the 3a return is crap it's still higher than my really low mortgage rate.

Is your mortgage linked 3a invested in equities?

newtoswitz 19.10.2020 12:54

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by HickvonFrick (Post 3228466)
Is your mortgage linked 3a invested in equities?

Yes but indirectly via a fund to a maximum of 90%.

As of last report it was 73% equities, 17% bonds and the rest in cash & "other".

newtoswitz 19.10.2020 13:09

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by HickvonFrick (Post 3228456)
Thanks for this - wasn't aware of this as an option (only moved here this year and don't own any Swiss properties). As I'm not interested in 3a in it's intended purpose - retirement savings, this looks to be a good option for me.

Now they've removed the limits on equity investment I wouldn't rule out 3a for pension investment.

Previously the return was poor, but when the rules changed I moved funds and now getting a respectable 10-15% p.a. which is pretty good when you start with say 25% immediately from the tax saving.

Phil_MCR 19.10.2020 13:39

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by newtoswitz (Post 3228488)
Now they've removed the limits on equity investment I wouldn't rule out 3a for pension investment.

Previously the return was poor, but when the rules changed I moved funds and now getting a respectable 10-15% p.a. which is pretty good when you start with say 25% immediately from the tax saving.

Same here. With VIAC I'm happy to invest in the 3a instead of the crappy alternative funds previously on offer. As you say, it's only about 6k a year, so not a big deal.

axman 19.10.2020 15:00

Re: Pillar 3a - Funds and shares supermarket
 
There was an article about pension funds in yesterday Sonntag Zeitung. It suggests that Pillar 3 is crap unless we are within 10 years of retirement. We should invest in the markets instead.

After reading it, I also felt that the super conservative pension regulations in Switzerland exists just so that banks and other providers of investment funds as alternative to the 3a can thrive.

HickvonFrick 19.10.2020 15:05

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by newtoswitz (Post 3228488)
Now they've removed the limits on equity investment I wouldn't rule out 3a for pension investment.

Previously the return was poor, but when the rules changed I moved funds and now getting a respectable 10-15% p.a. which is pretty good when you start with say 25% immediately from the tax saving.

If I was closer to retirement I'd agree with you. In my early thirties I have a long long time to get back that 25% back.

newtoswitz 19.10.2020 15:08

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by axman (Post 3228553)
There was an article about pension funds in yesterday Sonntag Zeitung. It suggests that Pillar 3 is crap unless we are within 10 years of retirement. We should invest in the markets instead.

After reading it, I also felt that the super conservative pension regulations in Switzerland exists just so that banks and other providers of investment funds as alternative to the 3a can thrive.

Loosening the restrictions on pensions is fairly common globally, but as usual the Swiss are being cautious.

They've moved to a reasonable situation on 3a.

Having seen the mess in the UK with underfunded and simply fraudulent occupational pensions, I have some sympathy with their slowness on pillar 2.

newtoswitz 19.10.2020 15:10

Re: Pillar 3a - Funds and shares supermarket
 
Quote:

Originally Posted by HickvonFrick (Post 3228557)
If I was close to retirement I'd agree with you. In my early thirties I have a long long time to get back that 25% back.

Absolutely; but you can consider it as a nice tax bonus and part of a diversified portfolio.


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