Go Back   English Forum Switzerland > Help & tips > Insurance
Reply
 
Thread Tools Display Modes
  #21  
Old 16.05.2018, 17:07
Forum Legend
 
Join Date: Mar 2009
Location: Zurich
Posts: 10,653
Groaned at 609 Times in 462 Posts
Thanked 14,307 Times in 5,577 Posts
Richdog has a reputation beyond reputeRichdog has a reputation beyond reputeRichdog has a reputation beyond reputeRichdog has a reputation beyond reputeRichdog has a reputation beyond reputeRichdog has a reputation beyond repute
Re: Pillar 3A insurance - how to cancel without losing everything.

Quote:
View Post
What a stupid plan
What is the benefit of it?
I also can't for the life of me fathom how these plans can in any way be considered a good idea.

It seems like a damn serious long-term thing to sign up for and lose control of your finances with little to no tangible benefit.
Reply With Quote
The following 2 users would like to thank Richdog for this useful post:
  #22  
Old 16.05.2018, 17:07
Junior Member
 
Join Date: May 2013
Location: Basel
Posts: 45
Groaned at 0 Times in 0 Posts
Thanked 28 Times in 16 Posts
echocharlie has no particular reputation at present
Re: Pillar 3A insurance - how to cancel without losing everything.

One thing to check (not sure if it's relevant in your case), but several of my colleagues were in a similar situation - they were essentially mis-sold a 3A through an insurance company when they first arrived, and looked like they were locked down to several decades of contributions, and if they cancelled within the first few years they would lose all contributions so far (around 20k).

After some strongly worded letters (including a letter from a lawyer in one case) all money was refunded (of course you'd have to repay any tax deductions).

I believe if you are a non-EU citizen then these type of 3A investments are not appropriate - as when you leave the country you would need to take all the contributions with you...but don't take that as accurate - rather my understanding from speaking to my colleagues...
Reply With Quote
The following 2 users would like to thank echocharlie for this useful post:
  #23  
Old 16.05.2018, 17:09
Las Las is offline
Newbie 1st class
 
Join Date: Mar 2016
Location: Basel
Posts: 28
Groaned at 0 Times in 0 Posts
Thanked 20 Times in 9 Posts
Las has no particular reputation at present
Re: Pillar 3A insurance - how to cancel without losing everything.

Quote:
View Post
What a stupid plan
What is the benefit of it?
I agree. It IS a stupid plan and the blame falls squarely on my shoulders for falling for this kind of trap.

In any case, I know that there is financial pain coming my way in case I cancel/surrender the contract. But better to do it now rather than lamenting over it in the upcoming years.

If it helps in any way, my personal situation is as follows:

40, Indian national, C permit, Basel Stadt.
Plan to get married in 2019, start a family in 2020 and buy a house in Basel Land (reasonably close to Basel Stadt) in 2022.
Reply With Quote
The following 2 users would like to thank Las for this useful post:
  #24  
Old 16.05.2018, 18:32
Las Las is offline
Newbie 1st class
 
Join Date: Mar 2016
Location: Basel
Posts: 28
Groaned at 0 Times in 0 Posts
Thanked 20 Times in 9 Posts
Las has no particular reputation at present
Re: Pillar 3A insurance - how to cancel without losing everything.

Quote:
View Post
Without reading the plan. It looks like your least worst way would have been to exit in 2017. Situation gets worse in 2018, before improving a bit in 2019, before getting steadily worse.

Iíve calculated this by comparing your premiums paid vs the surrender value. Itís going to have cost you over 8k for the insurance over the 3 years to 2019.
At the moment I am considering whether I should surrender/terminate the policy before 01 Dec 2018 or, if it gets back some chunk of money, before 01 Dec 2019.

I'll have to weigh all options and proceed carefully to find the least painful way.

Thanks for your tip!
Reply With Quote
  #25  
Old 16.05.2018, 18:39
fatmanfilms's Avatar
Forum Legend
 
Join Date: Apr 2010
Location: Verbier
Posts: 16,027
Groaned at 254 Times in 215 Posts
Thanked 13,503 Times in 7,561 Posts
fatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond repute
Re: Pillar 3A insurance - how to cancel without losing everything.

Quote:
View Post
At the moment I am considering whether I should surrender/terminate the policy before 01 Dec 2018 or, if it gets back some chunk of money, before 01 Dec 2019.

I'll have to weigh all options and proceed carefully to find the least painful way.

Thanks for your tip!
It's stacked against you as the first 2 years premiums are taken with commission. Just accept you have thrown the money away, even if you pay in for 20 years the investment performance will be crap v www.fundsmith.co.uk

People buy because they hear 'tax breaks', any investment that is bought for this reason is likely to be a bad investment.
Reply With Quote
The following 2 users would like to thank fatmanfilms for this useful post:
  #26  
Old 16.05.2018, 18:46
Member
 
Join Date: Jul 2016
Location: Lausanne
Posts: 164
Groaned at 2 Times in 1 Post
Thanked 117 Times in 71 Posts
theUser has earned some respecttheUser has earned some respect
Re: Pillar 3A insurance - how to cancel without losing everything.

The plan is essentially some form of savings with the limited downside and potentially higher-than-average upside (compared to a fixed interest P3a savings account).
If you eventually use it to pledge part of your house downpayment you can get some 90% of premiums paid counted as collateral so it's not completely useless.
Reply With Quote
The following 2 users would like to thank theUser for this useful post:
  #27  
Old 16.05.2018, 18:52
Forum Legend
 
Join Date: Mar 2016
Location: Leimbach, ZŁrich
Posts: 2,968
Groaned at 147 Times in 115 Posts
Thanked 2,837 Times in 1,485 Posts
EdwinNL has a reputation beyond reputeEdwinNL has a reputation beyond reputeEdwinNL has a reputation beyond reputeEdwinNL has a reputation beyond reputeEdwinNL has a reputation beyond repute
Re: Pillar 3A insurance - how to cancel without losing everything.

Quote:
View Post
I agree. It IS a stupid plan and the blame falls squarely on my shoulders for falling for this kind of trap.
A smooth dude with proper talk shows you estimated results based on previous results from over the last 20 years (including many years where interest and profit on such things was indeed skyhigh) and calculates suddenly with a yearly capital growth of 8% on capitals that go into the account (leaving out what they take out of it on costs) and gives you a calculation of what 8% does on an account that gets 500,- monthly in it for let's say 25 years. And you see a number that bedazzles you while you think that you could never save such yourself. Add some smooth talk about future, illness, security etc.. and an autograph is quickly placed.

Truth is however that costs are high, and interest/profit for years has been historically low and such plans hardly make any profit anymore (often even causing a loss..), only to be realised when one sees after some time how much is actually in the account.

Don't be to harsh on yourself, million of Europeans got into such plans and they do up to today.
Reply With Quote
This user would like to thank EdwinNL for this useful post:
  #28  
Old 16.05.2018, 19:00
aSwissInTheUS's Avatar
Forum Legend
 
Join Date: Nov 2007
Location: Zurich area
Posts: 8,269
Groaned at 66 Times in 59 Posts
Thanked 12,020 Times in 5,425 Posts
aSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond repute
Re: Pillar 3A insurance - how to cancel without losing everything.

Quote:
View Post
The plan is essentially some form of savings with the limited downside and potentially higher-than-average upside (compared to a fixed interest P3a savings account).
If you eventually use it to pledge part of your house downpayment you can get some 90% of premiums paid counted as collateral so it's not completely useless.
Compared to a pillar 3a savings it is crap. Yes, there is a potential gain and a minimum "return". But this guaranteed "return" is actually a loss

If OP wants to have a family a plan with a fixed death lump sum would be the better option. https://www.axa.ch/doc/aa22o

The loss if one wants to use it to finance real estate is not as much as ending the whole deal. The loss now is around 8k. But to fiance real estate in 2022 it is only 4k. (I might be wrong)
Reply With Quote
This user would like to thank aSwissInTheUS for this useful post:
  #29  
Old 16.05.2018, 20:12
robBob's Avatar
Forum Veteran
 
Join Date: Mar 2012
Location: Zurich
Posts: 1,306
Groaned at 25 Times in 15 Posts
Thanked 951 Times in 558 Posts
robBob has an excellent reputationrobBob has an excellent reputationrobBob has an excellent reputationrobBob has an excellent reputation
Re: Pillar 3A insurance - how to cancel without losing everything.

Is there a clause if you should lose your job and become homeless?
Reply With Quote
This user would like to thank robBob for this useful post:
  #30  
Old 16.05.2018, 20:43
Las Las is offline
Newbie 1st class
 
Join Date: Mar 2016
Location: Basel
Posts: 28
Groaned at 0 Times in 0 Posts
Thanked 20 Times in 9 Posts
Las has no particular reputation at present
Re: Pillar 3A insurance - how to cancel without losing everything.

Quote:
View Post
Is there a clause if you should lose your job and become homeless?
AFAIK, no.
Reply With Quote
  #31  
Old 16.05.2018, 20:59
robBob's Avatar
Forum Veteran
 
Join Date: Mar 2012
Location: Zurich
Posts: 1,306
Groaned at 25 Times in 15 Posts
Thanked 951 Times in 558 Posts
robBob has an excellent reputationrobBob has an excellent reputationrobBob has an excellent reputationrobBob has an excellent reputation
Re: Pillar 3A insurance - how to cancel without losing everything.

Personally, I would take the lose and transfer out to a good 3a fund.
Lesson learned.
Dont mix insurance with savings.
Reply With Quote
The following 4 users would like to thank robBob for this useful post:
  #32  
Old 16.05.2018, 22:04
Las Las is offline
Newbie 1st class
 
Join Date: Mar 2016
Location: Basel
Posts: 28
Groaned at 0 Times in 0 Posts
Thanked 20 Times in 9 Posts
Las has no particular reputation at present
Re: Pillar 3A insurance - how to cancel without losing everything.

Many thanks to everyone who replied so far with advice, fair criticism, tips and encouragement.
I will speak with the axa pillar 3a agent tomorrow and try to find a way out of this mess. I will try to get all details of the surrender clause.

If there is any special/specific question that you would advise me to ask the agent, please mention it on this thread. The meeting is in the afternoon tomorrow so I'll check the page right until the moment I speak with him.

I'll also set up a f2f meeting with the axa pillar 3a department in basel on friday or early next week.

I'll update this thread tomorrow with the information I get.

In the meantime, if you have any suggestions/tips/ideas, I request you to please take some time and post on the thread. Many thanks!
Reply With Quote
The following 2 users would like to thank Las for this useful post:
  #33  
Old 17.05.2018, 00:36
Forum Veteran
 
Join Date: Feb 2014
Location: The World
Posts: 1,269
Groaned at 225 Times in 132 Posts
Thanked 992 Times in 563 Posts
Capo is considered unworthyCapo is considered unworthyCapo is considered unworthyCapo is considered unworthy
Re: Pillar 3A insurance - how to cancel without losing everything.

Quote:
View Post
Personally, I would take the lose and transfer out to a good 3a fund.
Lesson learned.
Dont mix insurance with savings.
In the long run (+20 years) 3a funds are a bad idea because it will badly loose to stocks. 3rd pillar doesn't make any sense.
Reply With Quote
The following 2 users would like to thank Capo for this useful post:
  #34  
Old 17.05.2018, 10:29
Newbie 1st class
 
Join Date: Aug 2009
Location: Zurich
Posts: 19
Groaned at 6 Times in 3 Posts
Thanked 21 Times in 7 Posts
Early30s has no particular reputation at present
Re: Pillar 3A insurance - how to cancel without losing everything.

Dear Original Poster,

If you have a pillar 3a, there is an immediate tax benefit you get each year because your taxable income reduces by about CHF 7k.

BTW: in my understanding this is an Endowment Policy, with survival benefits and an element of insurance for you in case of death.

So in the event you were making chf 250k per annum, your taxable income would become chf 243k. The income tax savings would be around 7k X 20% (lets say that is your marginal income tax in that bracket), you would save 1400 CHF per YEAR. Again this is an example.

Multiply this "stupid plan", the tax savings 1400 x 27 yrs = CHF 37k.

That's a start.

Now further this company AXA or whoever will take your money and invest into funds.

So as you go on investing, they keep allocating the "surplus" the money made to your account. This growth can be low, medium or high, depending on market conditions.

But at the end, you will get your money back, plus tax savings, plus some surplus.

All you have to do is cut a cheque once a year.

If you try investing on your own, you could end up with ZERO. While the plan provide a limited upside, you have very little downside. (if such companies survice). Also, most likely in the unfortunate event of the death, they pay out the full amount.

So actually it is a decent plan. No downsides or capped at the money you put in, some benefits in case of death and a little possible upside + some tax savings.

This is a no branier.








---- Disclaimer. i am not an financial adviser. Just giving an opinion!

Last edited by Early30s; 17.05.2018 at 10:40. Reason: added images and clarified the post!
Reply With Quote
This user would like to thank Early30s for this useful post:
The following 2 users groan at Early30s for this post:
  #35  
Old 17.05.2018, 11:22
aSwissInTheUS's Avatar
Forum Legend
 
Join Date: Nov 2007
Location: Zurich area
Posts: 8,269
Groaned at 66 Times in 59 Posts
Thanked 12,020 Times in 5,425 Posts
aSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond repute
Re: Pillar 3A insurance - how to cancel without losing everything.

Quote:
View Post
But at the end, you will get your money back, plus tax savings, plus some surplus.

All you have to do is cut a cheque once a year.

If you try investing on your own, you could end up with ZERO. While the plan provide a limited upside, you have very little downside. (if such companies survice). Also, most likely in the unfortunate event of the death, they pay out the full amount.

So actually it is a decent plan. No downsides or capped at the money you put in, some benefits in case of death and a little possible upside + some tax savings.
Either you are indeed a financial adviser or there is something regarding "no brain".

In the worst case scenario you get back LESS than what you paid into the plan! Also in case of death the the payout is LESS than what was paid in!
If OP passes away right now his heirs would get CHF 0, but has paid CHF 13'536 ! Also if OP wants to use the plan to finance a house he will get back less than what he has paid into the plan!

Compare this with a simple pillar 3a saving account. Their you have the very same tax savings, but the heirs would get at least what you paid in, and also for financing a house you would get at least what you paid in.

Let us assume that the plan makes the high growth, than at payout time you would be liable for CHF 30k in tax! (City of Zurich, married, person, current tax rate for pillar 3a payouts). As it is a single plan/account you cannot make staggered payouts to profit from lower taxes.

Let us assume the people think it is stupid to tax pillar 3a payouts. Kind of a best case scenario for pillar 3a. So, what is better: Invest CHF 6700 in pillar 3a or CHF 5300 in an alternative investment? (Which means after tax you have the same free money). The answer depends on the performance of the pillar 3a scheme vs. the alternative investment. In case of this stupid AXA plan just one 1% more is needed even-tough you only invest CHF 5300 per year instead of CHF 6700!

Something brainless as the Vanguard S&P 500 Fund (in CHF) already beats the underlying DynaPlan Excess Return Index easily.
http://www.morningstar.ch/ch/etf/sna...estmentType=FE
https://www.goldman-sachs.ch/ch/unlinked/dynaplan
__________________
PLAYER 1 ENTER YOUR NAME:_
Reply With Quote
The following 4 users would like to thank aSwissInTheUS for this useful post:
  #36  
Old 17.05.2018, 11:45
Las Las is offline
Newbie 1st class
 
Join Date: Mar 2016
Location: Basel
Posts: 28
Groaned at 0 Times in 0 Posts
Thanked 20 Times in 9 Posts
Las has no particular reputation at present
Re: Pillar 3A insurance - how to cancel without losing everything.

Quote:
View Post
Dear Original Poster,

If you have a pillar 3a, there is an immediate tax benefit you get each year because your taxable income reduces by about CHF 7k.

BTW: in my understanding this is an Endowment Policy, with survival benefits and an element of insurance for you in case of death.

So in the event you were making chf 250k per annum, your taxable income would become chf 243k. The income tax savings would be around 7k X 20% (lets say that is your marginal income tax in that bracket), you would save 1400 CHF per YEAR. Again this is an example.

Multiply this "stupid plan", the tax savings 1400 x 27 yrs = CHF 37k.

That's a start.

Now further this company AXA or whoever will take your money and invest into funds.

So as you go on investing, they keep allocating the "surplus" the money made to your account. This growth can be low, medium or high, depending on market conditions.

But at the end, you will get your money back, plus tax savings, plus some surplus.

All you have to do is cut a cheque once a year.

If you try investing on your own, you could end up with ZERO. While the plan provide a limited upside, you have very little downside. (if such companies survice). Also, most likely in the unfortunate event of the death, they pay out the full amount.

So actually it is a decent plan. No downsides or capped at the money you put in, some benefits in case of death and a little possible upside + some tax savings.

This is a no branier.








---- Disclaimer. i am not an financial adviser. Just giving an opinion!
Thanks for your input.

However, as aSwissInTheUS as so eloquently explained in the follow up post, there are several reasons to abandon right now and that is what I am going to do.
Reply With Quote
  #37  
Old 17.05.2018, 11:47
Las Las is offline
Newbie 1st class
 
Join Date: Mar 2016
Location: Basel
Posts: 28
Groaned at 0 Times in 0 Posts
Thanked 20 Times in 9 Posts
Las has no particular reputation at present
Re: Pillar 3A insurance - how to cancel without losing everything.

Quote:
View Post
Either you are indeed a financial adviser or there is something regarding "no brain".

In the worst case scenario you get back LESS than what you paid into the plan! Also in case of death the the payout is LESS than what was paid in!
If OP passes away right now his heirs would get CHF 0, but has paid CHF 13'536 ! Also if OP wants to use the plan to finance a house he will get back less than what he has paid into the plan!

Compare this with a simple pillar 3a saving account. Their you have the very same tax savings, but the heirs would get at least what you paid in, and also for financing a house you would get at least what you paid in.

Let us assume that the plan makes the high growth, than at payout time you would be liable for CHF 30k in tax! (City of Zurich, married, person, current tax rate for pillar 3a payouts). As it is a single plan/account you cannot make staggered payouts to profit from lower taxes.

Let us assume the people think it is stupid to tax pillar 3a payouts. Kind of a best case scenario for pillar 3a. So, what is better: Invest CHF 6700 in pillar 3a or CHF 5300 in an alternative investment? (Which means after tax you have the same free money). The answer depends on the performance of the pillar 3a scheme vs. the alternative investment. In case of this stupid AXA plan just one 1% more is needed even-tough you only invest CHF 5300 per year instead of CHF 6700!

Something brainless as the Vanguard S&P 500 Fund (in CHF) already beats the underlying DynaPlan Excess Return Index easily.
http://www.morningstar.ch/ch/etf/sna...estmentType=FE
https://www.goldman-sachs.ch/ch/unlinked/dynaplan
You couldn't have explained it any better!

Thanks again for your generous input.

I will update this page in the evening after speaking with the axa agent. Right now, they are trying to make me call different phone numbers and speak to different "advisors".
Reply With Quote
  #38  
Old 17.05.2018, 11:51
Forum Legend
 
Join Date: Oct 2014
Location: Ostschweiz
Posts: 5,483
Groaned at 174 Times in 148 Posts
Thanked 6,921 Times in 3,574 Posts
Urs Max has a reputation beyond reputeUrs Max has a reputation beyond reputeUrs Max has a reputation beyond reputeUrs Max has a reputation beyond reputeUrs Max has a reputation beyond reputeUrs Max has a reputation beyond repute
Re: Pillar 3A insurance - how to cancel without losing everything.

Quote:
View Post
In the long run (+20 years) 3a funds are a bad idea because it will badly loose to stocks. 3rd pillar doesn't make any sense.
Nonsense, it definitely does.

OP will want to use the to-be-opened 3a bank account to pay back the mortgage. The money used this way is sheltered from income tax, payback is accepted by the tax office every five or so years. The income tax saved this way guarantees unbeatable returns for higher incomes.

This can't be done with an 3a insurance contract, one more reason why it's a very bad idea.
Reply With Quote
This user would like to thank Urs Max for this useful post:
  #39  
Old 17.05.2018, 12:30
aSwissInTheUS's Avatar
Forum Legend
 
Join Date: Nov 2007
Location: Zurich area
Posts: 8,269
Groaned at 66 Times in 59 Posts
Thanked 12,020 Times in 5,425 Posts
aSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond reputeaSwissInTheUS has a reputation beyond repute
Re: Pillar 3A insurance - how to cancel without losing everything.

Hi Las,

Regarding what else you can ask or discuss. It looks like you were not made aware of the surrender table at the time you entered the contract. As you have seen you will lose money in all three cases: surrender, death, or investing in real estate. I would use as a leverage to get out of the contract and be fully reimbursed / the plan transformed into a regular 3a savings account. The insurance agent clearly mis-sold and mis-informed you, as this plan, in your situation (future family and house/apartment) does not make any sense.

Important is to say:
- That the situation (future family and home) was an important factor to consider the 3a when you entered the contract.
- That financing real estate in the near future had a very high priority.
- That you wanted the best 3a product for your situation.
- That you were not aware of the surrender table.
- That you are completely gobsmacked that you will lose money if you use it to finance the house or in case of death.
- That if you knew all this and were properly informed had chosen a standard 3a saving account.
__________________
PLAYER 1 ENTER YOUR NAME:_
Reply With Quote
This user would like to thank aSwissInTheUS for this useful post:
  #40  
Old 17.05.2018, 12:51
Senior Member
 
Join Date: Jan 2010
Location: Zurich
Posts: 375
Groaned at 68 Times in 28 Posts
Thanked 289 Times in 155 Posts
Kedi is considered knowledgeableKedi is considered knowledgeableKedi is considered knowledgeable
Re: Pillar 3A insurance - how to cancel without losing everything.

I guess what I have opened at my bank is a "regular" 3a account, right? We were advised by the bank to save on taxes and my husband assured me it isn't one of those plans where you lose money the first 10 years or so.

I am actually a bit worried now.
Reply With Quote
Reply




Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Extra payments to pillar 2, or pillar 3a? cransom Finance/banking/taxation 9 16.08.2017 20:01
How to get tax back after contribution to 3a pillar? hiaw Finance/banking/taxation 20 13.12.2013 16:53
How to cancel health insurance Alejo07 Insurance 9 08.10.2012 09:06
New form 8938: how to report 2nd pillar / 3a pillar accounts?? rog Finance/banking/taxation 8 30.06.2012 19:37
Mis sold a 3rd pillar pension, How to cancel? empeppa Finance/banking/taxation 5 17.12.2011 21:19


All times are GMT +2. The time now is 16:35.


Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.
LinkBacks Enabled by vBSEO 3.1.0