2nd pillar or DEGIRO

joanaris · February 10, 2021, 2:18pm

Hello,

I am thinking a lot about the strategy to adopt to optimize my savings.

Briefly my situation is the following: I am independent, and the only income from the house and we have 2 children of 5 years and 12 months.

I am currently saving

1500chf per month in ETF at DEGIRO
2500 francs in 2nd pillar at Allianz
1100 francs in 3rd pillar at VIAC
1000 francs of reimbursement of a mortgage abroad

What bothers me is the 2,500 francs in the 2nd pillar: this allows a reduction in taxes but the yield of 0.5% puzzles me!
Is there a 2nd pillar solution with more dynamic VIAC-type management or would it not be better for me to cancel this 2nd pillar and increase the savings on the 3rd pillar?

Thank you for your answers

Johan

nabalzbhf · February 10, 2021, 2:25pm

Viac or finpension have a more equity heavy 2nd pillar.

joanaris · February 10, 2021, 3:43pm

yes but these are management on vested benefits. if I want to continue to feed my 2nd pillar, I cannot benefit from it

nabalzbhf · February 10, 2021, 3:47pm

Could you move it there and switch further contributions to 3a? (sorry not very familiar with the setup for independent workers).

edit: I see that’s what you asked in the original question, so yes if you want something with more risk that seems like a good solution. That said make sure it matches your risk profile.

pwi · February 10, 2021, 4:27pm

Hi Johan,
Since you have a pension fund, the maximum deductible from 3a is 6’883 per year, so 1’100.- per month is too high. If you cancel your pension fund you can pay up to 20% of your income, maxed to 34’416 per year in your pillar 3a (or 2’868 per months)
If you want to pay more tax-free, you have to find another pension fund. There are plenty of pension funds which give more interest than 0.5% but its not “fully insured” like Allianz and I am not sure that they accept independants…

joanaris · February 10, 2021, 8:15pm

Hi pwi,

I did not take any snuff, but my 3a contributions of 1100 francs are actually an account for me and my wife, i.e. 6883x2 per year.

The must would be the tax savings offered by the 2nd pillar and which would allow me to go up to 20% of income but without a decent return, I do not see the point. It doesn’t make up for the potential loss.

If I cancel the 2nd pillar, as you say so well, I can increase the contributions to 34 416 + 6883 (for my wife) in the 3a.

And I complete with Degiro.

I’m just surprised that there isn’t a pension fund that allows dynamic ETF management like in 3a.

pwi · February 10, 2021, 9:43pm

I thought that tax-free pillar 3a contributions are only possible when one is employed. Since you said, that you have the only income in your household, I did not know that your wife can also make such payments.

The problem is that the pension fund have to give a nominal guarantees on the paid contributions. With stocks portfolios, you have the risks of employees leaving during a market downturn. In that case, the pension fund (that means indirectly the employer and all the remaining employees) would have to finance the difference up to the guaranteed amount.
That is the reason why most pension funds have very conservative investment strategies and therefore very low returns.

Barto · February 10, 2021, 9:45pm

I would be interested to understand the rules on this

I thought you had to be an employee to have a 2nd pillar and if you are an employee it is compulsory for employer and employee to pay into 2nd pillar once salary is over 21,510 CHF

I also thought you can only invest the higher amount of 34,416 in 3a if you are self employed without 2 pillar

Lastly if I put in my tax software that my wife does not have any employment income it does not let me enter the 3 pillar deduction for her

Wolverine · February 11, 2021, 3:20am

Not answering your question but since 2nd pillar usually comes with insurances meant to protect your dependents (and yourself in case of disability or illness), I’d make sure to have a policy that covers loss of income, illness, disability and death to a level that would allow your dependents to keep on in case something happens to you or your spouse. It can be part of your 2nd pillar solution, can be deducted as 3a, as 3b in Geneva or Fribourg or simply be a policy you take without fiscal advantages if you’d rather use your full available amount for savings and investing.

You’ve probably already contracted one but it’s not apparent from your messages so I thought I’d mention it anyway. Congrats on having all those options open!

Ardius · February 11, 2021, 8:23am

I totally agree. Insurance aspects of the 2nd pillar has to be taken into account, especially if you have a family.