3a solution from Finpension [2023]

If I were you, I will not worry much and also do not overthink. You can have 2 accounts at Finpension, 2 at Viac and one in Frankly. Total 5.

In other words - I wouldn’t recommend to close or transfer anything. I know finpension might be cheapest. But difference between 0.39% and 0.44% is not that huge in my opinion. For perspective if you have 100,000 CHF in the portfolio, 0.05% would mean 50 CHF on annual basis.

If for some reason you don’t like Frankly (for example because of lack of choice of funds), then you can have 2 accounts at VIAC and 3 accounts at Finpension.

Going forward over a 10 year period, try to have similar amount in all of them. This way you would be able to have some flexibility at time of retirement.

Regarding which strategy to choose within each of the accounts, it’s more of a financial decision based on risk tolerance and overall portfolio allocation strategy (total across -: 3a, bank accounts and also other brokerages)

Last point -: I think you are focussing a lot on past returns. It is not going to be a good criteria for future returns. The future returns are based on when you invest and what strategy you choose.

And believe me -: few years back, Viac was cheapest, then Frankly arrived, then Finpension, in coming years there would be more. So any decision you make today will only be valid for few years :slight_smile:

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Yes, that’s correct.

Transactions are free with finpension, so you can always adjust your portfolio.

Common wisdom is to stop depositing into an account as soon as it reaches 50k and open another 3a account, but as stocks will increase the money in an account over time, I would distribute deposits much earlier, say after an account reaches 10-15k. Some deposit CHF 117.60 (7056/12/5) into five accounts each month, although I think that’s overkill. Each year into a different account/portfolio is fine IMO.

May I ask why you would consider that to be an overkill? After once setting up the 5 automated payments from your bank account to Finpension you don’t have to think about it anymore, no? Of course changing the amount if the limit has changed for the next year might be considered more work, but that’s it.

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If your tracking with Portfolio Performance, you have upload a lot of PDFs :sweat_smile:

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I do that, what’s the issue? You can upload all PDFs for one portfolio at once, so 5 uploads a month.

The painful part is once a year to manually enter all the reimbursements of withholding taxes, because VIAC doesn’t provide the FX rate in these statements :roll_eyes:

Having similar amounts in 5 3rd pillar accounts at retirement age is not really desirable unless you plan to take the annuity from your 2nd pillar after retiring.

If you intend to cash out your second pillar and do so over 2 years (obligatory and extra-obligatory in different years), the optimal scenario may be to split 3rd pillar cash out over 3 4 other years. Hard to do so in equal-ish amounts with 5 similar 3A accounts.

Anyways, I’m not sure optimizations at this level really matter that much: 3A is usually small compared to 2A, amounts can be cashed out at different times for real estate or self-employment for example, rules may also change in the meantime…
The main point for me is that IMHO there’s no need to over-complicate things, especially if the result is not even an optimal one.

edit: thanks @Luk_nuts for pointing out the mistake!

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Plus 1 vs 5 documents for tax filing.

Good thing that there are (at least) 6 years in total to cash out 2nd and 3rd pillar. :wink:

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I’m not saying it’s a bad thing to pay into five different 3a accounts monthly. I’m just saying you could simply switch your deposits to a different account every few years and the outcome would be the same.

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I mentioned 5 because normally people need to cash out full 2a in one year. So 5 accounts were recommended in various forums.

In the end , the final optimisation depends on one’s individual situation, needs for money at time of retirement etc.

With easy and cheap process to open accounts, one can have 30 accounts as well with every new year a new account :slight_smile:

But as you said 3a is smaller already compared to 2a. And then if you already split it in 4-5 accounts then it’s even further reduced in size. It’s not something to worry about too much.

That’s highly dependent on your salary and pension fund.

Let’s look at a realistic example:
Time horizon: 35 years

Annual payments 3a: 7’000
Annual payments 2a: 20’000 (that’s already a high amount and I’d say most people have way less on average)

Annual interest 3a: 5% (fully invested)
Annual interest 2a: 1.5% (above min, many people only get the minimum)

Final value after 35 years:
3a: ~632k
2a: ~912k

While the 2a amount is higher, the 3a amount is still significantly high to optimize.

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I don’t know if I am the only one who finds this worrying, though. I like to think nothing is free when it comes to services, having been burnt badly by “free” advice (3A with insurance…). There must be some cost, somewhere, or a limit. As it stands one could rebalance in Finpension 52 times per year…isn’t this a bit weird to be free IF we assume that the securities we hold there are in fact in our names? Or are they in silico and are/will be settled once someone withdraws - and I said above I expect most people to be far from it wth Finpension given they are quite new.

Looks like there is some confusion. First of all, assets held in a 3A account are NEVER held in your name. They are held in the name of the foundation, which is a separate legal entity than the operating entity. Meaning that even if FP go bust, the foundation was not affected and your assets are hence secure.

With regard to trading. FinPension incurs a ticket fee whenever they place orders with the fund banks. These ticket fees are highly likely flat and they don’t care whether they now purchase 10 or 1’000 fund units. So FP doesn’t incur any variable cost as such when you trade. The Index Fund itself trades like a fund does (aka trading cost are materially different from anything you and me have ever seen before). They recover these trading cost with the purchase/redemption uplifts applied at a fund level (that you still pay).

FP tries to reduce purchase/redemption uplifts using netting and pooling. This is actually good for the IndexFund too, as it leads to reduced trading (or at least the magnitude thereof) so its a win-win.

In conclusion: Your trade does not lead to any variable cost neither to FP nor the Fund, other than trading fees you still pay with the purchase/redemption uplift that are netted away to a certain extent. Why should FP charge you any transaction fees? They cover their fixed cost with your recurring fees already.

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I was just trying to find a reason, why it might be complicated.
But the other thing you mention: You mean, when you have to adjust the value in the foreign currency until you hit the right value in CHF?

It’s not free. But it’s optimised

  1. People can change strategy 52 times a year but they don’t change it because most people invest and hold.

  2. Remember there is also lot of AUM under 1E plans and Vested benefits account. So most likely when a trade is placed at fund level there are many trades which get combined.

  3. You are also paying 0.39% annually. So I believe overall it works out well for FP.

@TeaGhost has explained the mechanism in detail.

  1. of course, 52 times/year is an absurd exaggeration, but it is possible. It’d cost money to do that with other brokers, even with golden goose IBKR.
  2. true, it’s this point which I find somewhat worrying though, the worry that it’d be a mess to untangle, but that’s just me being overly conservative. I am not a fan of fractional shares either :wink:
  3. that’s fine, I hope it goes well for them because it works for me too :slight_smile:
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I mean that the withholding tax reimbursement statements can’t be imported into Portfolio Performance, because the FX rate is missing on the statement.

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It’s a bit long story, but it’s also not free because there is a spread “fee” added upon subscription and redemption of fund units.

I have analyzed the price at which funds are traded inside finpension. They are not traded at NAV but at NAV plus OR minus the spread. Sometimes I had the same fund bought and sold in different portfolios, the price was the same.

My conclusion was that finpension books transactions at the price that they paid to the fund management for subscribing or redempting. Because of the netting, only a part of gross order is actually traded with the management and incurs “fees”. The rest of the spread fee is exchanged between users buying or selling the fund units. If you are at the same side of the trade as finpension, you pay your part of the fee, if you are on the opposite side, you receive some of that fee.

To their honor, it looks like finpension is not taking their cut when their users are trading funds.

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Absolutely insightful comment. Thanks for further clarification

I don’t understand. I tried the upload function in Portfolio performance with the report from IB, but it didn’t work.
So what document do you exactly download every month on viac? Then you upload it in portfolio performance and it will automatically fill all the information so that you exactly see the performance from viac in that specific month?