Dear @wapiti @rolandinho and TeaCup
At the time we generate the transactions and place the trades, the NAVs of the funds from this specific date are not yet known. Therefore, the transactions are generated and instructed in number of shares based on the last available NAVs (end of October). As the prices of the funds rose sharply at the beginning of November, slightly more than 100% was invested. This can happen when prices rise sharply, but is not a problem. At the beginning of December this will be corrected by rebalancing.
Dear @wapiti @rolandinho and TeaCup
Thank you & great answer @finpension. Now I understand that little “over-invest” issue. Hopefully it can help allay some fears of people who think there are issues with Finpension. Carry on the good work.
We are currently examining whether we would like to include an optional identification as part of the onboarding (not mandatory). We are currently receiving a lot of positive feedback for the lean onboarding process. However, we are of course striving to cover as many different needs as possible. With regard to payout, it is important to understand that the following steps and documents are necessary for this:
- Application for withdrawal
- Passport/ID copy of the client
- Confirmation of residence (not older than 1 month)
- Confirmation of bank details
- Officially certified signature of the spouse
In addition, the following checks are carried out:
- Name and date of birth of the passport/ID must be identical to information from onboarding.
- Name and address of the beneficiary is identical to the information provided by the insured person.
- Verification of the bank details by phone with the insured person (IBAN etc.).
We specifically use the information from the onboarding (name, date of birth and telephone number) to ensure the correct payout process. If a typo was made during onboarding, the steps and documents listed should provide enough evidence to allow us to make a payment safely. Confidence in our pension solutions is very important, which is why large institutional clients in particular rely on our services (eg. HUG - Hôpitaux Universitaires de Genève, Gategroup, Leonteq, Kantonsspital Graubünden and many more).
Neither does or did Interactive Brokers, do they?
ID copy without any in-person or remote verification, that’s it.
For an account that’s arguably much riskier in trading and transfers it allows, isn’t it?
That’s why you keep records and documents regarding your transfers and check on your investments and registered data periodically, don’t you?
If you don’t, it might come to bite you sooner or later. For instance, I have recently seen two passport copies for one and the same person - albeit with different dates of birth. I do believe both passports to be authentic, just a typo that has been made by the issuing authority. But if you don’t rectify ASAP, it is a recipe for hurt later.
…though these are 2nd pillar pension clients, aren’t they?
For these, there are (almost perfectly) unique social security numbers and a large paper trail of employment relationship and AHV contributions, to clear up any doubts about customer’s identities.
I’m not sure if you’re allowed to collect AHV numbers for third pillar accounts (under data protection laws), but they might be an additional safeguard that wouldn’t be too onerous on customers.
Asking for the AHV number when opening up an account wouldn’t be a big hassle. I mean everybody has his health insurance card somewhere.
69% CSIF (CH) III Equity World ex CH Quality - Pension Fund***
10% CSIF (CH) I Equity Europe ex CH
10% CSIF (CH) Equity Switzerland Small & Mid Cap *
10% CSIF (CH) III Equity World ex CH Small Cap Blue - Pension Fund **
…is going to be my selection.
* yes, only small & mid cap for Swiss exposure. My current BVG pension fund is probably invested enough in the Swiss blue chips (though I have way less money in my pension fund than in pillar 3a).
** just a small side bet on Small Cap somewhat overperforming a whle following a crisis / bear market. Otherwise I would probably keep it even simpler and distribute these 10% among the other 3 funds.
*** PS: although on second thought… maybe I should go all-in on the MSCI Quality at FinPension, since it’s the only „flavour“ I can‘t get elsewhere (i.e. with Viac)? Maybe I should take a broader look at all of my pillar 3a investments and look into how I can achieve the desired overall allocation by splitting amongst them…
I’m bit lazy here as there are so many fund available. How exactly would you replicate VT in Finpension?
Please be not too lazy to at least read the posts above I have already asked. MrLeanLife kindly shared his google sheets. I am trying to find some time to re-do the exercise at some point. Maybe some others can share their own exercise.
@San_Francisco nice selection. I am less interested in CH and EP exposure and more interested in US exposure. My selection will probably be:
15% Equity world ex CH Small Cap blue (for high risk high growth)
65% Equity world ex CH Quality (for stable growth)
19% Equity US blue (to increase weight on US equities)
(I may adjust the weightings slightly)
I would welcome any comments or insights.
Does anyone know how finpension proposes such high percentages of equity/unhedged investments?
I think VIAC does it because it’s pooled with terzo foundation, but finpension doesn’t seem to pool it.
The regulations even say:
3.6 The following category restrictions also apply to account
holders and at the Foundation level:
a) 50% for investments in equities
b) 30% for investments in real estate, with a maximum of one-third outside Switzerland
c) 15% for alternative investments
d) 30% for foreign currencies with no currency hedging
(which matches the Art 55 BVV 2)
Do they really have that many people who don’t invest in equity that they’re below 50% at the foundation level?
I‘d guess that article 3.7 might mistakenly refer to article 3.5 instead of 3.6.
Even in the German version article 3.7 refers to „Kategorienbegrenzungen“, which aren‘t really found in 3.5 (which rather limits exposure to individual real estate properties), yet are explicity mentioned in the immediately preceding 3.6.
But even if that’s what they mean, it would only allow it at the individual level. 55 BVV 2 limitations would still apply at the foundation level iiuc (which is why e.g. VIAC is forced to have such an amount of hedged/chf investments.
Care to share an example where this happened?
Just read this, Pension fund are allowed to go over:
4 Sofern die Vorsorgeeinrichtung die Einhaltung der Absätze 1–3 im Anhang der Jahresrechnung schlüssig darlegt, kann sie gestützt auf ihr Reglement die Anlagemöglichkeiten nach den Artikeln 53 Absätze 1–4, 54, 54a , 54b Absatz 1, 55, 56, 56a Absätze 1 und 5 sowie 57 Absätze 2 und 3 erweitern. Anlagen mit Nachschusspflichten sind verboten. Ausgenommen sind Anlagen nach Artikel 53 Absatz 5 Buchstabe c.
4 Si l’institution de prévoyance prouve de façon concluante dans l’annexe aux comptes annuels qu’elle respecte les al. 1 à 3, elle peut, si son règlement le prévoit, étendre les possibilités de placement prévues aux art. 53, al. 1 à 4, 54, 54a , 54b , al. 1, 55, 56, 56a , al. 1 et 5, et 57, al. 2 et 3.
What does the Absätze 1 to 3 say:
1.The pension fund must carefully select, manage and monitor its assets.
2 When investing its assets, it must ensure that the security of the fulfilment of the pension purposes is guaranteed. The assessment of security shall be based in particular on an appreciation of all assets and liabilities as well as the structure and expected development of the insured population.2
3 When investing the assets, the pension fund must comply with the principle of appropriate risk diversification; in particular, the funds must be distributed among various investment categories, regions and economic sectors
If you are still not convinced, you can read this analysis from a renowned law professor (in french) https://www.fw2s.ch/fr/wp-content/uploads/sites/2/2019/02/article-55-opp-2.pdf
Many pensions go over the limitations.
No, it’s a question of liabilities. Finpension assumes no risk, they will give you the return of the stock market.
For sure, if they need to pay monthly pension the story would be different as you would need to manage the risk/return to transform the returns into the monthly pension.
thanks for the link, going through it now. Did finpension already publish an annual report? (that would include the justifications wrt BVV 2 obligations).
I have removed this part of my post.
I know that standard pension funds need to publish a report. I’m not sure about 3a and vested benefit.
To my knowledge, finpension or Viac haven’t publish a public report.
Then how can you satisfy Art. 50 al 4 if you don’t publish a report? Going over the limits is conditioned on demonstrating it in the report, right?
The accounts are reviewed by an auditor. You need to trust them
Could you elaborate? It’s a severe accusation. Providing some arguments may help us to make our minds.
Finpension is on the official list of the Swiss tax authorities of 3A providers. There are some control in order to be and stay on this list.
Finpension has top Swiss companies including banks as clients.
No one here knows, me included, how the legislation applies for a pension provider like finpension offerring vested benefit, 1E, 3A.
From my point of view, the fears are overated and only due to a misconception/limited knowledge on this complex topic, the Swiss pension system.
My take on it as well. They won’t be paying out pensions to their customers - they are only delivering them the returns of the funds their customers are invested in.
They aren’t even promising preservation of capital (with the exception of the share of cash held). So customer can even lose money without a problem, if they actually do invest customer’s funds as indicated.
In principle yes.
Just as they should be audited.
The question remains however how strict their supervision actually is?
To what degree do supervision and auditing rely on (assumptions of) integrity and trust - vs. stringent controls and thorough checks?
(side note: this may be an interesting question that transcends pensions funds and personal retirement savings but pertains to societies as a whole - and lead to very surprising revelations).
There have been allegations of severe mismanagement or downright fraud againt (even) pension funds and vested benefits institutions not too long ago. Accompanied by allegations of lack of adequate supervision.
As for 3a foundations in general, I don’t believe for a second that they are more strictly regulated and supervised, compared pension funds - quite the contrary!
I have invested some money with Finpension and am not alarmed. I’m also willing to cut them some slack, as they are a relatively new provider. However, the more I think about it, the more I am standing by my earlier assessment
…that they might indeed have made a mistake in their investment regulations.
It may be small one, but would not be a good sign.