3a solution from Finpension

[San_Francisco]

@Cortana

Damn didn’t know that they will charge me 200 CHF for pledging it.

Of course. Doesn’t every 3a provider or pension fund?

(Well, could imagine some some small dedicated pension fund set up specifically by an employer doesn’t. But I‘d very surprised if any collective 2nd pillar or 3a foundation did not).

[Dr.PI]

Does anyone know if CSIF funds offered at finpension get withholding taxes on dividends from Canadian stocks reimbursed/waived?

I am looking in particular at CSIF (CH) Equity Canada Blue ZB (CH0213352104), but World ex CH is probably also concerned.

1. According to the double tax agreement with Canada, Swiss pension funds don’t pay Canadian withholding tax on dividends.

2. CSIF (CH) Equity Canada Blue ZB suspiciously overperforms it benchmark MSCI Canada (NR) by ca. 0.3-0.4% p.a.

3. I was trying to read the annual report for this fund. It mentions “Reclaimed Foreign witholding taxes”, but I don’t see gross and net dividends or something like that.

[rolandinho]

@Dr.PI

withholding taxes on dividends from Canadian stocks reimbursed/waived?

I am looking in particular at CSIF (CH) Equity Canada Blue ZB (CH0213352104)

The way I understood it when these ETF’s which don’t pay wht for special use cases were introduced, the ETF’s which don’t pay wht (or get it reimbursed) got the suffix “Pension Fund” in the name.
See the US and Japan Funds for example (CSIF (CH) Equity Japan Blue and CSIF (CH) I Equity Japan Blue - Pension Fund)
As that particular Canadian ETF doesn’t have the suffix, I’d say its wht are lost.

[Dr.PI]

@Dr.PI

Does anyone know if CSIF funds offered at finpension get withholding taxes on dividends from Canadian stocks reimbursed/waived?

I am looking in particular at CSIF (CH) Equity Canada Blue ZB (CH0213352104), but World ex CH is probably also concerned.

…

@Dr.PI

I was trying to read the annual report for this fund. It mentions “Reclaimed Foreign witholding taxes”, but I don’t see gross and net dividends or something like that.

Ok I looked again. The ratio
“Reclaimed foreign withholding taxes” / “Securities income, divided into: shares and other equity instruments … + Shares of other collective investments”
gives me for different shares classes and different periods values between 8% and 22%. So I think it’s reasonable to assume that this fund is not paying more than 15% withholding taxes on Canadian securities.

[Burningstone]

According to the double tax treaty → https://www.estv.admin.ch/dam/estv/de/dokumente/international/auslaendische-quellensteuern-pro-land/k/kanada.pdf.download.pdf/kanada.pdf

the fund should be able to reclaim 10% of the 25% withholding tax, leaving 15% non-reclaimable withholding tax, if I understood correctly.

[Dr.PI]

@Burningstone

the fund should be able to reclaim 10% of the 25% withholding tax, leaving 15% non-reclaimable withholding tax

Yes, but if it is recognize as a pension fund, withholding tax should be reduced to 0, see documents linked in

Canada based ETFs

And now I have a question concerning level 2 withholding tax on dividends distributed by Canadian funds or stocks. According to this summary the standard withholding tax of 25% is reduced to 15% for individuals. Does anyone has a first hand experience receiving dividends from CA securities? Is the withholding tax really 15%? Is it possible to reclaim these taxes as tax credit in CH (DA-1 Form?)? Many thanks to anyone sharing experience.

[Burningstone]

As far as I understood, the CSIF used by finpension are not pension funds, but institutional funds.
The pension fund shareclasses are only available for the CS Anlagestiftung funds.

At least that’s how it works at the Anlagestiftung I’m working at. One shareclass is for our Anlagestiftung fubds, which can be bought only by penaion funds and the other shareclasses are for vested benefits/3a accounts. This way the they can at least profit from the low TER and spread from institutional funds as retail investors.

I’m not sure whether vested benefits/3a providers would even be eligible for pension fund shareclasses.

[nabalzbhf]

Depends on countries, e.g. for US they have access to pension class: https://finpension.ch/app/uploads/factsheets/CH0030849712_fact-sheet_en.pdf?t=1661267598

[skyw4lker]

Good News

Finpension is abolishing VAT on its administrative fee. The gross fee will therefore decrease from 0.42% to 0.39%.

[Burningstone]

I wonder how they are able to pull this off, VAT is not something that you can decide yourself to get rid of.

[skyw4lker]

My wording was imprecise. They will continue to charge VAT, but rather decrease their administrative fee. The rest is marketing slang.

Edit: looking at the news published today by finpension, it really is a bit unclear with how they handle VAT:

“VAT increase? Not with us! We are abolishing VAT on the administration fee of our #3a securities #app altogether. This means that the gross fee will decrease from 0.42 % to 0.39 % (incl. VAT). And this already retroactively as of 1 October 2022.”

[OrientExpress]

Additionally, the will start to offer Swisscanto Funds: finpension senkt die Gebühr und erweitert das Angebot | HZ Insurance

[Dr.PI]

This is a great initiative, but unfortunately Swisscanto funds look like normal classes, no preferential treatment for withholding taxes paid to pension foundations.

However I might switch CSIF funds which are not classes for pension funds.

Hmm, IPF = Institutional Pension Fund…

[Wolverine]

Additionally, the Swisscanto funds seem to be under custody of Swisscanto themselves (ZKB) and not Credit Suisse (Schweiz) AG. They react quickly, though their actual structure is still a bit opaque to me.

[Dr.PI]

Comparing performances of CSIF vs. Swisscanto funds over 5 years (same benchmark/index and currency):

• USA, pension fund shares without withholding taxes: no difference. Yearly performances are also almost the same with a small difference in either direction.

• Europe ex CH: CSIF overperforms by 0.24%

• Japan (3 years), pension fund shares without withholding taxes: CSIF overperforms by 0.03%

• Canada: CSIF overperforms by 0.34%

• Pacific ex Japan (very low L1 withholding taxes): CSIF overperforms by 0.02%

• World ex CH (3 years, same composition but different index types: gross vs net total return): no difference. Yearly performances are also almost the same with a small difference in either direction.

This I don’t understand. CSIF funds overperform for individual geographic segments which have significant L1 withholding taxes (Europe ex CH, Canada), but for the whole “World ex CH” there is hardly any difference.

• Switzerland total market (SPI): Swisscanto overperforms by 0.03%.

• Emerging Markets (CS fund is not zero-TER): Swisscanto overperforms by 0.18%.
  It seems that finpension kinds of promising to reimburse from now on TER for non zero-TER funds. However it is better to not rely too much on other’s promises. So the Swisscanto fund is clearly much better than CSIF one.

Furthermore, with the new pricing of finpension, the total investment cost for investing in MSCI Emerging Markets via the Swisscanto fund is now 0.2% to 0.3% p.a. more advantageous than via a US or IE ETF.

This is an even stronger argument to maximize investment in USA stocks in a taxable account (at IB?).

[greenore]

Thanks a lot for your research!

Following the work of other forum members I tried to replicate a world portfolio on Finpension (i.e, similiar distrubtion as VT).

• 74.0 % - CSIF (CH) III Equity World ex CH Blue - Pension Fund Plus ZB
• 11.0 % - CSIF (CH) III Equity World ex CH Small Cap Blue - Pension Fund DB
• 11.0 % - CSIF (CH) Equity Emerging Markets Blue DB
• 2.0 % - CSIF (CH) Equity Switzerland Large Cap Blue ZB
• 1.0 % - CSIF (CH) Equity Switzerland Small & Mid Cap ZB
• 1.0 % - Cash

First, am I reading your post correctly that a more optimal strategy would be to swap the two Swiss funds (CS) and the Emerging Markets Fund (CS) with the Swisscanto funds?

Second, I couldn’t find the passage where Finpension “promis[es] to reimburse from now on TER for non zero-TER funds”. Are you sure about that?

[Dr.PI]

@greenore

• 2.0 % - CSIF (CH) Equity Switzerland Large Cap Blue ZB
• 1.0 % - CSIF (CH) Equity Switzerland Small & Mid Cap ZB

There is Switzerland Total Market. Also from CS

@greenore

that a more optimal strategy would be to swap the two Swiss funds (CS)

No.

@greenore

Emerging Markets Fund (CS) with the Swisscanto funds?

Yes.

@greenore

, I couldn’t find the passage where Finpension “promis[es] to reimburse from now on TER for non zero-TER funds”. Are you sure about that?

No

Normalerweise kommen zur Verwaltungsgebühr noch Kosten der Fonds hinzu, die im Fonds-Factsheet als Total Expense Ratio (TER) ausgewiesen werden.Bei der finpension 3a Vorsorgestiftung sind die Kosten der eingesetzten Fonds bereits in der Gebühr enthalten (Ausnahme: Crypto Market Index Fonds). Die Kosten für den Zugang zu den eingesetzten Fonds übernimmt die Stiftung.

[johndoe1]

@greenore

Second, I couldn’t find the passage where Finpension “promis[es] to reimburse from now on TER for non zero-TER funds”. Are you sure about that?

On an other note: I think it’s about time to lower fees in the whole 3a/vested benefits sector. I don’t see much justification for a %-fee either. 3a/2nd pillar pension funds are comparable to brokers, so there should be a low fixed-price brokerage fee imho.

[Burningstone]

And how are the employees of the foundations paid?