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.
This is in fact a false reference. However, as we are not allowed to adapt the regulations without approval of the supervisory authority, the change is pending.
Here’s a list of things that put me off a bit:
- finpension themselves said in this thread that 3a deposits are insured up to 100kchf. This is wrong and they had to be corrected by the members of the forum.
- While Frankly and Viac do an ID check, finpension does not. Their explanation here in the forum might certainly be correct, but for example the operator of this forum and The Poor Swiss in his blog share my concerns.
- As @San_Francisco is saying above, the mistake in their investment regulations is indeed a small one. But it’s not a good sign.
I’ll pass for now.
Actually this is correct for the cash portion of 3A and vested accounts.
See here for further information
Nope. You own link says: “The balances of vested benefits accounts and pillar 3a retirement accounts are preferential deposits, but not protected deposits.”
And finpension said (quote) “All 3a foundations are covered under the deposit insurance”.
Protected (insured): no.
After reading the post from @nabalzbhf I was concerned about the legitimacy of Finpension, so I called to Finpension ask them to clarify the limitations. First they confirmed that there is a typo in paragraph 3.7 and that it should in fact refer to ‘3.6’. Second, they said that they are required by law to put the regulation outlined in paragraph 3.6 into their regulations, however they siad that Paragraph 4 of Art 50 (i bleieve that this is cited by @wapiti below) allows to overrule the limitations outlined in para 3.6 of the regulations.
Thanks for your analysis, but I disagree as mentioned in my previous posts.
What is the issue if the foundation holds 100% diversified stocks? The volatility will be higher, but this has no impact on the liabilities. Customers will receive the returns of their selected strategies. If you select 100% stocks, you have a warning that the strategy is risky.
I’m personally ok with having people have more control over their pension assets. The question is what is actually inline with the swiss regulations (because I don’t think that at least the spirit of them is in line with having full control on investment strategy, otherwise what’s the point of Art 50-55?)
The spirit of this law is to protect the future pension of standard pension funds (pillar 2). The goal is to avoid that pension fund not being able to pay the current pension anymore. A standard pension fund needs to pay pensions every month whatever the returns. That’s why articles 50-55 recommend allocations. But the article 50 al 4 allows changing this recommendation based on the fund situation.
A standard pension fund couldn’t have 100% stock because the value at risk would be too high, so the risk to run out of money. Because you have this link between asset and liabilities.
In short, Finpension is under 50 al 4, so there are align with the law. Don’t you agree?
I don’t think the regulation really takes into account DIY investment products within a foundation. My understanding is that the spirit of the regulation (and the recent change to art. 50, see the pdf shared earlier) was to remove the hard limits for funds that are managed (it’s explicitly inspired by the “prudent investor rule”).
Anyway I don’t think there would be massive downsides, if the regulator decides it’s not ok, worst case the product change or you have to transfer out, but there shouldn’t be any loss directly due to this.
Edit: and to be clear, I like the innovation from viac/frankly/finpension, and as a consumer that’s what I want
I think there is a mix up between “standard” pension funds (2nd pillar) that have to pay out pensions at retirement age vs 3rd pillar (3a) solutions like those offered by Finpension.
3rd pillars don’t pay pensions at retirement, you need to get your capital out and that’s the end of the story. The 3a foundation has no problem after retirement, no liabilities.
Finpension also offers other solutions like 1e and vested benefits, but these solutions also don’t have any liabilities at retirement, as the account holder is required to get his capital (not a pension).
In clear: finpension is not a regular pension fund; you cannot work somewhere and ask to be affiliated to finpension (with the exception of 1e solution, but this is not mandatory and regulated differently).
Why do you think there’s a mix up? Many (most?) of the regulations are shared. The regulators could have done things differently if that’s what they intended (e.g. if that was just a pre-tax retirement account with freedom of investment like some countries have).