3rd pillar investment solution from VIAC

If you had to open 10 accounts right now (5 for you and 5 for your wife) and contribute evenly into them for 20-25 years before moving out of Switzerland at retirement age, would you:

Open all 10 of them at Viac?
Open all 10 of them at Finpension?
Or split 5 and 5 between Viac and Finpension?

Let’s say you are very risk-friendly (3rd pillar will also be a minority of your investment portfolio) so your strategy would be to hit as close to 100 % stock as possible (no real estate, gold, etc.). You want to follow a global index like FTSE All World or MSCI ACWI. No additional exposure to CH stocks or other regions. You just want to follow one simple world index and don’t want to rebalance ever; set and forget auto-pilot type of thing for years to come.

What would you do? Of course I realize that things will change a lot until the day of my retirement, there will be new competitors etc but I need to open a 3a pillar finally…

All acccounts at Finpension.

1% Cash
2% SMI
10% MSCI Emerging Markets
87% MSCI World ex CH

You can’t do that at Viac.

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If you are looking for simplification consider only opening 1 account each to avoid 10 accounts with tiny balances and 10 bank transfers. You can always open the next of the 4 accounts in a few years once your first account once is worth something

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:point_up:t2: This.

Maybe open up one account, contribute the maximum amount to it for this year.
Next year I’d maybe open up another and contribute the maximum amount as well.
After having opened up my fifth account, I’d just take turns.

Opening up 5 account all at once an contributing a fifth to each every year is nuts (though admittedly, I have done worse things elsewhere).

That said, I’d split the risk between 2 or 3 different 3a foundations.

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When you both talk about simplification do you mean it’s too much hassle to open 10 separate direct debits in my bank?

I only mentioned opening 10 accounts because I’ve read on this forum (and Viac blog) many times that the most tax efficient way to do 3rd pillar savings is to open all 5 accounts at the same time and contribute evenly for years to come.

And I would totally do that.

Maybe not “too much”. But it’s unnecessary paperwork for little if any gain.

Regardless of whether the though the tax authorities might clamp down on the tax advantages eventually: It’s clever to have more than one account and distribute your contributions between them so that you have roughly equal amounts in all of them.

But contributing to every single of your five accounts every single year is for people who don’t have a life otherwise.

Why limit yourself to only 10 accounts, or 5 per person?

Since you can withdraw five years before the normal age retirement but contribute for a couple of years afterwards, as long a you’re working…

Why don’t you open 20 accounts right now (10 for you and 10 for your wife)?

You could then withdraw one account each at age 61, 62, 63, 64, 65, 66, 67, 68, 69 and 70!

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Only you can decide what’s easiest for you. Personally I could not be arsed with the upfront work of setting up 10 accounts in one go for 1000 fr each. In the next 20+ years new providers are likely to come on the market so it’s possible I might end up repeating the whole process anyway

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Mr @_MP himself does it :sweat_smile:

But seriously, don’t I just have to set up 5 standing orders once and be done with it forever? What other work awaits me with this strategy in the future years? Will I have to tinker with standing orders each year when the maximum allowed amount increases? Is that it? Or is there other paperwork? Filling in tax returns should be simple as you just enter total amount for all 5 accounts which VIAC provides so there shouldn’t be more work there…

VIAC says here that by opening 5 accounts at the same time and contributing evenly for 40 years one can save 13’000 chf in taxes on accumulated assets of 865’000 chf… That really doesn’t sound much. It might not motivate me personally to go through the trouble of changing all standing orders every year for the next 40 years. And since I’ll be saving only 20-25 years the tax savings will be even less than 13k chf…

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That’s a good thought how to cover being out of the market whilst funds clear and that I might reapply. There are other ways to achieve the same, for example using stock options or a margin loan

The amount increases every two years. You’ll have to adjust at least two standing orders to profit from that. If you want equal amounts it’s 10 standing orders.

Exactly. A big deal? No.
But unnecessary clutter in my life. And bank statements.

I’d just open a new account every year till I have five accounts. And then I’d just contribute mit 6K something to the account with lowest balance each year.

I don’t have to contribute evenly. I just have to similar accounts at the time of payout.
Which I’m going to have too.

Contributing the employed person’s maximum of 6k something over 30 years, I will be paying in a bit more than 200’000 CHF into my pillar 3a. Now let’s look at the capital withdrawal tax rates:

The average increase in the tax rate for a withdrawal of 500’000 CHF instead of 250’000 CHF is …about one percentage point.

EDIT: …though it could be a slightly higher comparing 100k to 250k. The difference will be negligible for the small amount I may be “off” on my perfectly equal balances. There’s optimisation potential that will much more likely be worth my time and effort. In addition, there’s the Unforeseens in life, tax law and the latter’s application over the course of thirty years, that can make the whole calculation moot.

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This. 3rd pillar providers continuously advertise the massive savings related to the 5 account but they usually take into account people starting to contribute at the very beginning of their work career and up to retirement age.

One should do his own due diligence and assess if - considering the timeframe, the amount, the canton etc - it could be worth it or not.

For me, I started at 30 yo with a shitty insurance pillar which I later used to amortize part of the mortgage. Therefore I started with stocks pillar ca. 6 years ago (at age 38) and I plan to stop working at 52 (+/-).

So for me 14 years contribution time horizon and additional 10-12 before withdrawal → considering the amount I can reasonably expect to withdraw and the related tax, for my situation I think that 3 accounts will be more than enough. I’ve currently 2 and I’ll open a third one in a couple of years (maybe…)

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What funds are you actually using to achieve this?

CSIF (CH) Equity Switzerland Large Cap Blue ZB
CSIF (CH) Equity Emerging Markets Blue DB
CSIF (CH) III Equity World ex CH Blue - Pension Fund ZB

You actually have to change the percentages slightly. VT would be 2.3% CH, 11.3% EM and 86.4% World ex CH. But VT is based on FTSE and not MSCI, so South Korea (1.8%) isn’t included in EM. By MSCIs definition it would be 2.3% CH, 13.1% EM and 84.6% World ex CH. So:

1% cash
2% SMI
13% EM
84% World ex CH

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Release note for VIAC 3a version 3.2.2 on the App Store:

“Preparation for an expansion of the investment universe.”

:smiley:

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They’ve reactivated the iShares Listed Private Equity fund, so that’s one more (expensive) option available already.

With the rising Swiss Franc and the increased risk of investing into the US and EU markets due to inflation etc. I am considering switching from a custom strategy, which has given me great returns so far, to the Schweiz 100 strategy. I am interested in hearing your thoughts and VIAC strategy for 2022.

On viac, you could use a custom strategy to avoid the home bias and reproduce a world exposure by picking your own etf.
In the 40% chf exposure, you could select

|—|—|—|
|CSIF SMI|2%|CH|
|CSIF SPI Extra|1%|CH|
|CSIF World ex CH hedged - Pension Fund|37%|CHF|

For the rest balance it with world exposure to get close to a market share by gdp instead of market cap:
|CSIF Europe ex CH|23%|Euro|
|iShares Core S&P500|17%|USD|
|CSIF Canada|3%|CAD|
|CSIF Pacific ex Japan|6%|Asia|
|CSIF Japan|4%|Asia|
|CSIF Emerging Markets |7%|Asia|

Schweiz 100 has 8.2% in Roche, 8.0% in Nestle and 6.4% in Novartis. That’s 22.6% in just three companies, which wouldn’t be enough diversification for me. Besides the lump risk of individual companies, I also wouldn’t like the sector diversification (e.g. very little in tech).

Also keep in mind that the large companies listed in Switzerland are global companies. Their revenue comes from lots of different countries. I.e., even if Switzerland will do better next year, this won’t mean that these SMI companies will do better than e.g. S&P 500 companies.

I’m not planning on changing my Viac strategy next year. I have some Swiss home bias but a lot less SMI/SPI than Schweiz 100 (or even Global 100):

  • 7% CSIF SMI
  • 6% CSIF SPI Extra
  • 36% CSIF World ex CH
  • 6% CSIF World ex CH Small Cap
  • 5% CSIF Emerging Markets
  • 16% CSIF CH Real Estate
  • 4% CSIF Gold
  • 20% Cash

I have a relatively large pillar 3a and no pillar 2, which is a reason why I don’t invest 100% of pillar 3a in stocks. And cash instead of bonds due to the negative SNB rate.

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