Thanks for good points!
Although I think that if we want to compare pillar 2 to the bonds and not just money market funds there is more than interest rate and risk, right? E.g. interest rate change risk (that one would expect to be paid a premium for taking on), etc. For example, CH0016999861 seems to have earned 67% in the past 20 years, which would be ~2.6% per year with compounding. But I admit that I don’t know how to compare risk/return of this vs pillar 2 all things considered and how to conclude whether one is better than another in an optimal portfolio
What if you buy back massively into your pillar 2, deduct the tax, consecutively leave Switzerland before the 3-year minimal period, and don’t take it out but instead transfer your pillar 2 funds to a vested benefits foundation (like Finpension or Viac) where you can freely invest them on the market. Could the taxman claim the tax deduction back?
This depends on the pension fund. Risk benefits are not always based on contributions.
See e.g. https://finpension.ch/en/knowledge/defined-benefit-vs-defined-contribution-plan/
Right. 98% of pension fund are linked to contributions.
98% is for retirement benefits. However, risk benefits are not linked to contributions for 2/3 of pension funds according to finpension:
Two thirds of pension funds already rely on this combination, often referred to as the duoprimat. In this model, pension benefits such as the pension are calculated on a defined contribution basis, while risk benefits for disability and death are calculated on a defined benefit basis.
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I think it’s tough to make such comparisons
The reason is that what 2nd pillar actually earns is different than what they pay as interest to members
The BVG minimum rate is driven by bond yields , so should reflect and capture interest rate changes.
BUT BVG minimum is the minimum and not every pension fund does such a mediocre job that they only pay BVG minimum as interest.
Avg Pension fund in CH returns close to 3% per annum (Since 2000). But I don’t know how much is average interest paid to members
I wasn’t aware of that, but makes sense. Since I’m on a government backed pension fund (Publica) I might be a bit less affected than on the privat market. Still, it’s not as risk free as Swiss government bonds. Can we have S&P risk ratings for pension funds 
Interesting to know. What about if you leave the company? Is it correct to assume that regardless of the solvency they will need to let your capital go to another company’s fund?
No they cannot, this is playing by the rule book.
Question is from my side, if you leave Switzerland permanently, does the 3 year waiting period then still apply before you can access the funds?
If yes, indeed you may park in Finpension or VIAC for up to the 3 years and then transfer to your usual investment account
If no, you could transfer to your investment account immediately upon leaving Switzerland
Anybody knows this/ has a link to this?
Iirc it’s not locked, it’s just you’ll have to pay the income tax you avoided.
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I believe in practice most providers actually lock them (presumably because it is a lot easier to manage than paying back the taxes).
Would your vested benefits provider even know you had a buyin in the last 3y? I had impression data sharing was pretty spotty but I might be wrong.
(You would do the buy-in while still being employed, then move to vested benefits accounts when moving abroad)
Ah sorry, I meant in the general case. Of course if they don’t know about it, they won’t lock or make you pay taxes.
Vested benefits accounts might be different and more willing to do the pay back taxes things, I don’t know, I am more experienced with pension funds whilst employed.
Generally all the information related to your benefits is transferred between pension funds or vested benefits foundations along with your benefits. So no matter which foundation is currently used, that foundation will have the information about previous buy-ins and the corresponding waiting periods.
It is up to each foundation to decide whether to refuse withdrawals within the waiting period, or to allow the withdrawal and let you sort out the taxes in arrears with the Swiss tax authorities. But many will simply refuse the withdrawal.
Just to clarify, the 3-year waiting period applies whether or not you live in Switzerland at the time of withdrawal.
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Thanks, good to know it’s actually transferred.
Interesting topic. I always thought the common wisdom is that 2nd pillar buy-ins only make sense if you are at least 50 years old, because the interest is so low that it makes more sense to invest that money in a stock portfolio in a brokerage account.
But this calculation only makes sense if you assume people hold 100% stocks and no fixed income. Bonds make sense IMO if:
- You need the money in the next 5-10 years
- To reduce volatility and rebalance in case of a stock market crash
But why would I need any significant amount of liquidity in the next 5-10 years?
Probably only to buy real estate in the next 5-10 years. But then I could anyways pledge the 2nd and 3rd pillar or take the money out with the WEF Bezug.
Point 2. is the big unknown. Is the rebalancing effect really worth it? I have to run more backtests and excel simulations lol.
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That was also my thinking. But then I heard that some pension funds pay up to 6% interest. My pension fund (Publica) paid 3% interest last year. So I am reconsidering buy ins.
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Sadly not mine. Otherwise I’d be dumping everything into there. Maybe I should just get a job at UBS. Are they hiring baristas?
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The other option is if you will retire soon and then can move all the pillar 2 into a VB account where it can be fully invested into stocks.
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Mine issued 12% for 2024. 
But of course it’s dependent on their portfolio performance (the set minimum interest is 1.5%).
So if the highs are linked with the stock market performance - on the YoY basis it’s still better to have it sit there (since that return was 30%+).
Last 4 year's interest
| Year | Interest rate |
|---|---|
| 2021 | 8% |
| 2022 | 2% |
| 2023 | 5% |
| 2024 | 12% |
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