Are you sure you are talking about 2nd pillar and not 1E plan?
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Yep, was surprised when I heard it but confirmed it with a couple people so pretty sure itâs right.
Technically, a PF can go bankrupt, meaning that those who paid in would lose some of their money. This makes you wonder what the point of the risk contribution as part of the second pillar deduction is, given that this is supposed to protect the PF either through its own reserves or via insurance.
I know of a case from the '80s or '90s in my local area where the pension fund was only saved by merging it with another one. It might even have been a state or cantonal PF that took them over IIRC.
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Okay. On paper capital is protected but it could be that pension fund goes bankrupt. But there are many regulations to avoid this from happening
Itâs always good to keep an eye on coverage ratio of the pension fund you are part of
Got it.
Yes if fund goes bust thatâs different
In my company whenever we were going short of 100% coverage, our company made millions of payments to bring back the numbers.
I guess it depend on the companies too
thanks for the explanation, so the main advantage comes from the tax relief from 2nd pillar, as oposed to the getting the neto approach and invest it, as this amount gets taxed as my normal rate, but for 2nd pillar i dont get any tax on it since it went direcly from the brutto salary to the 2nd pillar, correct?, so basically i save this tax, assuming similar performances from S&P and 2nd pillar?
Yeah, but thatâs a false assumption.
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I think you cannot compare 2nd pillar and S&P 500 purely from the returns perspective
Reason is that an investment where capital is preserved (i.e no downside risk) is a different investment vs Equity investment which comes with downside risk without any cap.
These are two different types of investments and should be treated as such.
In other words Equities will never return higher returns than fixed deposits if they donât have uncertainty around capital preservation
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