Company discount of 20% vs Viac

Hi everyone,

This is my first post :slight_smile: I ramble a bit, so I hope everything is clear.

My girlfriend works at a large swiss company, that offers 20% discount on various insurance products. We got an offer for 3a with a monthly payment of CHF 500. The fees are quite high (CHF 19.90) and there is an insurance (“Prämienbefreiung bei Erwerbsunfähigkeit”, CHF 26.60) included. I am not sure how the fees are related to the total payment amount if that were to be increased. It is also possible to buy 3b (our adviser said the fees are the same and it can be withdrawn at any time). As far as I understood it is possible to buy up to 20k (3a+3b including payments to other 3a providers).

summary:

  • The company pays 20% of the monthly cost (not sure how fees are handled)
  • Maximum of 20k per year is possible (3a + 3b)
  • I did not consider investing the cash there. Mainly to keep the calculation simple.
  • The money would otherwise be invested at Viac or Degiro.
  • 3a transfer within 5 years costs CHF 300 (not sure about 3b)
  • The fees would be payed by the 20% discount, so about 11% are left over

There are so many unknown variables and my math is rusty, that I am unsure of my calculations.

I am not sure how the discount is taxed. Worst case the whole 20% is taxed as income.

How would you handle this situation? Under what conditions does it make sense to take advantage of the company discount?

Maybe it could make sense to invest the money at the company (probably active funds with higher TER). On the other hand the position could also be used to reduce risk, instead of leaving the money at the bank.

Thanks for all your inputs and please tell me if you need more information or have any questions.

Here is my view: is it a 3a life/disability insurance ? Yes ? Don’t sign and open a VIAC, Frankly, Finpension (even PF 100) 3a account and invest the rest with whatever broker you want, you will earn more than de 20% discount on a product which offer between 1.75% and 3.25% return with a TER of at least 2% :slight_smile:

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No, it is not a life insurance. It is a normal third pillar with a small disability insurance. The insurance takes over your monthly payment for you if you cannot work anymore.

It is quite the same, the insurance will take a portion of your investment to ensure you against a risk of disability.

Imagine that you invest each year for 30 years 7’000 CHF, where the 3 first years are invested against you to ensure your risk disability, we are talking about a loss of 21’000 CHF. Then from the 4th years, they invest for you 6’000 CHF, and they take 1’000 CHF to continue to ensure you against your risk disability, and this for 30 years.

At the end you will lose 51’000 CHF (21’000 + 30’000) and only invest 162’000 CHF (27 x 6’000). Now imagine that these kind of insurance give you 5% return, but you pay 2-3% of fees… Do you really want to lose all of this money ?

In comparison with Finpension or VIAC you will invest your 7’000 CHF for 30 years for 0.45% TER and a 7% return…

Just subscribe to a real life-disability insurance, and not with a 3a…

EDIT: This is my view about your question, you can ignore what I’ve said and go for it, at the end, it is your money, your investment and your choice :wink: Personaly, I will never take again this kind of product (I’ve lost 4’400 CHF, it was a bad choice and I’ve learned from it).

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Just my personal opinion: As soon as I hear “3a” and “insurance” in the same sentence, I head for the nearest exit. I (as many others) have been burned before and I don’t intend to repeat my mistakes.

This is exactly why many people fall for the 3a-insurance trap: It is a huge blackbox and its fees are almost impossible to figure out. It might even be worth it with the 20% discount, but I doubt it. My advice: separate saving and insurance by opening a normal 3a account and getting the insurance you want/need (do you really need an insurance that pays 500 per month into your 3a in case of disability? In that case I’d rather have that money available to be able to alleviate my disability).

Another thing to consider: Be aware that you are signing a contract with a LONG duration. Usually, the contract ends when you turn 65, and until then, you are obliged to pay the premiums or face the consequences.

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Another thing to consider: Be aware that you are signing a contract with a LONG duration. Usually, the contract ends when you turn 65, and until then, you are obliged to pay the premiums or face the consequences.

As far as I can tell this is not the case. The only consequence would be the 300 fee if canceled within 5 years.

I can also change the monthly amount at any time.

This is the product: Wandelbare Sparversicherung | die Mobiliar
I just saw that they have a simulation tool. The fees stay at around 10%

What about the 3b product, if I would have kept the cash in the bank otherwise?

If you want to understand how this product works ask them to provide you with the table showing the surrender value of the 3A account (i.e. how much you can withdraw at any given time) and compare this to a standard compounding account with the same return as the one used from their simulation. At this point you will understand the difference between the two and how much money they make on your back.

I also got such an offer from swisslife and did not do that comparison until I discussed it with my wife as she was also considering getting one. When we did the calculation we understood that they took around 3% per year of fees on your money and that over the whole duration of the contract. That story actually lead me to that forum as I was googling about 3A insurance account and that’s when I found the horror stories people posted here. After the first payment I canceled the product, total loss for me 500 CHF but it could have been a lot bigger had I continued to send them my hard earned CHF (NB: I would actually say that 500 CHF to find that forum was actually not a loss given the information you can find here). Also one important thing, you ll see from the surrender value table that you only start making money after a few years (I would say at least 5 if not more) and that if you need to withdraw early e.g. to buy a property you will actually lose money.

I would also recommend to stay out of this and go for VIAC ^^.

3B is the same story, same kind of construct. What alternative do you have ? Just browse this forum there are plenty of ideas, for instance open an account with Interactive Brokers and invest regularly into Index ETFs.

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… the point here is the 20% discount on every payment! You pay 500 CHF p.M. and the employer adds another 100 CHF - each month.

Subtracting costs and the insurance part, you still get a performance > 10% in every “first year”.

On the other hand, there are the opportunity costs of not having your (full 3a) capital invested at “best” performance during the following years (e.g. VIAC). The difference / discount, you can invest there, though (~1200 CHF p.a.)…

Without knowing the projected annual performance and TER (compared to e.g. VIAC) and the projected time span there is no way to calculate it through (even If you value the “insurance part” with 0 CHF)

In your place I’d: Sign up, take the 20% (> 10% resp.) in every “first year” and cancel the contract every few year… and move the capital to VIAC (given the cancellation fee is only 300 CHF)

500 CHF per month with 4% for 30 years is 345k.
400 CHF per month with 6% for 30 years is 392k.

We don’t know the exact cost structure, but insurance products are always pretty expensive, so 2% difference isn’t even that farfetched. What happens when she stops working there? Will she lose this bonus?

I would never mix up insurance with capital saving.

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Short answer: go with Viac or Finpension.
If you really need life insurance ( AHV and pillar 2 already cover this part), take one without 3a.

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I think i lived the exact same experiences as @Yanikuza and @Voodoo and as best summarised by @Cortana , @HoiZame and @wapiti

…run.

Edit: forgot @HoiZame :wink:

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Thanks for all the replies. It is quite clear that I should not buy into the 3a pillar. But what about 3b without investing? My advisor said, that it is exactly like a bank account and I can withdraw the money at any time. I still plan on having a cash allocation in the future and 10% free cash isn’t exactly nothing…

Just to be clear: I would never buy this without the 20% discount.

Again, what if she stops working there?

That is a good point. I will ask what happens then.

3B with an insurance usually works the same as the 3A i.e. mixed with an insurance premium or is this a different product in your case ?

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No, I am guessing it is the same product, but the money is not locked in as far as I understood. Yes the fees and insurance are probably the same.

the fact that the money is not locked does not change the issue. If you were to withdraw that money in a few year after opening you will lose money. Again what I wrote in my post is still valid, ask them for the table showing how the surrender value of the life insurance evoluves over time and compare it with a normal investment account offering the same return as the one from their simulation. You will then see how much fees they charge you per year and I can tell you this is massive. The advisor will surely get a juicy commission if you sign I can tell you that ^^. Do you live in a canton that offers tax deduction for 3B premiums ? I would say that’s the only situation that could justify having one (would however need to understand whether the tax deductions make it up for the fees the insurance company charges in the 3B)

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I understand that there are high fees. The fees+insurance make up about 10% of the payments. Since I receive 20% as a discount/bonus I don’t really see why this should be a problem though. The surrender value should be at 100% of the payments (minus fees and insurance of course) after 5 years.

As far as I can see if I want to keep cash for 5+ years, then it makes sense, but I am asking here, because I am unsure about it.

The questions I will ask my advisor are currently:

  • What happens if I leave the company?
  • What is the surrender value over time?

I will research the tax aspects and maybe ask the advisor about it too.

Don’t take anything for granted without proof. Insurance salesmen lie often or leave out important details.

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Ask for the table then you’ll see how the surrender value evolves. I would really be surprised if this really is your payments - insurance cost ^^. They usually stay at 0 for the first 2 years and start to slowly increase after that until they finally get in line with you payments after 5 to 10 years (i.e. 0 return for that period of time). Reason for this is that the insurance company needs to build up the reserves required to cover the risk associated with the contract. Ask for the surrender value table that’s the only way to judge whether this product makes any sense.

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