# How to calculate Investing vs Pillar 2 buybacks?

**URL:** https://forum.mustachianpost.com/t/how-to-calculate-investing-vs-pillar-2-buybacks/6951
**Category:** Banks, Insurances & Third Pillar
**Created:** [August 27, 2021, 8:43am UTC](https://forum.mustachianpost.com/t/how-to-calculate-investing-vs-pillar-2-buybacks/6951 "2021-08-27T08:43:24Z")
**Posts on this page:** 1
**Showing post:** 5

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### Author: ![Dr.PI](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/dr.pi/32/5299_2.png) [@Dr.PI](https://forum.mustachianpost.com/u/Dr.PI)
#### Post date: [August 27, 2021, 10:43am UTC](https://forum.mustachianpost.com/t/how-to-calculate-investing-vs-pillar-2-buybacks/6951/5 "2021-08-27T10:43:26Z")

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First thing is to figure out how good your 2nd pillar is.

There are two different ways how 2nd pillar foundation uses your contribution. I only know how it is called in German, sorry, maybe somebody can provide a link with a explanation in English

> **[Leistungs- und Beitragsprimat - was ist darunter zu verstehen?](https://www.123-pensionierung.ch/pensionskasse/leistungs-beitragsprimat/)**
>
> Grundsätzlich unterscheiden Pensionskassen nach zwei Systemen. Dem Leistungs- sowie dem Beitragsprimat. Lesen Sie hier das Wichtigste dazu.

> **[Beitragsprimat und Leistungsprimat](https://www.finanzfabio.ch/beitragsprimat-und-leistungsprimat/)**
>
> Beitragsprimat und Leistungsprimat sind die Grundlage der Berechnung deiner Altersvorsorge aus der Pensionskasse. FinanzFabio erklärt deren Bedeutung.

“Leistungsprimat” works like an insurance, " Beitragsprimat" works like a saving account with an insurance component. I don’t know if “Leistungsprimat” is still used at all, but: caveat emptor.

There is also a question how good your 2nd pillar foundation in crediting you what they earn with your money. Here was a relevant discussion:

> [@What is your second pillar performance?](https://forum.mustachianpost.com/t/what-is-your-second-pillar-performance/6004):
>
> I asked mine and was shocked to discover its performance is a whopping 1% per year (the exact rate is voted each year at the end of the year for the year that just finished). That’s… nothing at all! And they charge a combined 10–15% fee between my employer and me on each monthly deposit. Am I getting the shittiest of second pillars or are these normal numbers? I’m also trying to understand if you can “cash out” your second pillar upon leaving Switzerland permanently and if you’re getting only…

So: read yearly reports.

Once both questions are answered, probably the easiest way to consider 2nd pillar is to count it as bonds in your asset allocation. A good 2nd pillar will give you 2% or more long term with a guaranteed minimum of 1% p.a. or so (not negative for sure). Cash and savings accounts will give you slightly above 0 if you optimize or might incur negative interest rate. Taking out cash from 2nd pillar is not so easy, but you can control how much you contribute if you start from 0. You get tax savings when you pay in, you pay no wealth tax on money in 2nd pillar, you get taxed if you take money out, so the tax advantage probably levels out somehow or at least is complicated to calculate. So, my advice: simply count it as bonds.

And definitely not buy back everything at once, you will kill your tax deduction advantage by strongly driving down your income and your marginal rate. For a couple, I would suggest not putting more than 30k per year in 2nd and 3rd pillar (which you should invest in stock funds or not use at all) combined.

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