A lot of financial advice is US focused and talks about Roth IRA, 401k, etc…
What Swiss pension pillars does each of those map best to? Or are these US terms even pension related at all?
So basically: how to map USA Roth IRA, 401k, and other things I missed, to Swiss pillar 1, pillar 2, pillar 3a, pillar 3b, or any CH things I missed that represents those better if they exist?
Thanks!
Social Security ≈ pillar 1.
The rest ≈ pillar 3a with elements of 2 (employer’s contribution). All these things have distinctions which are only relevant in US.
Pension funds like they are known in Europe are rare and usually exist for state employees or in very big companies.
A lot of stuff doesn’t really have an analogous scheme in Switzerland e.g. HSA, 529
Or rather, not needed.
I tend to draw imperfect paralells between:
There are no equivalents to Roth. Post-tax tax sheltered investments are not a thing in Switzerland.
One could note, being a bit pedantic, that 3A is post-tax and somewhat tax-sheltered, but yeah the closest thing to 3A is the IRA due to the tax deductions.
What I find really odd, and inappropriate, in the US and UK is that what’s essentially trading is allowed within what should be retirement accounts.
Care to explain? Tax deduction makes it pre-tax effectively, I would say.
With – unsurprisingly! – sometimes really shitty outcomes, like for this guy described by Jason Zweig in the WSJ just a couple of days ago: ‘I Don’t Know Where to Turn or What to Do.’ His $763,094 Retirement Fund Is in Limbo.
Lede:
Richard Whitacre transferred his entire 401(k) into an account offering a ‘guaranteed’ 15.25% return. Will he ever see his money again?
To be fair and to my understanding, he got his ‘guaranteed’ 15.25% returns through an IRA. Those things should be regulated and such products should never be authorized within a retirement solution.
It does, but that’s why I said “pedantic”, the money is post-tax when it goes into the 3A.
I mean, this is heartbreaking. Is there fiduciary duty anywhere there in these firms? The article alludes to potential fraud, but it’s too late for this person, his wife and their likely lovely dog.
I’ve read a couple of stories on reddit where people in the US got hit with massive tax bills after doing a Roth IRA rollover wrongly, and as the article points out, their rollovers were treated as withdrawals by the IRS, who hit them with monstrous tax bills.
I’m a dedicated capitalist but not a libertarian, in fact I dislike them as much as I do the loony left. There should be safeguards in place to prevent people screwing their lives over, it’s bad for society as a whole. It’d be good if more people were financially literate but the plain fact is most aren’t.
On a side note, I don’t get the point of articles like this one, I am not convinced it’s to protect people, it reads more like reality TV for finances.
I completely agree, and I believe this was @Mirager’s original point.
Where to draw the line, though …?
It probably should be somewhere between preventing seemingly stupid mistakes like Richard’s and allowing the choices seemingly smart investors like you and me want to make … 
Somewhat of a philosophical question almost …
Slight tangent, but this reminds me of some of the opinions I’ve previously seen expressed on this forum…
Paraphrasing (inaccurately, for sure):
“I’m smart, I know the stock market will (usually) perform best over a period of 10+ years, hence my (personal) pillar 2 should be all stocks, I expect it to generate 8% annually. Eff those in-my-pension-pool pensioners and soon to be pensioners in the same pool who need bonds to pay for their pension … I’m so smart that with my personal plan of 8% CAGR I’ll be so rich at retirement that I’ll never need a pension! (And if I need one, it’ll be yuuge)”*
–
“Ok, yes, I kind of acknowledge (but also … not really) that my all stock portfolio might be down 50% or so the year I retire, but I’m cool with that because statistically it almost never happens … well, at least not that often. Almost certainly won’t affect me.
Bottom line: I’m a better risk manager than all those portfolio managers at my retirement fund.”
That was my reaction, too.
Jason Zweig has covered in the past month or two the kind of funds that have offered shit like the stuff Richard bought into, but it all seemed kind of abstract, as in “yeah, sure, but who would buy this crap?” Now seeing this last follow-up detailing how Richard just … well, fell for this … man, I think I’d personally be suicidal with such an outcome.
Yeah, it’s a little hard to feel sympathetic (for the WSJ). As mentioned above, though – and I believe there’s links in the article – Jason Zweig first uncovered these funds already weeks or months ago and through his reporting basically put them out of business.**
I believe he discussed his initial findings in a section on the podcast The Wisdom of Jason Zweig | TCAF 163 about a month ago (main topic: his editing of the 3rd edition of Benjamin Graham’s “The Intelligent Investor”) where they discussed those scam funds, and Jason wasn’t sure whether there would be further articles on this.
My guess is that he found this particular investor who got scammed and did another article with the intent of protecting people.
On the face of it I would also say this looks like reality TV for finance, but I also feel strongly that Jason is probably the most integer finance journalist that I am aware of, so I feel it’s indeed a “warning to to people” article rather than a “get lots of clicks” one.
Also, I can’t really see behind the curtain of what happens between Jason and the WSJ that probably wants to just make money, mostly.
Edit: In the lack of regulation, maybe you need some kind of reality TV coverage to help prevent people signing up their pillar 2 for scams? Though, I guess it’s anyone’s guess what portion of people who typically fall for this read the WSJ … 
** My thought was whether Jason contributed to Richard’s misfortune through uncovering the fraud… Sure, it would be uncovered eventually, but perhaps Richard would be good by then (probably not, and lots of other additional victims, either).
There is a line to find and walk and I do appreciate that we have access to a relevant panel of funds in our 3a solutions that allow investors to tailor their retirement assets to their own perceived needs.
I think solutions offering 15.25% ‘safe returns’ fall outside of the perimeter of what should be considered to maybe fall inside the line and should either have to adapt their presentation, to reflect the actual risk they expose their clients to, or be outright banned.
Outright marketing lies and actual scams have nothing to do benefitting from a tax advantage lure to get their marks to fall for them. It falls to the authority granting the tax advantage to make sure it incentivizes what they want it to. That sollution shouldn’t have passed the smell test of any decent regulator.
As with many other things, I think the solution is already available in smart Switzerland: different tranches of separated retirement assets which can’t be messed with by more or less anyone (ie for Joe Public), and friendly environment for DIY investors, ranging from vanilla like me all the way to Wolf of Kasernenstrasse.
You’re right, he did allude to this in the article but they are paywalled for a pleb like me. That’s great to hear.
There’s a thing called “loss porn”, where people get a kick reading of others’ misfortunes. There was a great Greek comedic hip hop band in the 90s with caustic lyrics such as “people watch trash to tell themselves thank God it’s not us/we’re not trash”, it’s stayed with me along with many other nice points they’d made.
Yeah well let’s not go there because the mods may rap my wrists again
What about the aggressive and misleading marketing of insurance 3A peddlers? The bait you with the tax savings (I was having phonecalls where kids screamed “YOU CAN SAVE UP TO 65,000 CHF” in my ears), and hook you up to an insurance scheme which makes you lose ~40% of your principal if you dare leave early…I’ m probably a rarity here not calling insurance 3A a scam, and even finding a value of it for whoever wouldn’t do any saving and investing otherwise…but I am getting heated whenever I think about the 5500 CHF I lost to this…
Should be made actually transparent or banned. Those solutions serve some use for some people (risk averse ones) but too many people get into them thinking they’re buying a significantly different product than the one they are actually buying for it not to warrant being corrected. I don’t expect it to happen, though, as the insurance lobby is quite powerful.
I can see that as a Greek you just take a step back and easily just bucket all these approaches into “comedy”, “tragedy”, “mixed”, etc as you see fit and then just move on.