New 3a solution from Finpension

FINMA is responsible for banks (among other things). 3a are pension foundations, they are governed by regional authorities (e.g. BVS in Zurich). These regional authorities are then governed by Oberaufsichtskommission (OAK).

VSB etc. all force banks to identify you etc., but pension foundations are not banks.

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KYC has no effect on a pension foundation because you become a customer of the foundation and not of the bank. Third pillar foundations are not regulated by the Finma but have their own supervisory authorities. In the case of finpension 3a, this is the Zentralschweizer BVG- und Stiftungsaufsicht (ZBSA). For this reason, an ID check is not necessary during onboarding. An ID check is only required when a payout is made. If the balance of an account with finpension 3a is withdrawn because you are retiring, the following documents must be submitted to the foundation: Application form for withdrawal, passport/ID copy of the client, an officially certified signature of the spouse or registered partner, up-to-date confirmation of residence (not older than 1 month on disbursement date), confirmation of the bank details (e.g. opening confirmation). The beneficial owner of the credit account must be the same as the owner of the finpension 3a account.

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Yet you never verified the owner of the finpension 3a account.

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The fact that there is no KYC, and that Finpension managed to overinvest several people… these are my two no-goes.

Imagine there was a typo in your Birthday when you opened your account. As you retire 30 years later you realise that they refuse to pay your money back… or if you don‘t have a unique name, it could easily happen that soneone opened a new 3a account and just transferred you funds over there to his account. Finpension has no means of verifying signatures and the money was just gone.
Or even more severe, tgere are two „Hans Müllers“ with the same birthday, one can easily retire and burn the others money. Not sure if iOS push or e-mails would still be read by us once we are 60+ and mentalky probably less sound. Clearly, you could probably try to get it back as long as it remained within the 3a world… but still.

Read from two individuals here that invested on 2nd as well as 3rd pillar with them. Both ended up with more than 100% of assets and negative cash. This is just not professional.

I see Material risks that finpension somewhen ends up facing legal action… and by that time, I wouldnt want to be their customer.

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I think this is a reporting issue.

Dear @finpension
I personally aimed for 99% ETF + 1% Cash, at the moment it shows 100.6% ETF + -0.6% Cash.
I paid in the max. 6826, and the buy transaction was for 6876 (+CHF50). This explains the -0.6% Cash exactly.
What is the reason for this? Please don’t misunderstand, for years (1990-2018) we were “stuck” with max. 45% stocks 3a products and yearned for such a 100% stocks product. I don’t find it a disadvantage or negative issue going negative Cash, but it’s strange why not closer to “target” 99% is used? It’s not due rounding ETF units, as for example for a Fr 2000/unit & the fractional units is x.xxx so +/- 0.001 which is +/- CHF 2.
Thank u and regards

Dear @wapiti @rolandinho and TeaCup
At the time we generate the transactions and place the trades, the NAVs of the funds from this specific date are not yet known. Therefore, the transactions are generated and instructed in number of shares based on the last available NAVs (end of October). As the prices of the funds rose sharply at the beginning of November, slightly more than 100% was invested. This can happen when prices rise sharply, but is not a problem. At the beginning of December this will be corrected by rebalancing.

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Thank you & great answer @finpension. Now I understand that little “over-invest” issue. Hopefully it can help allay some fears of people who think there are issues with Finpension. Carry on the good work.

We are currently examining whether we would like to include an optional identification as part of the onboarding (not mandatory). We are currently receiving a lot of positive feedback for the lean onboarding process. However, we are of course striving to cover as many different needs as possible. With regard to payout, it is important to understand that the following steps and documents are necessary for this:

  1. Application for withdrawal
  2. Passport/ID copy of the client
  3. Confirmation of residence (not older than 1 month)
  4. Confirmation of bank details
  5. Officially certified signature of the spouse

In addition, the following checks are carried out:

  1. Name and date of birth of the passport/ID must be identical to information from onboarding.
  2. Name and address of the beneficiary is identical to the information provided by the insured person.
  3. Verification of the bank details by phone with the insured person (IBAN etc.).

We specifically use the information from the onboarding (name, date of birth and telephone number) to ensure the correct payout process. If a typo was made during onboarding, the steps and documents listed should provide enough evidence to allow us to make a payment safely. Confidence in our pension solutions is very important, which is why large institutional clients in particular rely on our services (eg. HUG - Hôpitaux Universitaires de Genève, Gategroup, Leonteq, Kantonsspital Graubünden and many more).

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Neither does or did Interactive Brokers, do they?
Just sayin…

ID copy without any in-person or remote verification, that’s it.
For an account that’s arguably much riskier in trading and transfers it allows, isn’t it?

That’s why you keep records and documents regarding your transfers and check on your investments and registered data periodically, don’t you?

If you don’t, it might come to bite you sooner or later. For instance, I have recently seen two passport copies for one and the same person - albeit with different dates of birth. I do believe both passports to be authentic, just a typo that has been made by the issuing authority. But if you don’t rectify ASAP, it is a recipe for hurt later.

…though these are 2nd pillar pension clients, aren’t they?

For these, there are (almost perfectly) unique social security numbers and a large paper trail of employment relationship and AHV contributions, to clear up any doubts about customer’s identities.

I’m not sure if you’re allowed to collect AHV numbers for third pillar accounts (under data protection laws), but they might be an additional safeguard that wouldn’t be too onerous on customers.

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Asking for the AHV number when opening up an account wouldn’t be a big hassle. I mean everybody has his health insurance card somewhere.

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69% CSIF (CH) III Equity World ex CH Quality - Pension Fund***
10% CSIF (CH) I Equity Europe ex CH
10% CSIF (CH) Equity Switzerland Small & Mid Cap *
10% CSIF (CH) III Equity World ex CH Small Cap Blue - Pension Fund **
1% Cash

…is going to be my selection. :slightly_smiling_face:

* yes, only small & mid cap for Swiss exposure. My current BVG pension fund is probably invested enough in the Swiss blue chips (though I have way less money in my pension fund than in pillar 3a).
** just a small side bet on Small Cap somewhat overperforming a whle following a crisis / bear market. Otherwise I would probably keep it even simpler and distribute these 10% among the other 3 funds.

*** PS: although on second thought… maybe I should go all-in on the MSCI Quality at FinPension, since it’s the only „flavour“ I can‘t get elsewhere (i.e. with Viac)? Maybe I should take a broader look at all of my pillar 3a investments and look into how I can achieve the desired overall allocation by splitting amongst them…

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I’m bit lazy here as there are so many fund available. How exactly would you replicate VT in Finpension?

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Please be not too lazy to at least read the posts above :wink: I have already asked. MrLeanLife kindly shared his google sheets. I am trying to find some time to re-do the exercise at some point. Maybe some others can share their own exercise.

@San_Francisco nice selection. I am less interested in CH and EP exposure and more interested in US exposure. My selection will probably be:
1% Cash
15% Equity world ex CH Small Cap blue (for high risk high growth)
65% Equity world ex CH Quality (for stable growth)
19% Equity US blue (to increase weight on US equities)
(I may adjust the weightings slightly)
I would welcome any comments or insights.

Does anyone know how finpension proposes such high percentages of equity/unhedged investments?

I think VIAC does it because it’s pooled with terzo foundation, but finpension doesn’t seem to pool it.
The regulations even say:

3.6 The following category restrictions also apply to account
holders and at the Foundation level:
a) 50% for investments in equities
b) 30% for investments in real estate, with a maximum of one-third outside Switzerland
c) 15% for alternative investments
d) 30% for foreign currencies with no currency hedging

From: https://finpension.ch/app/uploads/2020/11/Anlagereglement_EN.pdf
(which matches the Art 55 BVV 2)

Do they really have that many people who don’t invest in equity that they’re below 50% at the foundation level?

I‘d guess that article 3.7 might mistakenly refer to article 3.5 instead of 3.6.
Even in the German version article 3.7 refers to „Kategorienbegrenzungen“, which aren‘t really found in 3.5 (which rather limits exposure to individual real estate properties), yet are explicity mentioned in the immediately preceding 3.6.

But even if that’s what they mean, it would only allow it at the individual level. 55 BVV 2 limitations would still apply at the foundation level iiuc (which is why e.g. VIAC is forced to have such an amount of hedged/chf investments.

In my view, Finpension is problematic in different dimensions. Do agree with your view that Finpension might likely fairly soon already face an issue as their foundation level risk exposure was too hight. With regard to diversification obligations, they have in my view even left the grey zone towards the black.

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Care to share an example where this happened?

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