Paying annual Pillar 3 fees separately outside of annual Pillar III allowance?

Banks, Insurances & Third Pillar
1

My “personal Pillar 3 fund” tracks the Mustachian recommendations for Best Pillar III, usually with a little lag so I can accumulate a couple of years of maximum annual contributions before opening a new one.

From the recommendations a few years back I have the “Swisscanto BVG3 Index 45 R” with LUKB.

I noticed the annual maintenance Abrechnung Vorsorgedepot fee of a little over Fr. 100 which has been deducted from the account.

I’ve already made this year’s contribution to the latest Mustachian Pillar III recommendation (Finpension), so I have no Pillar III contribution allowance left this year.

Is it possible somehow to arrange to pay such management fees separately?

Cheers and happy 2025,
M

1 Like
2

Why do you want to pay the management fee separately?

3

So as not to deduct from the invested capital which can grow untouched.

4

I am curious to hear other answers (I have no idea). In my mind, however, it makes more sense to deduct this directly from the 3a, because you pay the fees either way*. But in this way you can deduct the fees from the tax because they are “included” and invest the CHF 100 outside 3a. Basically, you have to look at it the other way round: If you have to offset the fees, this would mean that you pay for your 3a the $MAX3a + $Fee, but can only deduct $MAX3a from the taxes. At the moment you pay $MAX3a including fee, so you can deduct both from your taxes.

*It would make more sense not to pay any fees at all, but that wasn’t the question.

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5

It would be great if such an option was offered. I suspect the providers probably prefer to hide fees to make it less obvious: it is easier to sell a 1.5% fee than a 300 Fr annual fee

6

But why? Wouldn’t this fee-money be made of better use when invested outside of 3a because of lower fees (e.g. VT at IBKR)? Don’t think it would be worthwhile to contribute those fees to 3a if you don’t get a tax deduction at pay-in.

7

Even worse. You can’t deduct the CHF 100 from your taxes and then pay even more when you pay out because the 3a has grown larger. Instead of simply investing the CHF 100 outside 3a.

Edit: The Fees could possibly be deducted from taxes as asset management? Then things might look different again if you take into account that no taxes are payable on dividends within 3a.

An interesting topic in any case.

8

If that’s the case, then there would be no case for investing in the 3a at all. Just put everything outside the 3a.

If the 3a is overall beneficial compared to GIA, then moving the fees outside the 3a to increase the amount you can contribute to the 3a would be beneficial.

9

Let’s say you habe CHF 7’358.

You invest this in 3a, fees included:

3a tax deductible:
+ CHF 7'158 Investing
+ CHF 0'100 Fees

3b:
+ CHF 100 Investing

Tax deduction:
- CHF 7258

You invest this in 3a, fees exkluded:

3a tax deductible:
+ CHF 7'258 Investing

3a not tax deductible:
+ CHF 0'100 Fees

3b:
+ CHF 0 Investing

Tax deduction:
- CHF 7258

The first gives you more tax advantages. Because you pay the CHF 100 either way.

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10

I guess I imagined it would be better to allow the tax free investment growth to continue cumulatively with as few fee deductions as possible.

I would be happy accepting the fact that the fee payment couldn’t be claimed as a tax deduction when I’d already made the max annual Pillar 3 contribution elsewhere.

11

Actually you might be right. Unless I miscalculated something, the gain in not-paid dividend taxes would outcompete VT even with tax deductions at payout.

Year 3a (0.38% fees, 5% growth/year) IBKR VT (0.07% VT, 0.03% currency conversion, 0.3 CHF buy fee, 30% tax on 3% dividend yield (1% lost))
0 100.0 99.7
1 104.6 103.6
2 109.4 107.7
3 114.4 112.0
4 119.7 116.4
5 125.2 121.0
6 131.0 125.8
7 137.0 130.7
8 143.3 135.9
9 149.9 141.2
10 156.8 146.8
11 164.0 152.6
12 171.6 158.7
13 179.5 164.9
14 187.7 171.4
15 196.4 178.2
16 205.4 185.2
17 214.8 192.6
18 224.7 200.2
19 235.1 208.1
20 245.9 216.3
ZH 4.5% 3a payout tax rate (lowest tier) No tax at payout
Payout 234.8 216.3
12

There’s also an additional friction of annual wealth tax on the non-3a balance.

2 Likes
13

So, theoretically speaking, following could be interesting:

Edited, since random thoughts sometimes should stay in the shower and should be drained with the rinsing water :smiley:

2 Likes
14

This is illegal, don’t do this.

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15

Pretty sure it would get you in trouble. I wouldn’t do it.

It probably is, because you don’t pay taxes on dividends, which is more (for 5+ year timeframe) than the withdrawal tax in the end.

1 Like