Thank you for all these information.
Do you know if this is possible to get out of this contract before 3 years ?
I’ve only been on this contract for 21 months, but I saw somewhere that you have to do 3 years to get out of it. Is this correct?
Of course I don’t know the specifics for your contract, but I do know that my contract is worded in a deliberately opaque and obscure and misleading way. For example my own contract stated that “you can terminate at any time” and one paragraph below (literally) it said “you can only terminate if one of the legally stipulated reasons arise” (the 5 reasons for 3A: buying a house, leaving CH etc). That was clearly untrue - going to prison for murder is probably more lenient that that! - and I confirmed with the broker, what it meant was that you can terminate at any time but only take your full surrender value if one of the 5 reasons arise.
The surrender value had a ladder but it was only shown to me as an example by the broker, so it has exactly zero weight, the surrender value is calculated using NASA-level mathematics aimed at basically giving you a meager portion of your contributions back. What the contract did say was that terminating within 12 months of starting meant I’d lose all the principal (that’s probably already been paid to the broker upfront).
I think I have the same conditions as you. How much did you lose?
Logging into the portal I see that from 2*6883 (=13766 contributed) my surrender value is currently sitting just shy of 8000, so that’s a good 41% lost. That’s what I can transfer to another provider, and will do soon. Once your money is in the 3A system it stays there, but you knew that already, you can always move it to another provider (even a bank for 1% interest).
Opportunity costs, draconian serial killer level imprisonment contract terms, pathetically poor investment performance, hidden fees (they have to give you a detailed breakdown of costs if you ask, but won’t do it if you don’t because it’d probably be too sobering), poor life/disability insurance. Objectively could be called a legal scam.
P.S. what clued me to my mistake was that my first premium was 6883, in 2023 the 3A limit went up to 7056, however my premium was still 6883. I asked to contribute the maximum but the insurance refused due to a health condition I have and said “let’s revisit in 2024”, this struck me as an opportunity cost both in terms of tax savings and investment and prompted me to do more digging. I will admit I have been skeptical around the hate these products get around here, because I have some opinions on the ultra-efficient FIRE mentality, but the more digging I did the more I realised I could be doing a lot better in a dedicated invested 3A. I still maintain that these can work reasonably for some people, mostly those who are more risk averse.
P.S.2 perhaps the key aspect which should have put me off if how hard these insurance 3As are pushed to all newcomers in Switzerland, meaning there’s real profit to be made for the sellers, and when all these consultations and information sessions and FedEx are free then WE are the product. My own phone was ringing off the hook to get a 3A, once I did it stopped. We are new here, likely with good jobs and big motivation to do well, perhaps from lower level countries (so trust anything Swiss - I mean who wouldn’t trust a major Swiss insurance company?).
P.S.3 you say in your original post that you want to keep 60% of your money as cash, that’s a valid statement that works for you, in that case why not keep all as cash in a 3A with a bank and do investments outside of that if it makes you sleep better knowing that you have clearly split your risky from your safe options? The bank has no fees, it gives you a totally predictable interest, and you submit the certificate of contribution for the tax benefit. If you want the insurance part, 3A insurance is also subpar: if I die today mine promises to pay my wife and kids my total contribution as if I contributed until I was 65, that’s 149k CHF. A proper life insurance would pay 500k for 500/year. I didn’t research options for the disability insurance part, but they are promising to continue contributing to my 3A until I am 65 if I get disabled and can’t work. Sounds meh to be honest because it’s not something I or anyone else can benefit from anytime soon.
Personally I believe that passive investing in broadly diversified, cheap ETFs is less risky in the long term than anything else because you beat inflation and can catch amazing years (like 2023, for example, where the S&P500 did nearly +20%).
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Hello,
Last May, I also made the mistake of making payments into a split pillar 3a (50% Viac, 50% Generali). Now, I’m wondering whether it would be wise to make payments for the full 3 years, then put the contract on hold (freeze it), and plan to buy a house in the future, thereby accessing the money I’ve paid in? The alternative would be to cancel the contract early and accept the 100% loss.
Best regards and a thousand thanks for this fantastic forum,
Josh
I don’t think you’ll get more money out if you continue paying in (at least the money that’s gone is gone regardless of what you do now). See The Sunk Cost Fallacy - The Decision Lab
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Thank you for your response. Isn’t it legally regulated that, for example, if I build a house, I get full access to the deposited money from the pillar 3a insurance? Then it would still make sense to continue paying in up to the full 3 years, wouldn’t it? Or am I making a mistake in my thinking? Or should I cancel it right now to stop a potential loss. Best regards
Why don’t you calculate for a start 3 numbers:
- How much have you paid already? This is your loss if you cancel now.
- How much are you going to pay in 3 years minus the guaranteed buy-back value?
- Same with the guaranteed conversion value?
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Forget about getting the money paid in.
We‘ve recently had this discussion on the forum (though the user suggested his wife move to Turkey to withdraw funds, instead of through the home ownership scheme). Might have been a Generali insurance too, if I’m not mistaken.
It’s not - you‘ll be getting as much as it’s „worth“ at the time of cancellation - according to your contract‘s terms and insurance plan - not what you deposited.
Prepare for a nasty surprise (loss, relative to your deposits). But consider yourself lucky for the (supposedly?) short term you’ve had that.
Edit: here you go: Closing 3a & 3b life insurance (looking for a best way)
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Hello and welcome, it’s no big deal, you WILL lose ~40% of what you put in, but it sounds like it’s not too much if it was already split out to VIAC. Others found out after 2 years (like me) and others after 10.
Part of the reason to kill this is that it is likely a piss poor life insurance product (costs at most ~800/year and promises to pay out your total expected contributions if touch wood you pass, which means that for 20 years it’d pay out ~150k, while dedicated life insurance could cost 400/year and pay out 400-500k), and often a downright terrible investment product, locks you in etc etc which has been mentioned here many times over. I got burnt, many here got burnt.
It works for some people, but not to people who’re interested in making the most of their 3A.
Hi all, as many others, I was also “trapped” by Axa and stupidly just realized this year what a scam this all is. My contract is from 2016 and I have been paying the maximum amount for 8 years now and just checked what “guaranteed value” I have and it’s only about 60% of what I paid so far (paid approx. 50k, have 30k in 3a).
I called them and they said I can either just cancel and transfer the 30k to another 3a account or I can suspend / put on hold my 3a with them, leave the money there (apparently it will continue to generate interest) and do a separate 3b pillar with them (they recommended paying in 400 chf a month or so) and apparently earn up to 9% interest on 3b…I don’t believe that for a second but who knows.
Any thoughts on this? I will likely just cancel and transfer to viac or so asap and cut my losses.
Maybe check what the repurchase value in two years will be. Sometimes the first ten years are the hardest to get out.
There is also the possibility to keep paying it. There are certain circumstances in life, where this insurance is not completely useless. If you have health issues and you expect you have to quit working within the next ten years, for example.
If you stop paying you usually lose the insurances coming with it as well. You need to read the General terms and conditions. If the insurance is discontinued, you can as well cut your losses and go to Viac with the money.
thanks for your reply, I made a comparison with what I paid / will pay against the purchase value for every year until my pension and the discrepancy is getting bigger by the year.
Also, I am healthy in my early 30s and don’t see the point of having a life insurance, and also read that even if I were to have one, it’d be better to have it separated from 3a.
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I belive you should cancel it ASAP and transfer the remaining to an online 3a (like VIAC, FinPension …).
Even if you lose 40% and they will promote the fact you’ll earn some money after x years, it won’t be as good as if you invested on ETF with low fees.
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From what I have seen and experienced myself, “take the loss and move on” is the way to go.
These products should be banned, but it seems the situation is beneficial for some, maybe they have friends in the right places.
Just for the heads up: You are not alone. 9 Years here.
What for me is a bit the question is where to find a replacement (separate) Erwerbsunfähigkeits/Disability insurance, not linked to a life insurance (I have no need for that).
Not playing devil’s advocate, I’ve been burnt by this too and lost 1 year’s contributions getting out, but I still believe they are better than nothing for those who don’t want to think much about it or optimise it. That’s most people. Hell in fact most people don’t even go with any invested 3A, they just take their bank’s 3A with 1% interest, claim the tax benefits and ride happily into the sunset.
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This should be offered by various insurance companies. You just have to make sure you get exactly what you want (pure risk). VIAC Life may be a good option (you can choose to insure risk of disability instead of risk of death) but it’s limited to a lump-sum payment of up to CHF 300k. Zurich offers an online calculator where the payout is an annuity until retirement age: Disability Insurance - Calculate online now | Zurich Switzerland. Mobiliar offers such an insurance as well and probably various other insurance companies.
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I think a simple 3a bank account with interests is better than these obscure products. In my case it would have been drastically better.
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Thanks Jay! For obvious reason, it is not a question I want to ask my current/previous insurance broker…