Seeking advises about Pillar 3a and b

Banks, Insurances & Third Pillar
1

Hello, I’m new to this forum and would appreciate your insights on some investments I made in 2024.

Background:

- I’m not well-versed in investments and am behind on my retirement planning, which led me to seek solutions.
- I hired a tax advisor for my tax declaration in German language. After completing it, the advisor suggested retirement plans since I had significant cash available and I was willing to put an effort.

Investments Made, following work with the Advisor:

  • Opened a Pillar 3b with classical and “fund-unit-linked life insurance” for both my wife and me.
  • Transferred my existing Pillar 3a to the same plan.
  • The advisor mentioned that after 10 years, the money in Pillar 3b would not be taxable, which seems advantageous.
  • During the process, the advisor requested that I provide medical checkups because the insurance company needed to assess their risk. At that stage, I was so uninformed that I found myself asking, ‘Why is that? What risks are they referring to?’ I’m not suggesting that the advisor hid the nature of the contract; rather, I was so unaware that I did not understand it well.

Both Pillar 3a and 3b contracts started in early 2024 for 15 years:

- Pillar 3a contributions: CHF 7K each per year (for both my wife and me).
- Pillar 3b contribution: approximately ~CHF X0000 per year for both my wife and myself.

Current Situation:
After one year, my Pillar 3b balance shows a total 15% lower than what I invested.
=> The “savings Total balance on 08.01.2025 before deductions upon surrender"

Concerns:

- I feel both plans lack diversity, we are “putting all our eggs in one basket”
- As I have no dependents, I’m questioning if life insurance products are the best fit for me.
- A “loss” of 15% invested seems significant for 2024 only (is the remaing used as Premium fees?)

Questions:

- What are your thoughts on my situation?
- What could be my next steps be?
    - Trust the system and continue, hoping the loss will be compensated over time?
    - Close both plans, accept the losses, and start fresh?
    - Keep the plans but reduce my monthly contributions to regain investment capabilities, and to start investing somewhere else to diversify?

Thank you, I would really appreciate your help!

PS: As a side note, the same tax advisory company did not respond to my request for assistance with my 2024 tax declaration, forcing me to extend the deadline with the Canton and hire a new tax advisor in an emergency. This experience gave me the impression that their business model works as follows:

- The Tax Declaration activity allows Tax advisors to assess clients’ investment capabilities (but they don’t make much money from this)
- Acting as brokers to sell life insurance plans is where they generate their real profit.

But I may be wrong.

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No! In general it’s not a good idea to mix saving and insurance in a single product. That tends to be intransparent and expensive - a sales force wants to be richly compensated. This thread has lots of stories on pillar 3 insurance products.

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That’s a rip off. Get out of it asap.

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Moreover, OP, the avisor will strongly recommend to keep the pillar 3a and 3b.
Why? If you are cancelling withing three years, the advisor has to pay back the provisions, he received (you have basically paid them). And the provisions are roughly calculated as 3a/3b premium * (65 - your age) * 4%. So, he got himself a nice bonus only with your 3a and 3b.

Since it seems, that you do not need such an insurance (e.g. a life/death insurance can be done separately and is massively cheaper) nor do you have a mortgage I would terminate all three contracts asap.

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Thanks for your advises. I would terminate the contracts immediatly, but I fear that the company will retain a huge part of my money.
Pillar 3b I already invested 24K in 1st year, my wife a bit more
Pillar 3a, I transferred all my previous amount
0> So I anticipate the lost to be like an atomic bomb.

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Yes, there will be definitely a loss.
It depends a bit, what investment product you have chosen, but the costs of opportunities are huge, if you stay within the products.

Again: insurances are not bad and they make sense under some circumstances. But you are not getting a car insurance without having a car :slight_smile:

Regarding your question, why Swiss Life asked for medical records: they are an insurance company. So, e.g. if you had a tumor and in case of getting handicapped and if they relate that to the tumor (e.g. tumor growths on the nervous system and you cannot remove it), they have the right to deny the future contribution into your pillar 3a / 3b or can even reject you from the beginning (e.g. in case you have something like HIV).

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Your assessment is totally correct. They shouldn’t call themselves tax advisors. They are financial predators. Unfortunately, the title “tax advisor” is not protected in Switzerland.

I would cancel the policies asap and transfer the money into banking solutions (see Finpension or Viac for example).

You’ll probably lose few thousands swiss francs in the short term, but it’s the best option for the long term.

For death coverage, look at your second pillars. The coverage may be sufficient. If not, you can opt for a pure risk life insurance.

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Thanks for your feedbacks. I was reaching similar conclusions myself but I preferred to crosscheck with neutral opinions because I am quite stressed by this and not sure if I am able to think clearly.

I will request a meeting with them to assess the loss if I terminate all. I am mentally ready to lose a few thousands of CHF, I just hope that it wont be a 5 digits figures for both myself and my wife.

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You’re not at all wrong. It’s EXACTLY how it is, and it’s disgusting.

After I’d been caught by one fisherman to sign a 3A with an insurance company - where I had similar questions why am I providing all my medical history to them - I wanted to see if they (the fisherman) can do my tax forms for me, they said they didn’t do that unless I had 100k to invest with “them” (meaning a 3b with an insurance company) as that unlocks the “premium fish caught” level.

So I was looking around for a tax advisor and found one, went to meet them in person - as they insisted they want to know their clients well, that they form decades-long relationships with them - in a bar. After exchanging life stories, having drinks and snacks (he paid) he pulled out a big folder from a big insurance company and wanted to talk 3A. I said I am there for tax forms etc, they said “Ah yeah, that’s minor, I’ll do it in an instant when the time comes”. In any case I left nd said I’ll think about it, few weeks after he called to see if I made a decision and I said I’m not going forward. I found a dedicated accountant doing my tax forms since then.

101% chance that this is TOTAL BULLSHIT. They probably meant that the surrender value edges towards your amount contributed (any gains from the investments is a freebie to them, not you), so you get your money back if you pull out after 10 years.

You already know the loss, it’s 4k on the 3b and ~40% on the 3A. I’d get out. In fact I did get out with 40% loss because I was so enraged at this - I lost 3 nights of sleep due to anger when I figured all this out. Seems you were caught by a particularly skilled salesperson.

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Is’nt it function of the total amount?
~40% on the 3A will be where I will be hit, it will be almost halt of my years of saving. Maybe I could just try to reduce the contribution to minimum only?

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Sorry to intervene, but it is very likely correct: when withdrawing the pillar 3b policy, the whole value incl. dividends and interests are tax free. There are some guidelines, but they are completely reachable. But obviously, make sure to reach these (please check with each insurance company individually).

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Scammers will try to rob you of as much as you are willing to continue to ‘invest’ with them.

Figure out which stage you are at:

  • denial.
  • anger.
  • bargaining.
  • depression.
  • acceptance.
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In my case after 2 years with a 3A I got back 8,800 with 14,112 contributed (2x7056), that’s 35% loss.

I’d say, my opinion, is to cancel and take the hit. The 3b is where you’ll get REALLY hurt in the long run, again in my opinion, if you stay long-term with putting 2k/month in it.

This is your surrender value, which means if you were to cancel today you’d get ~20k.

Sorry, I really am, I was also done by these, as were many others here.

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You may be right, when I signed (and then cancelled within a week) a 3b I was told it’s tax free because it’s money that it’s already been taxed, and capitals gains are tax-free in CH. It was in accumulating CH-domiciled funds so I don’t know how they handle dividends on their end. What is suspicious in OP’s case is saying the tax-free withdrawal would happen after 10 years, why not after 1 day? That’s why I suspect this to be another trick of creative uncertainty. I may be wrong, this subjects heats me up and not in a good way!

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This one maybe I am not using the right words, but what I understood is:

  • Pillar 3b
  • If I withdraw the money before 10y it is taxable
  • after 10y it is tax free
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Some reading material:

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I have no idea, tbh. I assume, that this is a rule by the tax authority, but I am not very sure.

E.g., the rules mentioned from Helvetia (did not find them fastly for Swiss Life) are:

image
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Edit: @Mirager, ah I know what you meant, I was a bit slow.
Yes, the 10y rule sounds a bit scetchy, since it is mentioned above that the policies with annual premiums are generally tax free. So - if you are asking me - which also should be the case after 2 weeks or 2 days :smiley:

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You may be right and I’ll edit my post above for clarity.

The Helvetia example says 60 and 66 years (that’s probably when their underwriters anticipate health problems to start, and we wouldn’t want to actually pay anything out, right - being facetious on purpose!)

I could just say that not wanting to DIY one’s investment is understandable and respectable, but at the same time it’s odd given CH’s tax-free capital gains rules. One could contribute the same to any investment and get it back at any time tax-free at market value, excluding dividend taxes.

I can’t shake believing this is purposefully there to catch more fish.

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My current status above

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Thank you, I thought it was the values of my “assets”, deducted from the fees and the market performances. Thanks for the clarification.