What do you guys think about them? Would you like to see something similar in Switzerland?
I really can’t find the actual useful information about the terms and legislation surrounding the accounts from the linked official website (could be me). Is there a dryer page with the terms that apply somewhere or could you provide a summary of all the relevant terms applying to those accounts?
Edit:
For a start, here: Trump Accounts | Internal Revenue Service
and here: One, Big, Beautiful Bill provisions | Internal Revenue Service
The trumpaccounts.gov page is really useless and has nothing to do on an official website if you ask me. It also looks designed for mobiles and has an awful rendering on my browser that makes it illegible (there again, could be me, I run all sorts of script blockers on my devices).
Is this the financial version of the hideous Trump watches?
USD 1’000 at birth, then the parents can add USD 5’000 annually. It’s basically a investment account for children.
The Swiss system is different, we have birth allowance, child allowance.
With the Trump account, they put in place a Federal birth allowance invested into an account. Nothing revolutionary here. The US is only catching up to some extent with the rest of the world with family welfare.
It is already possible to open an ETF investment account for a child in Switzerland with the exact same output.
edit: looking at this page Treasury, IRS issue guidance on Trump Accounts established under the Working Families Tax Cuts; notice announces upcoming regulations | Internal Revenue Service
the law is limited in time. If not extended, it will stop on 31 Dec 2028.
Funds will be invested in a diversified investment vehicle designed to maximize long-term growth while minimizing risk.
Given data points from previous “Trump-branded” products, Im personally reading this vague statement as:
Funds will be invested in an investment vehicle that benefits cronies and my family, designed to maximize short-term growth and keep the tech-bro AI bubble from popping for a bit longer, while offloading risks to the broader population, leaving them to be the eventual bagholders.
Sorry, feeling very cynical today (yes - I work in tech with AI shoved down my throat), and happy to be proven wrong 
Difference is that child allowance gets spent and not saved usually. But you are right from the state view they are similar. Downside of the child allowance system is that you are at the mercy of your parents.
I just like the thought of bootstrapping a persons saving like this. It could be merged with the 3a and get funded at birth.
Just been proposed and rejected:
Missed this. Curious what the national council will say. BR says no to anything that costs money (unless it is for farmers). The political problem with 3a is that it benefits the rich more. Trump accounts at least benefit all the same.
The tax deferred growth will benefit rich people tho (with employer contributions being income tax exempt)
I would argue that capped tax benefits actually benefit those in the middle more. If you are rich, the volume is too small to make a difference or at some point even a waste of time.
Still benefits the rich (or more precisely the high-earning) the same - or more - in absolute terms.
Actually more, when you consider that “the middle” don’t pay maximum marginal income tax.
Comparing the absolute tax brakes whilst not comparing the absolute taxes probably doesn’t make much sense.
The ones most impacted by having such capped tax brakes is the middle. If you have 10m in net worth those 7k tax reduced are just not relevant to your calculus. And also not relevant to the tax income of the community, I might add.
The main expected benefit is people that can afford it taking care of their own retirement, so the community doesn’t have to, without allowing even richer taxpayers to stop paying taxes. If that is a good or a bad policy is probably a discussion for another forum.
So, new account.
My opinion:
type of account.
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Since the child can’t withdraw the money upon reaching 18 unless they are otherwise eligible to withdraw 3a funds, I have no problem with the 100% stocks allocation. People born at different times will have a different amount at 18, even with similar contributions but that also is education on the market.
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The Swiss stock market may not be sufficiently diversified, though part of the measure aims at supporting the national stock market. I’d probably make it something like a 40% SPI / 60% world ex CH (or a combination including EM) allocation. The allocation should be imposed and fixed to limit shenanigans by providers and the fees should be capped at a low amount (not the traditional 1%+ of AUM from traditional Swiss actors).
State/government contribution:
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Yes. It can be considered as an early start in the pension system or a shot at entrepreneurship or home owning. Withdrawal for permanent departure from Switzerland should be carefully monitored. Withdrawal for own home purchase or mortgage amortisation should also be monitored like 2nd pillar ones and be reimbursed if the home is sold.
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CHF 1000 at birth would turn into something like CHF 2300 at 18 with a 5% annual growth. It can be less in case of crisis, it can be more. It seems too low for me. I would make it something like CHF 400 per year (so CHF 7200 in total) or CHF 5000 at birth to aim at something around CHF 10k at 18 to encourage the child/young adult to notice and appreciate the power of compounding.
Employers contributions:
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I’m for it. It encourages young people to practice summer/side jobs and build the mentality of saving some of it.
Individual contributions:
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I’m mitigated. They introduce a huge difference between people who have received contributions (value of the account of 140k for the max additional 5k of contributions each year at 5% CAGR) vs 2300 for those who only have the first 1000).
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I can be for it, as it encourages relatives to take a stake in the future of the child instead of immediate gratification but I would like to see a mechanism that, for the year of the beneficiary turns 18 (so calculated when they’re 19), checks the total balance on all accounts of all the beneficiaries and provides an additional amount from the government up to a% of the total amount (make it the median of all, or 10% of the mean, or something else. The actual percentage could be up to debate).
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This could be financed by a separate fund set and managed by the government where an amount of assets by participant would be invested. The very good 18 rolling years would pay for the very bad ones so the amount per child could potentially be somewhat limited.
Generalities
I like the concept. Sine qua non for me would be:
fees monitored by the confederacy. Ideally a single vehicle handled by the confederacy but we’re in Switzerland, I have no illusion that it would be done using competing private solutions of which some would be very good and some would be awful.
imposed allocation with strict limitation on the funds available (low TER, good tracking record).
turns into another locked account at 18 (3a, hybrid, other).
some kind of solidarity applying for the transfer at 18 between the beneficiaries having received a lot of private participations vs those who only have the government one. This must not hurt those who have received more so it should come from another pot.
Something I have been convinced for a while of is the introduction of a childless tax (sorry for the bait).
The issue is that people without children in their old days, on average, cost more to the social security system than people with children. This is because children often provide some amount of free care to their elderly parents and they end up relying less on social insurances.
The result is families with children are subsidising families without children through future social security contributions.
But of course, not everyone is fit to have children. Some even simply can’t. So an outright extra tax would be a moral judgment or unfair. So instead you could simply force higher 2 pillar contributions for people without children.
There’s already the economic équivalent with all the child support benefits.
To me, this remark reads like a broad swipe at an entire professional group rather without any value to your own topic.
Also, any reaction to such a statement would most likely derail the discussion and potentially interfere with the forum rules. In that sense, I think the remark itself is already problematic from a guidelines perspective.
That said, maybe I can’t see the reasoning or the data behind your statement. Would you mind explaining what exactly you meant by it?
It does in my view.
Especially in this context, The subsistence of a child costs a certain amount of money. Whether you’re poor or rich, whether you have a low or high income doesn’t matter (with few exceptions).
So does mandatory health insurance - it’s charged as a per capita premium.
According to your logic p, rich people pay only negligible health insurance premiums (cause it’s only such a small part of their income, whereas poor people pay a ton.
Yet in reality, they pay the same - and benefit the same. And that’s how most things in life work. Very few things have progressive pricing according to income/wealth.
If anything, we might agree on the notion that “rich/high-earning people benefit just as much - though it might not matter as much to them”.
Not when the systems (99% of it) of pillar 2a is based on the principle of defined contributions.
Higher contributions lead to higher benefits (by law).
But the opposite is true for pillar 2.
People with children on average cost more than people without. Childless people are “subsidising” families with children through their 2nd pillar contributions today already.
But the main objection against such capped tax breaks is not that, amongst all people that can afford it, some people get a relatively small slightly higher absolute sum of support for children (due to their slightly higher marginal tax).
The main objection is that the rich have so much money and don’t pay enough tax on that and this helps them pay less. And I say that mechanically, capped breaks do not work like that.
The clearest example are the taxes themselves. On the first Francs you pay nothing, then on the next you pay a bit, on the next a bit more, until you pay in the maximum bracket. But even those which reach the maximum do not pay anything on the first few Francs. Does this capped tax break now prevent a final tax bill taking 99% of all income?
No, and any capped tax break for taking an action will equivalently only push out the lower brackets by that amount for anybody which is able to do that action.
If you are rich and your blended tax rate would be 40% for living here, it will still be 40% (minus an insignificant absolute amount) after implementing such tax breaks. The community will still get those 40%. There is no material difference. And nobody here will want change anything based on the existence or non-existence of these tax brakes.
This is not the same for someone in the middle, which will get an reduced blended rate by using the tax break. This is a material difference. E.g. in Zurich for 100’000 you pay 16’181 which is 16.18%. If you could take 5’000 out, tax free you would pay 14’875. That is a 1’306 or 1.31% more for you. That sum is still not high enough to be the deciding factor, but it is not negligible anymore.
In fact, the relative advantage grows the less income you have. But at one point your counterfactual becomes not saving any money. The advantage becomes a relative disadvantage then.
I don’t understand, pillar 2 isn’t redistributive since it is a personal fund. While AHV, IV, EL, etc.. are: the rich subsidise the poor, the healthy subsidies the sick, etc..
I think such redistributions between the various group of society should be carefully analysed. Some are desirable and some are not. Redistribution between families with children to families without children in my opinion is not desirable.
This transfer happens through increased reliance on the social safety net for the families without children. Namely: Supplementary benefits (EL, tax funded), Helplessness allowances (AHV/IV funded), Nursing care (health insurance funded with a good share of tax subsidy).
The question about the second pillar is that people without children will never generate a claim of pension for an orphan while people with them may. Similarily, people without partner won’t generate a widow pension.
Those pensions are factored in the pool dedicated to the risk coverage, in which all contribute (that’s the principle of an insurance) and reduces the amounts available to qualify as returns that are then allocated to participants.
More broadly, there is cross-financing happening both ways. The families without children still pay to finance the schools, part of kindergarten, children’s parks,…
Though the children themselves contribute to society so in order to make it fair, you would have to compare the situation of the family with children and the family without children while as many immigrants as the not-made children would be taken in.
And then you could want to factor in non-monetary things like the cultural impact, or voting power.