Turning 30 this year - need help with 3rd pillars

Hello all! Been a reader for the past few months, this is my first post, let me introduce myself.

I am turning 30 in July this year, been working in Nyon since 2016, live between the Valais and Lausanne. Since beginning to work I’ve been living from salary to salary, often spending more than I actually made, while still sending the maximum amount to my 3rd pillars (more on that later). As I am turning to the 30s, I would like to live without having to see red numbers in my bank accounts!

I am looking to invest the mustachian way for my future!

I make CHF 90k per year, and after my recurring expenses (which I greatly cut since the beginning of the year) I am now left with approximately CHF 1 - 1.5k/ month, versus 400-500/month a few months ago (so I’m on the right track!)

Right now my main dilemma are my 3rd pillars, which I’d like to transfer to VIAC, here the backstory:

In 2016 I opened a 3rd pillar savings account at my bank, UBS very last minute (in december), where I put the maximum amount in order to deduct on taxes for my 1st professional year. It had an interest rate of something like 0.1% interest if I remember. My advisor at the time only offered me this option eventhough I told her I was young, liked risk and wanted best returns for my retirement, now that I think about it I dont understand why she didnt offer me a custody account tied to a fund (but their costs are very high for this). I found the 0.1% low and was told banks were always low compared to other institutions, but offered more freedom and flexibility.

So in 2017 I searched online, and found a “courtier”, so I went on and signed two 3rd pillars, convinced to go the insurance way because I wanted to “maximize” them with better interest rates compared to the bank’s savings account:

  1. Retraites Populaires - a pension fund combined with life insurance:
    I pay CHF 4768/ year into it. The interest rate varied between 0.5 to 1.0% since
    In case of life when I hit retirement in 2055, CHF 197’171.00 are guaranteed

  2. Zurich Assurance Life insurance tied to a fund, the excedents are currently reinvested into CH0116274009 “Leveraged Certificate on SMI”:
    I pay the rest of CHF 2000/year into this one.
    Guaranteed at the age of retiement in 2055 are CHF 58’050.10. They then present it in 3 scenarios:
    “low return” 3.75% = 118’594
    “medium return” 5.50% = 187’736
    “High return” 7.00% = 274’489

At the time I took the Retraites Populaires one was the safe investment, and the zurich one was where I took risk for higher returns, all the while profiting from the split in order to save on taxes once I hit retirement. Unfortunately at the time I thought it was either bank or insurance. What are your takes on the two above?

Unfortunately at the time I was unaware of better products, such as custody funds or VIAC.

I opened an account and contacted VIAC, and they told me they would take care of transferring the funds over to them, all I have to do is fill out a form. Have any of you done this type of transfer directly with VIAC? I though it only worked between bank institutions, and not with insurances, but VIAC said they’ve done it with all types of institutions. Also do you advise I transfer both to VIAC?

Both of my pillars are “renewed” on the 1st of june 2020, so am I too late for this year? I cant find any delay for cancelling, both contracts however state that I may “rebuy” the policies once the first year payment has been made. I contacted both by email to see what the conditions were, and if the form sent via VIAC suffices. I dont mind “losing” some money if I change, as I want to max return with VIAC. I just want to avoid surprises. So any advice is appreciated.

I think its already enough for my first post :wink: I will share the rest once I managed to clear this up! Thanks in advance for any advice!

Look forward to sharing/ reading and meeting you all!

Kind Regards,

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If your goal is to have a safe investment, Retraites Populaires 3a is good.
However, for a 35 years investment, the likelihood that a 100% invested 3a in stocks like VIAC global will give you a higher final balance is really high. I would say something like 95%.

I don’t really understand the Zurich product. What is the amount invested in the certificate? If it’s only excedents, I don’t know how you would have a 3.75%, 5.5% or 7% returns.

In any case, life insurances are hard to cancel without losses. Check the forum, others posts have discussed this

Hi @wapiti, thanks for your response, yeah that is exactly my opinion too. As my investment horizon is 35 years and my actual career is only in its 5th year, I am willing to take the risk for a higher final balance. If I were already in my 50ths, I would probably keep retraites populaires.

For the Zurich product, the excedents are automatically invested into the SMI leveraged certificate so the “low”, “medium” and “high” scenarios are the guaranteed buyback value (58’050.10) + excedents and the yield generated from the excedents invested in said certificate. Hope this clarifies?

And yeah I’ve checked the other posts, just havent found any info of someone getting their life insurance transferred directly to VIAC with the VIAC form. I’ll wait for the response from my current insurances (buyback value and transfer to viac).

Thanks again!

Kind Regards,

Hi @belouga13,

I transferred my 3a early this year (February) from Swiss Life insurance to VIAC using the form you are talking about. It was really easy cause the only thing to do is to fill in the form and wait…(about 6 weeks for swiss life).

The only thing i recommend you is to be sure about the « valeur de rachat » and the possible loss you will make! For example, i paid in 4 years 24k in swiss life and could only transfer 11,5k to my new 3a VIAC. So just be sure with your choice and if you can afford such a loss.

Cheers :v:

2 Likes

Hi, thanks for your response, was exactly wondering if it worked, and if it did, how “smooth” it was.
Yes, I am waiting for a feedback from both institutions with the valeur de rachat before sending anything out. As it is a longterm investment I am sure it will compensate the “loss” :wink:

Were you paying annually to swisslife? if so, could you still just buyback at anytime or were there specific delays? I am asking this, as my annuities will be due in june for both pillars, so i might be penalized for buying back/ cancelling so “last minute”. I am hoping to being to pull out before even paying the annuities

:exploding_head: so 50+% was the cancellation fee, which they charged you due to this transfer?

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It’s not a cancellation fee, it’s the money that went to commissions and insurance premiums.
Whatever the “valeur de rachat”, this is money you will never get back. Even if you wait a few more years for the transfer.

Yes, in general 3a Life insurances are a big scam:

  • the short-term costs are super high due to the various commissions taken by the middlemen and the reinsurance cost (life insurers insure themselves to reinsurers in case something happens to you)
  • the long term costs are even higher, although this one is not obvious: if you do a simulation of the difference between what this product will return and what it could have returned if you were in a low fees passive index 3a type, over 35 years the difference is absolutely insane.

So exit it as soon as possible. Others have been burned (me included), and you can find various topics on the subject in the forum.

On a final note, this scam will continue for a long time: most financial “advisors” and insurance brokers have super high incentives to sell you life insurances because the commissions are incredible: usually the broker gets an upfront fee of the lifetime revenue your contract will generate, and it is not rare that this fee equals an amount of 1-2 years of what you will contribute to the contract.

Given these incentives, there is absolutely no surprise that most advisors and brokers will never recommend solutions like VIAC or Frankly when the 3a topic comes in the discussion.

This topic makes me so angry i almost want to create a website “www.3a-life-insurances-are-a-scam.ch”.

9 Likes

Exactly, I would like to add that if you really need a financial advisor (some cases are complex). Always use a fee-based advisor and not a commission-based.
In most cases, I wouldn’t recommend a 3a with life insurance, but in a few cases, it can make sense. I won’t qualify these products as scams but they are not attractive. I follow this logic: if bank A offers a mortgage with a 1% fixed rate and bank B offers 5%. Is bank B a scammer?

Viac works with WIR which is a bank :slight_smile: A broker paid in commission will always recommend an insurance product because the commission is higher due to the contract length.

That’s kind of the way they trick you to go for life insurance. They say it’s either bank or insurance, and bank interest is 0.1%, so we are better.

I think I had the same Zurich product, see my story here :

Just cancelled my contrat.
I will certainly take a pure risk life insurance because I have 1 (and soon :-)) 2 kids.

Here is the documentation of the product I had : https://www.zurich.ch/-/media/zurich-site/content/privatkunden/vorsorge-anlage/dokumente/zurich-vorsorge-premium/factsheet-vorsorge-premium-e.pdf

Hi, just curious what the rationale for taking life insurance in Switzerland is. There is already a life insurance component baked into the 2nd Pillar, no?

Edit: OK, I just looked at one of my 2nd pillar statements… it would only pay out 22% of salary for the partner + 8% per child…not sure how these numbers are calculated.

Risk premium only (aka. Life Insurance) is inexpensive. I pay ~350 CHF/y for 500k payout in case of death which is a fair price for some peace of mind for the family

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No i paid monthly the amount of CHF 564.- during 42 months = CHF 23’688.-
I had the possibility to buyback whenever i wanted but with some penaltys (like the part of the insurance seller, the cost of the insurance).

I’m really happy with my choice and convinced that i will make way more money with my 3a VIAC till my pension comes (i’m 26 btw). But it was a tough decision… losing 50%, regardless of the amount, is really hard! So be sure you can live with it!

You (or get someone with a higher chance of being published) should try to write an op-ed for NZZ or Tagesanzeiger or somewhere. I’m sure it could be a hit. :slight_smile:

I doubt those newspapers would touch a story like that. They are in cahoots with “the finance industry”.
Look at their articles on 3a, they still see nothing wrong with a 45% stocks fund with TER > 1.5%. It comes from a big fancy bank, so it must be good.

@glina: could you mention which one or a few from top of your mind? We just started family and its high time I get one.

Who? Me ? :face_with_hand_over_mouth:

I’m with PAX, but you need to contact an advisor to get a quote. Swisslife has a calculator online, you can give it a go. The rates I got from both were quite similar, but your situation may be different.

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I was interested by the one from la mobiliere.
Will get you posted. I will make some research this month.

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