I just left a job with no other job lined up, and will be placing my 2nd Pillar assets into either VIAC, or FinPension, or both. I will be splitting the assets into two accounts. So either two accounts at FinPension (they allow that), or one account at FinPension and one at VIAC. For an Individual Strategy, it looks like these two accounts are very similar in terms of fund offerings and costs. Has anyone done a comparison of the two? The only difference I see:
FinPension charges a fee for withdrawal in the first year
FinPension allows to turn off rebalancing. I can’t find info on whether VIAC allows the same. Does anyone know?
VIAC only allows a 99% equity allocation for the extra-mandatory part, while FinPension allows it for all. But this might be circumvented if you only send the extra-mandatory to them? Not sure.
VIAC has local currency funds (eg. USD) which I like, while FinPension has exclusively CHF-hedged share classes. But I can’t fin any info if VIAC hedges the entire portolio.
Any information, opinion, experience super welcome
I’d split to both to diversify against risk that something goes wrong with one or the other. You can also split into 2 each, not sure if that flexibility might be useful to you or not.
Viac mandates 40% in CHF, so you need to use hedged funds.
Finpension doesn’t.
Not sure what you mean by your last point - I am quite certain Finpension has unhedged funds.
Some might be denominated in CHF, but not necessarily CHF-hedged.
Are you sure? I couldn’t find this fee.
Aside - do u plan to withdraw within 1 year? Then going fully invested may be deemed a bit risky.
No, one can’t turn off rebalancing @ Viac.
Viac-mandatory allows max. 80% equity, but the remaining 19% can be RE, bonds, alternative etc., it doesn’t have to be 20% cash.
other people have answered this, but yes, Finpension is certainly not “exclusively CHF-hedged”.
As an extra, I transferred pots to Viac and Finpension.
Viac automatically made 2 portfolios at one FreizĂĽgigkeitsstiftung (mandatory and over-mandatory - it has to do that because mandatory pots has some portfolio limitations)
At Finpension it comes into one portfolio per FreizĂĽgigkeitsstiftung
I went for Viac and Finpension as a way to mitigate risk IMO. I went for ex-CH stuff only at Finpension, and then the mainly CH-stuff at Viac, resulting in only a smallish home bias IMO overall. CH-stuff at Viac due to limitations at Viac (40% CHF), foreign currency funds for foreign equity (=FX losses).
Sorry, maybe unclear.
example:
PK 500k
BVG Anteil 200k (mandatory part)
split into 2 (for example 50:50) (one can choose any ratio)
It will look like this:
Viac mandatory 100k
Viac over-mandatory 150k
Finpension I 250k (40% mandatory)
It was not possible (in my case, and I think this is generally the case) to put mandatory to one and non-mandatory to another Stiftung, in each of the two pots the mandatory % is the same. You can split the amount freely, but not define where mandatory should go.
AFAIK When starting a new job and transferring from Viac, both amounts will be summed up, the total will be transferred with extra info “BVG Anteil Xk / mandatory”.
Just to add - on this I have the opposite opinion - local currency funds (US fund in USD) at Viac means you convert CHF’s when buying and convert back when selling = up to 1% FX loss, although they use netting to reduce this, it is not clear how much you are paying.
Finpension offers the unhedged CHF version of the US Fund, which is better, since the FX is done inside the fund, at much better rates.
This is very clear. Thank you. I was also wondering if someone could send the mandatory to one provider and the extra-mandatory to another, and you have clarified this perfectly.
Thank you for the clarity – I went to VIAC’s FAQ and couldn’t find those restrictions (80% stocks, 60% foreign currencies). Would you mind sharing any links to the correct pages, I don’t understand how I cannot find them? Thanks!
I couldn’t find it in a clear text right now either.
But it is implied here for example:
See Note 1 for all the “100” Strategies = “Equity only strategies can only be selected in the extra-mandatory segment”.
So the highest Viac strategy you can choose for “mandatory” is “80”.
This is as OP indirectly wrote in the first post above
I just tried, and for the Vested Benefits mandatory strategy, in the App, for custom strategies, it doesn’t allow to go over 80% stocks.
Besides VIAC’s restriction on the percentage of stocks for the mandatory part, or CHF hedging, are there any limitations to the individual strategies at either VIAC or FinPension?
Or can you, for example put everything into Swiss or Emerging markets?
Besides those two, I came across ZKB’s Frankly vested benefit option, which at first glance offers similar conditions. However, it seems they only offer a set of fixed strategies (0 to 75% stocks, global or Swiss), but no individual mix and match. Or did I miss something on their offering?
Yes Frankly offers only fixed strategies (few active and few index based)
Good thing is that their active strategies are similar in cost to index one. This could mean that they have higher chance to deliver similar returns as their are no cost differentials.
(Sorry for the offtopic, but)
Could you please point me to the “rip-off” discussion you are talking about?
I don’t see much in the transaction list beside “dividends” (WHT refund) and “fees” (which are shown as 0)
I think it’s not very fair to say VIAC is ripping off on account of currency exchange. They are trying to net and pool and publish that overall average is 0.05% across all strategies
Yes - they could have used CHF denominated funds to make it even cheaper but of course not everyone offers same solutions.
From their website
Yes, usually there is a fee. Our goal though is to keep any foreign currency exchange as little as possible through VIAC’s intelligent calculation system. Thus, in the best case, the fee is at 0% when the purchases and sales of foreign currencies during rebalancing cancel each other out across all customers.
Should the purchase and sale volumes not be identical, the foreign currency fee is only charged on the difference that is actually traded – more information on the settlement system can be found here: Academy. The resulting costs are then distributed proportionately among all customer orders.
Experience shows that, depending on the strategy, one-off costs of a maximum of 0.20% (e.g. Global 100) could occur. Here an example: 60% foreign currency share x 0.3%, whereby the 0.3% corresponds to the effective optimized foreign currency fees for the months June, July and August 2020. Without internal settlement or optimization which VIAC carries out in the interest of its customers, the premium charged by the Bank would be 0.75%. Therefore we pass on 100% of all cost advantages directly to our customers.
Historically and over the long term, the annual average cost of all strategies is less than 0.05%. With other providers, these fees are usually hidden and not disclosed to the customer. They are for instance not included in the TER of a fund. Hence the name “Total Expense Ratio” is misleading as foreign currency hedges, which cause recurring / running costs are also not included in the TER. However, especially in long-term pension plans, such recurring costs are much more important than a one-off fee for the foreign currency exchange.
I don’t think you can calculate it like this because VIAC strategy is a fund of funds. So you can only compare the results for same strategy using same funds on Finpension for example
I agree with the one time costs at time of buying.
But why should there be a cost at time of rebalancing?
By the time of rebalancing, there are already a lot of USD in portfolio. It shouldn’t lead to more currency costs unless the money needs to move back and forth between USD funds and CHF funds.
As far as I know, transfers between vested benefits accounts always include information about the mandatory/extra-mandatory amounts, same as transfers between pension funds.
To be precise, it’s the WIR bank that pockets the premium. VIAC tries to keep the exchange fee as low as possible via netting and pooling but it seems that their contract with WIR doesn’t allow VIAC to switch to CHF trades for international funds. VIAC doesn’t control the Terzo foundation, unfortunately, as far as I know, so I suspect they can’t easily get out of this situation.
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