"I often see recommendations to maximize contributions to the 2nd Pillar. I’d like to better understand the reasoning. Some advantages include:
However, the interest rate is lower compared to ETFs, and over 10–15 years, this could make a big difference.
Has anyone ever calculated the tax savings vs. the long-term returns of an ETF? How do they compare?"
This isn’t comparable (the volatility is massively different), it’s all part of your overall allocation/strategy (which is the first thing you should define, how much risk do you want to take, which kind of drawdown would you stomach)
Your pillar2 money can’t (in ~all cases) get negative returns. The equity ETF very much can and will.
(That said still check how healthy your 2nd pillar fund is before dumping a lot of money into it)
Here, if you compare to UCITS:
You get around a 1% yield.
Normally the pension gives you 1%-2% plus tax benefits, so pension is better in terms of return (and also protection against capital loss), but you lose liquidity/accessibility/flexibility.
It’s a double-edged sword. In a perfect world, it makes sense to invest in ETFs for the rest of your life and then pay the profits into the pension fund before you retire. On the other hand, the pension fund is more secure, there are also pension funds with good interest rates and you have downfall protection and can possibly sleep better during market crashes. So… it’s a decision you have to make for yourself, there is no perfect answer.
The YTM is 0.39% and that’s before fees and taxes. The expected net yield is currently about zero, or even negative with higher tax rates. (That’s not accounting for interest rate changes, of course).
Are these recommendations for people who otherwise wouldn’t invest at all? The members of this community are not typical society members.
You are right, I should have rounded down instead of up. So you actually get around 0% return, which makes pillar 2 even more attractive in comparison.
Nothing worst than locking up your money for low yields. Id avoid putting a rappen more into pillar 2 if possible
Depends on your pension fund.
I’m happy with my 12% for 2024.
You might want also take into account the recent discussions of higher taxation of 2a.
I for myself took out all my money and invested it in real estate (flat)
with RetrairePopulaire i had %3.75 interest for my 2nd pillar 
12% ? What kind of 2nd Pillar?
Depends on pension fund. I get a very good yield, histoic average of 5pct and it cant go below zero when market tanks. So like a 5pct bond with hefty tax break. What‘s not to like?
Also I only pushed in significant contributions near retirement, so the yield gap is minimized, while getting an instant 35 pct return on saved tax. What‘s not to like?
I modelled all this out, funny thing is the bigger the market swings the more interesting is pillar 2a. So perfect hedge for SORR near retirement if you use it well and have the right fund
If I had a crappy fund with 1 pct yield, I would still use it last 3-5 years before retirement. Do the math
I believe that this topic is more nuanced than what many internet influencers make it sound
I heard lot of comments everywhere that it’s not worth to add money to pension fund and it’s better to invest in Stock ETFs.
The reality is that such thinking only works if
#2 is not true for every fund and hence people should review their own fund guidelines. If you work for UBS, hopefully you know the staggering returns of UBS pension funds. Same is true for some companies which guarantee 3.5%. Every fund is different
#1 is only for the bravehearts and also assumes wrong investment returns in most cases. People forget that USD denominated S&P 500 returns are not representative of expected returns post tax in CHF.
The worst thing one should do is
„Say that I can make more money by investing somewhere else (equity) rather than taking tax advantages of 2nd pillar but then keep the money in savings account and not investing anyways“
Exactly, if you fill aggressively in the final few years, even with a 1% yield, you still get a hefty tax discount so the overall return should still be good. And then once you stop working, you can withdraw to a VB account where you get high stock market returns while being tax-sheltered.
Depends but 2 AND 3 pillar are very effective tax-wise. Use them while you can. Plenty of different schemes including ETFs, shares, etc.
Just the tax advantage is humongous.
“ça dépend” - I don’t know French but like how it sounds.
If one is Swiss, or is considering staying here at least until 58, ideally 65, then I’d agree. If not…there are big threads where we’re discussing ways to get taxed in Switzerland for bloody pension accumulated in Switzerland rather than in tax hells like Spain or Greece which would bite off 40-50% of our 3rd AND 2nd pillars.
I don’t know if answering is ruining the clip from one of my favourite films of all time which is the origin of me using “ca depend” IRL, but the answer is in the second sentence of my post It depends on how will one be taxed on 2nd/3rd pillar withdrawal. If you’re looking at a hefty ex-CH tax bite and reimbursement of a much smaller CH tx then it makes little sense to maximize the 2nd pillar, and borderline sense to use the 3rd pillar.
Edit: irrelevant but this 2 second exchange in the film stayed with me, Jordan Belfort doesn’t speak French but he’s shown to be smart enough to instantly catch what he’s being told in a foreign language, most of people I’ve known put up a filter of “This is all gibberish” when they hear a foreign language. I mean in Nice in France I asked for “Marlboro cigarette/tabak” in a petrol station and the vendor guy kept on saying “desole” to me like he’s never heard of any of these three universal words before. I wanted to tell him “My guy, you have a petrol station in a busy tourist town, people from around the world come through here by their thousands every day, do you REALLY not know what “Marlboro cigarettes” are?!”
But you can plan around those instead of directly giving away half of your pension!