I receive many emails with the same question. Rather than copying and pasting my answers to each new email, I decided to test this new “Quick answer” format to make it as easy as possible for as many people as possible to benefit from it.
Until three years ago, there was no third pillar that was 100% invested in equities AND with very low fees. At that time, I even went so far as to set up an account at the Cantonal Bank of Lucerne to find the best frugal third pillar in Switzerland.
Then came VIAC, the holy grail of Pillar 3a.
The competition finally started to wake up in 2020. And that’s good, because it means more options for us Mustachians of Switzerland :D
We saw the Cantonal Bank of Zurich arrive with its digital solution of 3rd pillar: Frankly.
Then, more recently, Finpension announced a Swiss third pillar invested entirely in equities with the lowest fees on the market!
Legitimately, I therefore received quite a few questions about what I was going to do. Keep VIAC? Or switch to Finpension or Frankly? Or what about Descartes Prévoyance, Selma Finance or Sparbatze?
As a reminder, I use VIAC because:
- I save taxes by deducting the maximum amount for the pillar 3a (CHF 6'826 in 2020, and 6'883 in 2021) each year
- I invest all these savings with VIAC’s Global 100 strategy, which automatically invests my cash in ETFs
- I benefit from an unbeatable fee (so far ;)) amounting to 0.51% (all inclusive)
I discard the following solutions (for the moment):
Third pillar Finpension
It is the most promising third pillar that comes to tease VIAC. And this is because of their lower costs of 0.44% for a 100% equity strategy (0.39% fees excluding taxes + 7.7% VAT on the 0.39% + 0.02% for the TER costs of the 100% equity strategy = 0.44%).
They reach such a level by using index funds reserved for institutional investors rather than ETFs which have additional costs such as stamp duty.
I currently have two concerns that keep me from recommending Finpension’s solution fully.
The first is a major one (in my opinion): Finpension does not verify your identity when you create an account. So you can call yourself Donald Duck or James Bond, and it will work. They create a unique ID by combining your name, date of birth, and phone number.
They partially reassured me that where the big identity check was done was when someone wants to withdraw their third pillar. Indeed the latter must present a paper form (no electronic way accepted…) with the following proofs:
- Withdrawal request via paper form
- Copy of the client’s passport or identity card
- Confirmation of place of residence (no older than one month)
- Confirmation of the details of the bank where you want to receive the money
- Officially certified signature of spouse
I don’t know how someone malevolent would get around their process and withdraw my third pillar in my place. But considering the cash I’ll be depositing there over the next few years, I find the security too limited for my taste to choose Finpension at this time.
But I’m keeping a close eye on their solution, because I imagine they will improve over time.
UPDATE 28.04.2023
finpension now offers formal identification (N.B. this is optional) for clients who wish to do so. If you go with finpension, I strongly recommend you to do this formal identification.
The second concern with Finpension is that they’re just young on the market, and that’s reflected in the core functionality as discussed above. So be patient.
Third pillar Frankly
Frankly is the pillar 3a’s solution of the Zürcher Kantonalbank.
Their fees are 0.47%, cheaper than VIAC.
Except that the equity ETFs — in foreign currencies — in which they invest are hedged in CHF. But, as I learned myself at the beginning as a Swiss investor, this currency protection hedge is more expensive and does not so much guarantee performance over the long term.
I therefore pass my turn and prefer VIAC where I have optimal products at this level (i.e. invested in the base currency of the ETFs).
Third pillar Descartes Prévoyance
Their fees announced on the home page are 0.65-0.80%. I’ll pass my turn.
Third pillar Selma Finance
Their fees are 0.68%, to which must be added the fees for the products they offer — 0.22% on average. The total is then around 0.9%.
Much too expensive for the frugalist that you are. Next!
Third pillar Sparbatze
Maximum 75% in shares. Not enough!
Announcing fees at 0.39%, but by doing a simulation with their third pillar’s solution with 75% invested in shares, the site announces 0.78% fees. Too expensive ;)
So, for all these reasons, I remain at VIAC for my Swiss 3rd pillar invested 100% in equities through their Global 100 strategy.
Afterwards, as I often say to the readers who write to me, the important thing is to take action as soon as possible. Because even if you go to one of VIAC’s new competitors, you don’t take too many risks compared to the old solutions on the market which were really expensive at the time. Today, we don’t fight over a lot of % anymore.
But VIAC is still the leader in this market in my opinion.
Knowing that it is going to cost me time and transfer costs if I change, I’m more patient than in the past (where these efforts were much more worthwhile than they are now). And also because I can imagine that VIAC is not going to let its market share be eaten away so easily.
Story to be continued in 2021 ;)
VIAC promo code
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PS: if you too want to create a third pillar at VIAC, you can follow this VIAC step-by-step guide (you will find recent welcome codes in the comments)
