If you want to invest in passive pillar 3a products, you are not necessarily spoiled for choice. Many banks do not offer passive pension ETFs, preferring to sell their own, often more expensive active funds. We have therefore done some research and put together a list of the most attractive providers – using Reto as an example.
Reto is 34 years old and has an investment horizon of 31 years until retirement. His long-term investment horizon allows him to build up his 3rd pillar pension provision with equity funds. But what is the best way for him to do this?
Reto recently learned that , in addition to active funds, there have also been much cheaper passive funds in the 3rd pillar. Passive funds (ETFs or index funds) do not even try to “beat the market” and achieve a higher return, but automatically track a market index. This requires less active fund management; an algorithm does most of the work. That’s why these products are much cheaper. You can find out more about ETFs in our eBook.
Reto also learned that the difference in fees between the two types of product makes a substantial difference to his pension assets in retirement. In his example calculation, this would have been a 30% difference in his final assets.
Today Reto wants to know: How can he access the low-cost passive 3a funds? His bank only offers him its own 3a pension funds with nice-sounding names. He can have these in various forms, i.e. with different equity ratios. But they are all actively managed and Reto doesn’t want that – after all, the fee savings from a passive product should make a contribution to his final assets. That’s why he looks around the web for providers that offer various passive 3a funds.
We compare the providers with Reto on the basis of the expense ratio and the included or additional costs and the possible equity ratios for passive 3a pension funds. Reto wants a high equity ratio and broad risk diversification because of his long investment horizon. As he doesn’t have the confidence to combine different products sensibly himself, a predefined strategy is more his thing. The table shows you Reto’s findings.
| Cost ratio p.a. | 0.00-0.70% | 0.68% | 0.5% | 0.4% |
| – Included therein |
Costs for custody account, administration and transactions and product costs (TER) of the ETFS / index funds used | Costs for custody account, administration (investment, rebalancing) and transactions | Costs for custody accounts, acquisition, exchange or redemption of fund units. | Foundation fee for custody account management |
|
– not included | Dissolution of 3rd pillar for home ownership financing without mortgage at WIR Bank | Product costs of ETFs and index funds (TER) of approx. 0.2%; immediate buy and sell orders are settled at the e-banking rate of VZ Depotbank. | Product costs of ETFs and index funds (TER) | Fund fees (product costs of ETFs and index funds, TER) of 0.28-1.19%), possibly bank costs (transaction fees for purchase/redemption) and stamp duties |
| Equity exposure depending on strategy |
20 – 97% | 15 – 100% | 15 – 80% |
12 – 95% |
| Investment products used |
The majority of the investments used are index funds | Index funds and ETFs traded on the Swiss stock exchange | 35 active and passive BVG funds from 6 cooperation partners |
55 active and passive BVG investment products from all renowned Swiss banks, fund providers and investment foundations |
| Product selection |
Select from 15 predefined strategies (5 gradations in each of 3 strategies) | Choose from 6 risk-related strategies or put together your own portfolio | Entries for risk profile, analysis horizon and active / passive product lead to fund proposal |
Choose your own standard strategy or a maximum of 5 funds according to your risk profile |
| Number of customers |
16’000 | 25’000 | n/a |
24’000 |
| Partner |
Terzo Pension Foundation | Asset Center AG | Bank CIC (part of the Crédit Mutuel Group) |
Liberty 3a Pension Foundation |
| Minimum investment in CHF |
1 | 1 | 1’000 |
1 |
The VIAC solution appeals to Reto. Viac invests his money with the Terzo pension foundation of WIR Bank, a purely Swiss, cooperatively organized bank. Reto only has to decide on the investment focus (Switzerland, global or globally sustainable) and the equity allocation (20, 40, 60, 80 or 100%). With very low total costs of 0.53% per year, he can invest 80% or even 97% in equities with a global investment focus by investing in standard indices such as SMI, SPI, MSCI Europe excl. Switzerland, S&P500 etc. And to top it all off, the external product costs (i.e. ETFS / index fund costs) are already included. In addition, all costs for custody accounts, administration and transactions are also covered. The only thing that bothers him is not being able to transfer the investments to his private assets when the pillar 3a is dissolved, but that is still more than 30 years away. In the meantime, he wants to benefit from the top conditions.
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Last update: 17.09.2024 08:34
