Last update: 17.09.2024 08:37
Cryptocurrencies such as Bitcoin and Ethereum are on everyone’s lips. Many people want to benefit from them, including 30% in pillar 3a. Tadaa, and Pillar 3a with cryptocurrencies and Bitcoin as investments is now also possible. Finpension is the first provider that lets you add cryptos to your pillar 3a portfolio. We’ve done the research for you and put it to the test. Are cryptos worthwhile in pension provision?
What does the law say about pillar 3a with cryptocurrencies as investments?
Pillar 3a investments are subject to the BVV2 investment guidelines for 3a pension foundations. Cryptocurrencies are not specifically mentioned in the guidelines; they therefore fall under the “alternative investment” asset class. It is therefore generally possible to offer crypto assets as alternative investments.
The Swiss Financial Market Supervisory Authority (FINMA) approved the first Swiss crypto fund at the end of September 2021. This is the “Crypto Market Index Fund”, an investment fund under Swiss law of the type “other funds for alternative investments” with special risk. Only qualified investors (such as pension foundations) can acquire this fund, but not private investors like us.
FINMA only approved the fund subject to special conditions. For example, it may only invest in established crypto assets with a sufficiently large trading volume. Furthermore, investments must be made via established counterparties and platforms that are domiciled in a member state of the Financial Action Task Force (FATF). This is intended to prevent terrorist financing and money laundering.
Who offers pillar 3a with cryptocurrencies and Bitcoin?
Since December 2021, this has been possible with finpension ‘s pillar 3a and an individual investment strategy. You can invest up to 5 % of your assets in the Crypto Market Index Fund. This fund includes not only Bitcoin, but also Ethereum and other altcoins. As an innovator in the pension market, finpension also wants to be at the forefront of crypto investments in pillar 3a. In January 2024, finpension expanded its range of funds. You can now also invest 5% in the iShares Bitcoin ETF Trust in the individual strategy.
VIAC followed suit in March 2024 and also approved the iShares Bitcoin Trust ETF for selection in your individual strategy. You can find a review in this article.
Plans by frankly bitcoin or other providers are not known – even when asked. The frankly investment products do not currently invest in cryptocurrencies. However, they monitor market developments on an ongoing basis and adjust their product range if necessary.
Review: Who offers pillar 3a with cryptocurrencies?
finpension Bitcoin: the crypto pioneer of pillar 3a
With finpension Bitcoin, you have been able to invest 100% of your pillar 3a in Bitcoin since January 2024.
Investing in cryptos has been possible with finpension since 2021.
We check the offer.
Discover everything you need to know about finpension bitcoin in the article.
VIAC Bitcoin: crypto precaution?
With VIAC, you can now invest in 100% Bitcoin in your pillar 3a.
The high price fluctuations make many people dream of quick money.
Do you need Bitcoin in your pension plan?
How much Bitcoin and cryptocurrencies can I invest in pillar 3a?
The pension foundations should handle your money responsibly. Their investment regulations are therefore subject to strict rules. The BVV2 (Occupational Pension Ordinance) regulates, among other things, which asset classes they may invest in. Bitcoins and cryptos are not specifically mentioned in the guidelines. These belong to the “alternative investment” asset class. The share of alternative investments in total assets is limited to a maximum of 20 % in accordance with BVV2. In order to be allowed to include such products in their offering, the pension foundations need the OK from the respective foundation supervisory authority.
The limit of 5% portfolio weighting for VIAC or finpension is a decision made by the respective pension foundations. The limit is intended to ensure diversification of your pension assets.
Investing in cryptocurrencies in pillar 3a: what does it cost?
There are not yet that many funds for crypto assets on the market. In addition, there are still no major providers. As a result, the fees for crypto funds are still quite high. Some products charge fees (total expense ratio) of more than 4 % per year.
The Crypto Market Index Fund or the iShares Bitcoin Trust are used in the pillar 3a products. The fees can be found in the following table:
| Product | Expense ratio (TER) p.a. |
|---|---|
| Crypto Market Index Fund | 1.6 % |
| iShares Bitcoin Trust | 0.25% |
Should I buy cryptocurrencies or Bitcoin in pillar 3a?
This is a very personal decision. On the one hand, crypto assets can diversify an investment portfolio because they develop relatively independently in value and have a low correlation to traditional asset classes such as equities, bonds, currencies and precious metals. Accordingly, an admixture can increase the risk/return profile of a securities portfolio and allow higher portfolio returns with increased risk.
Many believe that Bitcoin or other cryptocurrencies offer diversification from other asset classes and open up great opportunities for returns. They distrust the banking system and see Bitcoin as “the new gold”. This is because cryptocurrencies are independent of legal currency systems such as the dollar or euro and regulate ownership via the possession of computer-generated keys. Proponents want to use them to boost their retirement provision a little and are prepared to accept very high price fluctuations to do so. To illustrate this: At the beginning of 2020, one bitcoin was only worth around USD 7,200; in April 2024, one bitcoin cost more than USD 65,000. Market turbulence such as the bankruptcy of the crypto exchange FTX in November 2022 further exacerbates the price fluctuations of the already volatile cryptocurrency. There are people who forgo the tax advantages of the 3a, buy Bitcoin directly instead and try to make up for the tax savings through the price gains.
On the other hand, it is still a very young asset class. There are currently only a few applications in the real economy and there are no signs of the technology being widely used. Others, such as asset manager Vanguard, believe that the changes in value are motivated by speculation and are fueled by the central banks’ glut of money and have completely abandoned the idea. There are therefore many who describe Bitcoin as highly speculative and do not regard speculation as a retirement provision.
Whether and for how long the large increases in value of recent years will continue and are suitable investments for your retirement horizon therefore remains an open question.
In Vanguard’s view, crypto is more of a speculation than an investment. This is at the root of our decision not to offer crypto products, whether our own or others. … it’s an immature asset class that has little history, no inherent economic value, no cash flow, and can create havoc within a portfolio.
Janel Jackson, Vanguard Global Head of ETF Capital Markets
How do I have to pay tax on pillar 3a cryptocurrencies?
Irrespective of the question of faith in Bitcoin, on which opinions differ, there is also a hard fact that speaks against Bitcoin in pillar 3a: the tax on capital gains.
- In tied pillar 3a, you have to pay capital withdrawal tax on your assets when you withdraw them. You pay tax on the total amount you withdraw.
- The situation is different for free assets, pillar 3b. Here, gains from capital appreciation are tax-free, but you pay income tax on your investment income.
It therefore makes sense to invest in free assets (pillar 3b) in assets with high (expected) capital gains (such as commodities, cryptocurrencies, gold) and in assets with high returns and interest in pillar 3a. From this perspective, an investment in cryptocurrencies therefore makes more sense in pillar 3b. This is because if Bitcoin rises sharply (which you assume and hope will happen), you will have to pay higher taxes when paying out a pillar 3a with Bitcoin than with a direct Bitcoin investment in free assets (pillar 3b).
Summary of pillar 3a with cryptocurrencies
In pillar 3a, you can participate in changes in the value of Bitcoin and the 10 largest cryptocurrencies with a portfolio share of up to 5%. As a study by Morningstar shows, the risk profile of an otherwise balanced portfolio increases drastically with just 5% Bitcoin exposure. The reason for this is the extreme volatility of Bitcoin. As this brings high fluctuations into your portfolio, it is understandable and sensible for customers to make a conscious decision to include it in their own strategy. This is all the more true as the fluctuations in the value of cryptocurrencies do not follow any real economic mechanisms.
Open pillar 3a now (with or without cryptocurrencies) with a CHF 25 bonus
Use the code SMLUTQ for your welcome bonus when opening an account. You will receive this as a fee credit if you deposit or transfer at least CHF 1,000 within 12 months. And you save for life with equity ratios of 60% or more thanks to very low fees.
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