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Pillar 3a: If you don't switch, you're giving away a fortune

Felix Niederer

Towards more securities and lower fees: A Pillar 3a switch takes just minutes – and pays off for life.

You'll discover how quickly and conveniently you can create more room for growth in your third pillar toward the end of this post. (And if you don't want to wait, you can skip ahead here).

But first, perhaps you'd like to take a closer look at why switching is so worthwhile?

Ideally, you should invest your third-pillar assets where they will grow best. With securities, you can expect more long-term returns in your private pension plan than in an interest account. And if you invest in securities, make sure that the provider's fees don't eat up a large part of the additional return.

More return: You can expect more from your Pillar 3a

If you had applied these two levers, you could have achieved significantly higher returns over the past decades – despite the dotcom crash and the financial crisis.

The track record of investing in securities goes back even further: In this blog post, you can see in one graph how much an investment in equities would have paid off – and in a second graph also that interim losses were limited in time.

For an investment with such a long-term horizon as retirement planning, there is therefore basically no question: an investment in securities should be your strategy of choice. Here you can easily simulate how such a strategy might develop over a period of 25 years.

Save taxes: That's just the beginning

The state wants you to make provisions for your old age. That's why you can deduct your payments into your occupational pension plan from your taxable income. This means you pay less tax year after year. In addition, the income from Pillar 3a is not taxed during the term of the plan.

Even if you only pay into the third pillar for tax reasons, you have already taken an important step towards more wealth – and you have already saved something. But that's just the beginning. The next question is: Will your assets also increase as you earn them?

We mentioned the two levers you can use to achieve this at the very beginning:

  • an investment strategy with securities
  • a provider with low fees

Invest optimally: Securities in Pillar 3a

With the third pillar, you have a choice: interest account or securities. If you choose a strategy with a higher proportion of securities for your tied pension assets, you can expect a higher return in the long term.

This higher return is associated with a higher risk, however. However, the investment horizon in retirement planning is long, and over time fluctuations should generally not matter.

You can easily simulate what the expected return might be for you online, preferably here.

Whatever scenario you calculate in the simulation: An investment strategy with securities offers higher return opportunities than an investment in an interest account.

Save on fees: With the right provider

More return with securities – providers make this advantage pay. They usually charge fees for investing in securities. This is in contrast to an interest account, which is usually free.

The fees reduce your return and have a significant influence on your investment success. It is therefore important that you check the provider thoroughly. Only invest in securities where the fees are low.

Compare the costs of account management, custody fees and transaction costs at different providers to find the best conditions for your investments in securities.

At True Wealth, low fees have been core to our offering since inception. For investments, we select a universe of ETFs and index funds with the lowest costs. Our management fees for discretionary asset management regularly rank us first in independent comparisons. And in Pillar 3a, we completely waive fees: The management fee is 0.0 percent.

Untapped potential: the majority is giving away opportunities

Although switching from an interest-bearing account to a securities solution offers so many advantages, according to a 2019 study by the Federal Social Insurance Office entitled «How much capital is in Pillar 3a?», only 24% of pension assets invested with banks are invested in securities. The other 76 percent are missing out on opportunities.

Not only do most people in Switzerland hold back on switching strategies, they also hold back on switching providers. We do not have precise figures on switching 3a accounts. But the figures on bank accounts show how reluctant customers are to switch here.

According to a 2021 survey by Comparis, about 9 percent of customers in Switzerland said they had switched banks in the past year. This figure is at a similar level to that in the US. Younger customers are more inclined to switch banks: about 16 percent of respondents aged 18 to 29 have done so.

Compared to other service providers, customers are much less likely to switch banks. A 2020 survey by Salesforce, for example, found that 58 percent of consumers had switched brands for nonbanking products and services in the past year.

Pillar 3a transfer: More convenient than you think

If you've been paying too much for a securities solution at your bank or haven't invested in securities at all because of high costs, you should know:

A Pillar 3a transfer is simple and convenient – and can be completed in just a few minutes.

Nevertheless, many people believe that such a transfer is difficult. But this is not true at all. The switch is:

Easier than with health insurance. There is not only one deadline in the year for a termination. Therefore, you cannot miss any deadlines. In short: You can switch to another provider at any time – and you can initiate it with a simple, informal letter.

Easier than with payment transactions. If you want to change your salary account, you'd have to inform your employer, reschedule your direct debits, switch the e-bill procedure. And perhaps deposit a new credit card for online stores. With Pillar 3a, there is only one channel for deposits. And usually no payout for many, many years.

So switching Pillar 3a is the easiest bank switch there is. Easier, in fact, than switching many other service providers – from Internet or mobile subscriptions to fitness studios and insurance policies.

Unfortunately tedious: From an insurance company to the bank

Which brings us to the only case that is unfortunately not convenient and simple: It can be tedious to transfer the Pillar 3a from an insurance company. The effort involved is often not even the biggest problem. Depending on the provider, the switch may be financially painful.

Insurance companies often reserve the right to pay out only a so-called surrender value when the contract is terminated. Sometimes you don't even get your entire deposits back after a cancellation. Especially if you cancel the contract soon after it was signed.

Therefore, if you want to leave such a provider, the first thing to do is to try to prevent further deposits and start in a better place for the future. And sometimes the most sensible step is an end with horror – instead of horror without end.

Your switch: We make it easy for you to terminate your contract

By switching the Pillar 3a, you can take advantage of opportunities that many people give away: benefiting from lower fees and more attractive return opportunities. Find out about different providers and their conditions, so you can make an informed decision about your wealth accumulation.

At True Wealth, you will not only find an investment strategy with securities for Pillar 3a and unbeatable fees for investing in index funds and ETFs. Our algorithm also tailors an individual investment strategy for you, in which the proportion of equities, bonds and other asset classes is perfectly diversified – and fits your individual risk tolerance exactly.

We make the switch as easy as possible for you. No matter which provider you want to switch from: We've got everything set up for you to cancel and transfer. Simply click on the "Transfer from external 3a" button in your dashboard and everything you need is automatically available as a PDF.

Transferring Pillar 3a to True Wealth – it's that easy

It's that simple, and your assets have room to grow. You don't have to worry about anything – just make the right decision. Because we think: The first steps with True Wealth should be just as convenient and effective as we manage your assets later.

Disclaimer: We have taken great care with the content of this article. Nevertheless, we cannot exclude the possibility of errors. The validity of the content is limited to the time of publication.

About the author

Felix Niederer

Founder and CEO of True Wealth. After graduating from the Swiss Federal Institute of Technology (ETH) as a physicist, Felix first spent several years in Swiss industry and then four years with a major reinsurance company in portfolio management and risk modeling.


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