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What is the best third pillar in Switzerland for 2023?

By Baptiste Wicht | Updated: | Best retirement accounts, Retirement

(Disclosure: Some of the links below may be affiliate links)

In Switzerland, contributing to your third pillar is one of the best ways to save on taxes. I recommend everybody to contribute to their third pillar.

But contributing to your third pillar is not enough. You should invest the money in your third pillar. That means you have to pick the best third pillar for your money. Since there are many options, it may be difficult to choose the best third pillar for your needs.

So, this article is here to help you! We see how to choose the best third pillar!

What makes the best third pillar?

The third pillar is the last of the three pillars
The third pillar is the last of the three pillars

First of all, we have to think about what makes the best third pillar. It is essential to decide which factors will drive the choice.

I assume you already know about the third pillar and are contributing to it. If you do not, you should learn why you should contribute to the third pillar.

We only consider bank third pillars, not insurance third pillars. Indeed, in almost every case, a bank third pillar is much better than an insurance third pillar.

The goal of your third pillar is to provide you with enough money to retire comfortably. Therefore, you want your invested money to grow as much as possible while not taking too much risk. So, the best third pillar must support this goal!

There are three critical factors to choose the best third pillar:

  1. A large allocation to stocks to increase your returns in the long-term.
  2. A diversified stock allocation to reduce the volatility of your portfolio.
  3. Low management fees to avoid wasting your returns in fees.

Since we are counting on the long-term, there are also some things we can ignore:

Let’s delve more into the details in the three critical factors.

Allocation to stocks

The best third pillar has a significant allocation to stocks.

It will depend on your situation, of course. You need to decide for yourself the allocation to stocks that you need. Moreover, Swiss bonds are in the negative territory now. Therefore, what is not invested in cash should be invested in cash.

For me, I want as much as possible of my third pillar into stocks. I already have bonds in my second pillar. My current allocation to bonds is more than enough. Ideally, a third pillar will have a 100% allocation to stocks.

Diversification

The best third pillar has a diversified stock allocation.

Switzerland is too small a country to only invest in it. We need to have global stocks (stocks outside of Switzerland). Ideally, the allocation should be the same as a world stocks fund. Since the Swiss stock market represents about 3% of the entire stock market, we should avoid investing much more than that.

Unfortunately, this is not possible in Switzerland. The law states that the third pillar must have at least 40% allocated to Swiss stocks. So an ideal third pillar should have 60% of international stocks and 40% of high-quality Swiss shares.

As we will see later, there is a way against this limit, making some third pillar providers significantly better than others.

Fees

And last but not least, the best third pillar has fees as low as possible.

I want my third pillar to have zero load fees. I do not want to pay to get money inside the fund. The absence of load fees is essential. You should never use any fund with load fees.

Moreover, the yearly fees must be low as well. The TER must be as little as possible. Most third pillar accounts in Switzerland have high TER, higher than 1%.

When you are investing for the long term, it is essential to minimize investing fees. The difference in returns in the long term is really significant.

Third Pillar from a Bank

Most people in Switzerland will invest in a third pillar provided by their banks. And they have a ton of options. Historically, they have been the only option available for third pillars.

I will not go over all the possible offers here. Indeed, there are too many of them. And most of them are terrible options. But I will go over some interesting options from some popular Swiss banks.

We will use the third pillar accounts from banks as examples. These are not the best third pillars.

Migros Bank Fund 45 V

My current bank is Migros, so I wanted to check their offer. And to be honest, it is quite disappointing.

They only have three retirement funds for their third pillar offer. The most interesting fund is the Migros Bank Fund 45 V. It has 45% in stocks, 40% in bonds, and the rest in cash. The TER is 0.89% per year.

This fund is not a great offer. The allocation of only 45% to stocks is too low. And the fact that they have a large allocation to bonds does not help. Cash would be better. The TER is actually not that bad for a Swiss bank. But I would not recommend this fund.

LUKB Expert Fund 75

Many people are recommending the LUKB funds from the Luzerner Kantonal Bank. So, we can take a look at their LUKB Expert Fund 75.

This fund has 75% of stocks, which is alright but not great. 40% is invested in Swiss stocks, 35% in global stocks, 15% in Swiss bonds, 4% in international bonds, and the rest in liquidities and real estate. The diversification is not too bad when compared with other options.

It has a TER of 0.8%. For third pillar accounts in Switzerland, this is a good TER. However, it has a load fee of 0.4%. The TER is okay, but the load fee makes it highly undesirable.

PostFinance Pension 100

Many people are using the retirement funds from PostFinance. So, we can take a look at the PostFinance Pension 100 fund.

This fund invests 100% in stocks. 72% is invested in Swiss companies while 28% is invited globally. And the TER is 1.01% per year.

The allocation to stocks of this fund is actually quite good. 100% allocated to stocks is the best you can do in your third pillar. However, more than 1% fee per year is already a significant fee. And this fund is not well globally diversified since only 28% of the stocks are international stocks. This is significantly lower than we would like.

Raiffeisen Pension Invest Futura Equity

Since there are many Raiffeisen banks and they have a good reputation, it is a good idea to look at their retirement funds, and more specifically, the Pension Invest Futura Equity fund, a mouthful.

This fund has between 80% and 100% in stocks. I do not know why it is not fixed. But the last invested value I saw was 95% in stocks, which is really good. 47% is invested in Switzerland, which is not great but not the worst either.

The TER of the fund is 1.42%, which is very bad. While it is not the most expensive fund in Switzerland, it is definitely the most expensive that I will mention today. And it is way too expensive for people to consider.

Swisscanto Fund 95 Passiv VT

Swisscanto is the provider of many funds in Switzerland, and many banks use their funds. We can take a look at the Swisscanto Fund 95 Passiv VT.

This fund invests 95% in stocks, which is great. The diversification is also good, with 65% invested in foreign equities. However, they hedge most of the equities, with 72% in CHF for the entire fund. This is not great for currency diversification.

On the fee side, this is an excellent example of how banks are trying to make it complicated for people to know how expensive it is. The flat fee for the fund is only 0.38% per year. At first sight, it sounds great. But if you look in detail, we can see that this is a fund of other funds, so there is an extra 0.33% in fees for the sub-funds. But they never show the full fee of 0.71%. On top of that, they are adding a 0.1% issuance fee and a 0.09% redemption.

It is the most complicated fee system I have seen during my research. They use several small fees not to scare customers away. But when you put all the fees together, this does not make them very attractive. And just for this lack of transparency, I would not invest in their funds.

Independent providers

As we saw, offers from banks are not that great. Fortunately, recently, many independent providers have started in this market. And they are offering much better conditions than banks.

We have seen that banks have high fees, sub-par diversification, and not aggressive enough portfolios. Independent providers are fixing all these issues. So, to find the best third pillar, we need to look at these independent providers. Note that they are not all good, they are also some bad options out there.

There is no disadvantage at having your money in a third pillar from these companies instead of doing it at a bank. They only have advantages.

There are many, but I will only mention two main providers in this article: Switzerland’s two best third pillar providers.

Finpension 3a – Best Third Pillar

Best Third Pillar!
Finpension 3a

Finpension 3a is the best third pillar in Switzerland.

Use the FEYKV5 code to get a fee credit of 25 CHF*!

*(if you deposit 1000 CHF in the first 12 months)

Pros:
  • Invest 99% in stocks
Grow your 3a with FEYKV5 code Read my review

For most long-term investors, Finpension 3a will be the best third pillar available in Switzerland.

Indeed, they have some powerful advantages going for them:

Finpension 3a is the best third pillar for your long-term returns, with a high allocation to stocks and very low fees. This is a great way to ensure that your money is well invested until you retire.

Interestingly, Finpension is also running an excellent vested benefits account. They are experienced in the pension industry and are providing great products.

I strongly believe Finpension 3a is the best third pillar available for aggressive long-term investors. So, in 2021, I started investing my third pillar in Finpension 3a.

For more information, you can read my review of Finpension 3a.

VIAC – Best Conservative Third Pillar

If you do not want to invest heavily in stocks, VIAC will be a better option than Finpension 3a.

VIAC is a little more mature than Finpension 3a. They also offer an excellent third pillar. In general, they have several disadvantages over Finpension:

However, they have some advantages for conservative investors that would not invest fully in stocks:

Therefore, for an investor with a lower allocation to stocks, the fees will be significantly lower, and the returns will be potentially better.

So, I would recommend VIAC over Finpension 3a only if you were to invest 80% or less in stocks. It is still an excellent third pillar. But if you want the best third pillar for your money, you will have to change. VIAC used to be the best third pillar until Finpension 3a came along.

For more information, you can read my complete review of VIAC.

Conclusion

Best Third Pillar!
Finpension 3a

Finpension 3a is the best third pillar in Switzerland.

Use the FEYKV5 code to get a fee credit of 25 CHF*!

*(if you deposit 1000 CHF in the first 12 months)

Pros:
  • Invest 99% in stocks
Grow your 3a with FEYKV5 code Read my review

Overall, the best third pillar available in Switzerland is Finpension 3a. They offer the highest allocation to stocks and the lowest fees. On top of that, you can create custom portfolios with a high degree of liberty. This makes them an excellent option!

For these reasons, in 2021, I invested in Finpension 3a instead of investing in VIAC. And I recommend all aggressive investors do the same.

Now, there is one case where VIAC is better than Finpension. If you do not want to invest the maximum in stocks, you can get better results at VIAC. This makes VIAC the best third pillar for conservative investors.

If you open a Finpension 3a account, please use my code FEYKV5, this will help the blog and give you a 25 CHF fee credit (if you deposit 1000 CHF in the first 12 months).

If you need more information on these two third pillars, I have an article on VIAC vs Finpension. This article goes more in-depth into the comparison.

What about you? Which is your favorite third pillar?

The best financial services for your money!

Download this e-book and optimize your finances and save money by using the best financial services available in Switzerland!

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Photo of Baptiste Wicht

Baptiste Wicht started thepoorswiss.com in 2017. He realized that he was falling into the trap of lifestyle inflation. He decided to cut his expenses and increase his income. This blog is relating his story and findings. In 2019, he is saving more than 50% of his income. He made it a goal to reach Financial Independence. You can send Mr. The Poor Swiss a message here.

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113 thoughts on “What is the best third pillar in Switzerland for 2023?”

  1. VIAC will allow 99% allocation as of the new year. Worth updating it accordingly.

    Their email:
    “Au 01.01.2023, nous augmenterons la part d’investissement maximal possible de 97% à 99%. Tous les clients disposant des stratégies standard “Global 100”, “Suisse 100” et “Durable 100″ profiteront de cette augmentation. L’augmentation de la part d’actions s’effectue automatiquement lors du premier trading de la nouvelle année.

    En outre, les clients disposant d’une stratégie propre pourront également augmenter leur part d’investissement jusqu’à 99% à partir du 21.12.2022. La première mise en œuvre possible aura lieu également lors du premier trading en 2023.”

  2. Hi Baptiste, thank you for your article & advices. I would have some questions:
    1) What do you think about True Wealth?
    2) Do VIAC or Finpension have fees in case of total advance withdrawal (in case of leaving CH for example)?
    3) For someone who does not know how long will be working & living in CH and with low finance knowledge, which option would you recommend?

    Thank you!

    1. Hi Victor,

      1) My review of True Wealth and True Wealth 3a
      2) Finpension has fees for advance withdrawals but VIAC does not
      3) If you don’t know how long you are going to stay, it depends on whether you are going to keep your 3a when leaving or not. If you are not going to keep your 3a and may leave soon, don’t invest, use a cash 3a. If you are going to keep it, use Finpension.

      1. Hello Baptiste,

        I will bump the 2) point. Assuming you don’t know yet how many years you are going to spend in Switzerland (maybe 2, maybe 5, maybe 25…), do you agree with an opinion that VIAC is a better choice for the beginning due to a) no fees for advance withdrawals (as I understand your above comment, please confirm) b) cost-effective investments into cash, and when you finally clarify your future plans in Switzerland (e.g. you decide you want to retire here) – then it would be a perfect moment to move to Finpension and start adopting more aggressive, stock-based strategies there?

        Reading your comments, I have a feeling starting with Finpension and stock strategies from the very first day is not the best idea in such an “uncertain” situation, so the more conservative model could be a more reasonable approach as for now.

      2. If you don’t know how long you are going to stay, it may be difficult indeed to estimate how to invest.
        Nevertheless, keep in mind that depending to which country you are leaving, you may keep your 3a and keep it invested until your retirement age. You don’t have to withdraw the money when you leave. That’s something else to take into account.

    1. Hi Nico,

      The fund itself is good, but the problem is that UBS will charge you 0.65% management fees on your third pillar and this is on top of the 0.25% fee of the fund. This makes about 0.90% per year for UBS which is more than twice more expensive than FP.

  3. What is your opinion regarding 3a and “unbound” pension. In particular, that if you invest in 3a and make a capital gain on it, this is then taxed upon withdrawal (with the reduced tax rate). With “unbound” pension it is not the case resp. depending on the amout it will be taxed with the wealth tax rate.
    Depending on the investment strategy, does it make sense to invest in the “unbound” pension plan and to have a “normal bank account” with (low) interest in the 3a pillar? For me very difficult to calculate what makes the most sense, especially when you consider the taxes…

    1. Hi cd,

      What’s an unbound pension? Your own investments?

      With the much nicer returns of stocks over cash, it makes sense to invest in the 3a as much as possible even though you are going to pay more taxes at the end. Since you can make 5 third pillar accounts, you can also reduce the taxes over several years and the tax rate should be pretty low.

      1. Lets call it 3b :-)

        Probably more an optimization problem if you have more money to put aside and have a defensive investment strategy with a higher cash amount. This way you could put the maximum in 3a as “cash” and profit from the reduced tax and invest in 3b and don’t pay tax on capital gain.

        Thanks for your reply!

      2. If you want to be defensive, it may make sense indeed to have cash in your 3a. But you have to do that math:
        * Dividends are not taxed in the 3a
        * Capital gains are never taxed in the “untied” assets
        * Net worth is taxed in the “untied” assets

  4. Hi Mr Wicht

    Thanks for the post. I would have one question for you. The swisscanto 95 passive can be accessed via Frankly, which has an all-inclusive fee of 0.45% (and they seem to be very proud of this). Have you looked into this? It is 6 basis points more expensive than finpension, but it has a good mix between large, medium and small cap companies. I would appreciate your thoughts on this option for the 3rd pillar.

    Thanks!

    1. I don’t see any advantage of that fund over finpension, or even over VIAC.
      * 95% only in stocks
      * Forcing hedging for the CHF
      * No customization ability as to the different countries or stocks
      * It is not more balanced in terms of caps than any other solutions

  5. Hi Mr Wicht

    I have been following your research and appreciate your work. Have you looked into the 3a options of VZ (Vermögenszentrum)? I am interested in the “VZ Säule 3a – Anlegerprofil 7” but have too little routine to put it into comparison.

      1. Thank you for your answer. I read that 0.68% includes all relevant costs (“transaction fees, issuing commissions, redemption fees and securities account fees”) but did not realize that this probably excludes the ETF costs. Could also not find any ETF costs without making an account.

        I would have two more questions. Does it not concern you that Finpension is a relatively young product and that the relevant funds are CS funds?

      2. They mention 0.15% for ETF (https://www.vermoegenszentrum.ch/fr/competences/pilier-3a-des-couts-eleves-rognent-les-rendements)

        They are not very young, they have been managing 1e and vested benefits longer than VIAC and Frankly. But the fact that they are younger than banks does not concern me, this is well regulated.
        They just started offering Swisscanto funds if you prefer. CS retirement funds should be well separated from CS assets. They may be unavailable for a while in case of CS bankruptcy, but they won’t go away.

      3. Appreciate your answer.
        Swisscanto funds probably trade on much lower volume, am I right.
        I just wonder, what about Bid / Ask spreads for 3a funds. Buy in for free at a high price could be similar to paying commissions for buy in at a better price. Also, the performance of the products can cancel the benefit of having no fees. Did you put effort into comparing their index ETF performance with the associated indices?

      4. Yes, the volume should be lower for the Swisscanto fund. But you can’t have everything. CS funds are quite good. If you are afraid of CS, you will have to compromise :)

        Normally, there is no bid/ask spread. These are mutual funds in which you can only buy once a day. But there are load and redemption fees which are usually worse than spread.

        No, I did not compare it. Usually, the fund (not ETF here) performance is very close to the index, but there are variations (and always will be). I have never seen a case where this concerned me.

    1. Hi Yas

      Usually, I don’t think 3bs are necessary. Very few cantons have any tax benefits for 3b and most people don’t need life insurance.
      I don’t have any thing on these two life insurance.

      1. Thanks…the advantage of 3b is that one can park aside a amount every month into it and apparently at the time of withdrawal when one retires its tax free. Also a return of around 3-4% return so a good way to save for the future vs keeping same money in a bank and not earning any thing

      2. Then, why don’t you simply invest with a broker or a robo-advisor? The returns of a capital life insurance are really bad. I would be really surprised if you got more than 2% per year, after fees. These products are expensive.
        Without tax advantages, a capital life insurance is not interesting.

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