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Many of you asked me about an excellent vested benefits account. Until recently, I did not know any good one. But now, I came across Finpension Vested Benefits (previously known as valuepension)! Finpension Vested Benefits offers an excellent vested benefits account.
Finpension Vested Benefits relies on index investing! They use low-cost index funds and allow people to invest heavily in stocks. Their vested benefits account looks like an excellent account that should maximize your return on the second pillar.
Their offer is really interesting. So I wanted to know more, even though I do not have a vested benefits account. And they plan to offer a third pillar in 2020. So, they could become a very interesting third pillar option as well.
So, here is my complete review of the Finpension Vested Benefits offer.
Vested Benefits Account
Before we delve into Finpension Vested Benefits, we can cover vested benefits accounts in more detail.
Employed people are contributing to a second pillar. They cannot choose the second pillar account. Each company chooses a second pillar provider, and employees have to contribute.
But people that leave employment for some time have to transfer their second pillar money into a vested benefits account. You can get a vested benefits account when:
- Taking a sabbatical
- Early retirement
- Leaving Switzerland
In this case, people are free to choose a vested benefits account. So, they need a good one since their second pillar money could be there for a long time. Also, people that already have a vested benefits account can move to a new one.
The problem is that there are many vested benefits accounts. And many of them are bad.
So, let’s see what Finpension offers as a vested benefits account.
Finpension Vested Benefits
Finpension Vested Benefits is a foundation that is managed by finpension AG. They are offering vested benefits accounts in Switzerland. They are highly specialized in pension funds. Indeed, finpension is also managing yourpension, which is providing second pillar accounts for high-income earners (extra mandatory part of the second pillar).
valuepension was founded in 2017. Now, finpension is managing more than 200 million CHF in assets. In 2021, they have rebranded their offer as Finpension Vested Benefits. But it remains the same as valuepension.
The story of valuepension is very interesting. Many clients at yourpension were delighted with their 1e pension plan. So once they left the company, they wanted to keep their second pillar invested in the same way. So, valuepension was created to help these people transfer to the vested benefits account they wanted.
There are two cases when you can use Finpension Vested Benefits. If you leave your job, you can transfer your second pillar to Finpension. If you already have a vested benefits account, you can switch it to Finpension. There is no minimum for getting started with Finpension Vested Benefits.
With Finpension, you will access your vested benefits account with the web portal. There is no application to install.
Finpension Vested Benefits is betting on digitalization to minimize costs. All their services are heavily digitized. However, it is essential to note that they are still available for support. So, you profit from the low cost of the solutions, but you can always contact them if you need assistance.
Since I had a few questions, I have talked with one person at finpension about their vested benefits offer. I had an excellent feeling about the company and its philosophy.
For more information about finpension AG, you can read my interview with CEO Beat Bühlmann.
Finpension Vested Benefits has a philosophy of low-cost and high returns. For this, they have done their research and have found that the best course of action was to use index funds. That way, they can reduce fees and increase long-term returns. This philosophy is great because this is precisely my philosophy of investing.
So, at Finpension, your vested benefits portfolio would be a collection of index funds. They are offering several possible strategies already made. They range from very conservative with 0% stocks to very high risk with 99%. The fact that they allow a substantial allocation to stocks is an excellent thing.
However, it is important to know that you can only go to 99% if you already have another vested benefits account that is in cash. So, in practice, most people can only invest up to 85% in stocks. However, you can invest 85% in stocks and 14% in real estate if you want to be fully invested.
You may ask: Why index funds and not ETFs? It is a great question, and I asked them the same question. And it turns out that pension funds can invest in particular tranches of index funds in which the cost is significantly reduced. They have special conditions that private investors would not have. So by doing so, they are reducing costs and thus increasing our returns!
Another great thing about their vested benefits system is that they allow a very high level of customization in the portfolio. You can directly choose the index funds you want. And you can also change all the allocations. There are a few limits, of course. For instance, you need 1% cash, and you cannot have more than 50% in real estate. But overall, you have a lot of freedom for your portfolio. This freedom is great. But remember to keep it simple.
Finally, you can change your portfolio at any time. But they will only apply the changes once a month (on the first banking day of the month). It means that you can change up to 12 times a year. It probably does not make sense to do that. But it is good to have the option to do it.
Finpension Vested Benefits Fees
When you invest passively in index funds, the most important is the fees. You need to minimize fees as much as possible. So, how much fees will you pay with Finpension Vested Benefits?
The great thing with Finpension is that they are transparent with their fees. They have an all-inclusive 0.49% fee. You will see this fee when you are customizing your portfolio.
Now, this 0.49% fee advertised on the website is without TVA. So the real all-in fee is 0.53% per year (0.5277 % to be precise, with a TVA of 7.70%). Even though this is not a huge difference, I wish it would be more transparent on the website.
There is one exception: Some of the funds they are using are funds of funds. It means that Finpension Vested Benefits cannot get zero costs for these funds. Therefore, there could be some extra fees depending on your portfolio. For instance, this is the case for their real estate funds. But there is good news: since you can choose your portfolio, you can also avoid these fees. It is entirely possible to do a portfolio without extra fees, and with this, you will pay exactly 0.53%.
There is no fee for rebalancing or investing in Finpension Vested Benefits. This absence of a rebalancing fee is great, of course.
Now, there are some fees for some operations:
- 400 CHF if you leave Finpension within one year of joining
- 200 CHF for pledging your portfolio
- 500 CHF for withdrawing the money to buy a house
- 500 CHF for withdrawing the money while abroad
- 1500 CHF if you do it within one year of joining
You may never have to pay any of these fees, depending on your situation. But for instance, 500 CHF for withdrawing the money for a house is a high fee. If you plan to buy a house soon, you may not want to move to Finpension. And the same thing stands if you plan to relocate abroad.
So, overall, the fees of Finpension Vested Benefits are outstanding. There are some cases where you will have to pay extra fees. But overall, it should not happen to most people. I wish that the fee for withdrawing the money for a house would be lower than 500 CHF.
Opening a vested benefits account at Finpension
We can also look at the process of opening a Finpension account.
Fortunately, it is straightforward to open an account. Just go to the Finpension Vested Benefits website. From there, you can click on Get Started, and they will take you to the entire process. You will have to find your risk ability, leading you to a portfolio. You can still change the portfolio later if you want.
After this, you will have to fill in the usual information. I do not think I have to guide you through that! Once you complete the form, they will message your phone to authenticate you. And Finpension will directly create your account. The entire process takes less than ten minutes.
Once your account is created, they will give you two letters to fill:
- One letter to sign and confirm your identity.
- One letter to order the transfer of funds from an existing second pillar.
You can print, fill, and send these two letters to Finpension Vested Benefits, and they will take care of the rest.
Overall, it is straightforward to open an account with Finpension. It is good that it is possible to open a digital account before getting the funds. That way, you can play with the portfolio and get familiarized with the interface before it is fully activated.
If you are going to invest any significant amount of money in Finpension, it is essential to look at the security.
First, it is well regulated under Swiss Law. But this is the case of every vested benefits account. Something really good is that your assets are not in the hand of finpension (the mother company) but the hands of the foundation. It means that if finpension bankrupt, your assets are safe from bankruptcy. And then, the foundation will have the job to find a new place for your assets. It may take some time, but you will recover your assets.
From a technical point of view, you will log in to your account with the web interface. It is important to note that the application is almost read-only. You cannot transfer money from the application. Even if someone could access your account, hackers could only mess with your portfolio, not with your money. And since rebalancing is done once a month, the damage would be minimal.
The web application is encrypted. And you will require a password to go with your account name. On top of that, there is an extra layer of security. Every time you log in, you will receive a code by SMS. It is a form of Two-Factor Authentication (2FA). It is a good enough security. I wish they would allow other forms of authentication (another 2FA system). But almost all the platforms in Switzerland are using SMS as two-factor authentication.
So, the security of Finpension Vested Benefits is excellent! Even though there is not much a hacker could do from your account, the app is well protected! Finpension has good security for your money.
Many people do not realize this, but security is essential for your online finances. When a large amount of your money is available from your computer, you need to be very careful about your security.
Finpension Vested Benefits vs VIAC
VIAC very recently introduced a vested benefits account. So, we can compare these two accounts. I will not go into too many details since I plan to make a complete comparison later.
For some people, there is one significant difference between the two offers: the domicile of the foundation. VIAC is in Basel, and Finpesion is in Schwytz. If you are retiring in Switzerland, this will not matter to you. But if you plan to leave Switzerland and withdraw your second pillar, it is essential. The difference is that when you withdraw money from your second pillar account, you will be taxed based on the place your assets are managed (only if you leave Switzerland).
And it turns out that Schwytz is the best state in Switzerland for that. They have the lowest second pillar withholding tax in Switzerland. If you work many years and have a large second pillar amount, this can account for more than 10’000 CHF saved (with about 300’000 CHF) compared to Basel. You can read this article to compare different withholding taxes.
From a price point of view, there is a very slight advantage for VIAC. VIAC has a 0.52% management fee, while Finpension Vested Benefits is 0.53%. 0.01% is not a huge difference. But it is still a difference.
However, VIAC has extra foreign currency exchange fees (an additional 0.05%). So, Finpension Vested Benefits is slightly cheaper than VIAC (if you avoid funds with too many subfunds, which you can do).
The customization is also slightly higher with Finpension, and you can go to 99% of stocks (only 97% for VIAC). 2% is a small difference. But in the long-term, this 2% difference will make a significant difference to your returns.
If you invest in cash, VIAC will give you some interest (0.10%) back. But this is not the case with Finpension Vested Benefits. Now, these two providers are not for investing in cash. So this point should not matter anyway.
At first sight, Finpension Vested Benefits offers a better deal than VIAC. For me, the extra 2% invested in stocks is significant enough. And if you plan to leave Switzerland, the domicile of Finpension may matter to you!
If you want more information, read my complete comparison of VIAC and Finpension vested benefits.
We can summarize the advantages of Finpension Vested Benefits:
- You can invest up to 99% in stocks!
- 85% max if you have only a single vested benefits account
- You have very low fees.
- Finpension is using the best fiscal domicile for people withdrawing money abroad.
- Accounts can be opened very easily.
- Good customization of the portfolio.
We can summarize the disadvantages of Finpension Vested Benefits:
- Not entirely straightforward to invest sustainably.
- No interest on cash (but you will have very little of it anyway).
Overall, Finpension Vested Benefits offers an awesome vested benefits account. To the best of my knowledge, valuepension is the best-vested benefits solution in Switzerland.
They have a great investment philosophy with passive investing. And Finpension Vested Benefits is making everything to reduce the costs as much as possible. You can invest a significant amount in stocks and have great diversification in your portfolio. On top of that, you have tremendous freedom to customize the portfolio.
I wish I had access to vested benefits accounts to invest with Finpension Vested Benefits instead of investing in my bad second pillar.
And here is excellent news for Switzerland: finpension also offers the best third pillar of Switzerland. Their third pillar uses the same philosophy as yourpension. And it comes with a mobile application and a web application. I think this is great to have more options for good third pillars.
If you open an account and use my code FEYKV5, you will receive 25 CHF in your account.
If you still have questions regarding Finpension, let me know in the comments below!
Do you have any experience with Finpension Vested Benefits? What do you think of their vested benefits offer?