valuepension Review – Great vested benefits account

Categories Retirement, SwitzerlandUpdated on

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

valuepension Review - Great vested benefits account

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 valuepension! valuepension offers an excellent vested benefits account.

valuepension is a vested benefits account that relies on index investing! They are using low-cost index funds and allow people to invest heavily in stocks. Their vested benefits account looks like a great 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 valuepension vested benefits offer.

Vested Benefits Account

Before we delve into valuepension, 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 to it.

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 the money from 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 valuepension offers as a vested benefits account.

valuepension

Best vested benefits account
valuepension

valuepension offers a great vested benefits account where you can invest your retirement money in stocks with very low fees!

valuepension 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.

The story of valuepension is very interesting. Many clients at yourpension were delighted with the management of their second pillar by yourpension. 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 valuepension. If you are leaving your job, you can transfer your second pillar to valuepension. If you already have a vested benefits account, you can switch it to valuepension. There is no minimum for getting started with valuepension.

At valuepension, you will access your vested benefits account with the web portal. There is no application to install.

valuepension is betting on digitalization to minimize the 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 valuepension. I had an excellent feeling about the company and its philosophy.

Investment strategy

valuepension 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 valuepension, your vested benefits portfolio would be a collection on index funds. They are offering several possible strategies already made. They are ranging from very conservative with 0% stocks to very high risk with 99% stocks. The fact that they allow a substantial allocation to stocks is an excellent thing.

valuepension - Very High Risk Portfolio
valuepension – Very High-Risk Portfolio

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.

valuepension - Customization of the portfolio
valuepension – Customization of the portfolio

Finally, you can change your portfolio at any time. But the changes will only be applied 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.

Fees

When you are investing passively in index funds, the most important thing is the fees. You need to minimize fees as much as possible. So, how much fees are you going to pay with valuepension?

The great thing with valuepension 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 TVA of 7.70%). Even though this is not a huge difference, I wish it would be made clearer on the website.

Now, there is one exception to that: Some of the funds they are using are funds of funds. It means that valuepension 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 valuepension. This absence of a rebalancing fee is great, of course.

Now, there are some fees for some operations:

  • 400 CHF if you leave valuepension within one year of joining
  • 500 CHF if you relocate abroad
  • 200 CHF for pledging your portfolio
  • 500 CHF for withdrawing the money to buy a house

Depending on your situation, you may never have to pay any of these fees. 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 valuepension. And the same thing stands if you plan to relocate abroad.

So, overall, the fees of valuepension are great. There are some cases where you will have to pay extra fees. But overall, it should not happen to most people. I just wish that the fee for withdrawing the money for a house would be lower than 500 CHF.

Opening an account at valuepension

We can also take a look at the process of opening a valuepension account.

Fortunately, it is straightforward to open an account. Just go to the valuepension 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, and this will lead you to a portfolio. You can still change the portfolio later if you want.

After this, you will have to fill the usual information. I do not think I have to guide you through that! Once you complete the form, they will send a message to your phone to authenticate you. And your account will be directly created. 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 valuepension, and they will take care of the rest.

Overall, it is straightforward to open an account with valuepension. It is good that it is possible to open the 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.

Security

If you are going to invest any significant amount of money in valuepension, 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 just 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 valuepension is great! Even though there is not much a hacker could do from your account, the app is well protected! valuepension has good security for your money.

Many people do not realize this, but security is very important 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.

valuepension 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 full comparison later on.

For some people, there is one significant difference between the two offers: the domicile of the foundation. VIAC is in Basel, and valuepension 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 important. 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 you 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 valuepension is at 0.53%. 0.01% is not a huge difference. But it is still a difference.

However, VIAC has extra foreign currency exchange fees (that accounts for an additional 0.05%). So, valuepension is slightly cheaper than VIAC (if you avoid funds with too many subfunds, which you can do).

The customization is also slightly higher with valuepension, and you can go to 99% of stocks (only 97% for VIAC). This is a small difference. But in the long-term, this 2% difference will make a significant difference to your returns.

If you are investing in cash, VIAC will give you some interest (0.10%) back.  But this is not the case at valuepension. Now, these two providers are not for investing in cash. So this point should not matter anyway.

At first sight, valuepension 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 valuepension may matter to you!

If you want more information, read my complete comparison of VIAC and valuepension vested benefits.

Pros

We can summarize the advantages of valuepension:

  • You can invest up to 99% in stocks!
  • You have very low fees
  • valuepension is using the best fiscal domicile for people withdrawing the money abroad
  • Accounts can be opened very easily
  • Good customization of the portfolio

Cons

We can summarize the disadvantages of valuepension:

  • Not entirely straightforward to invest sustainably
  • No interest on cash (but you will have very little of it anyway)

Conclusion

Best vested benefits account
valuepension

valuepension offers a great vested benefits account where you can invest your retirement money in stocks with very low fees!

Overall, I think that valuepension 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 valuepension is making everything to reduce the costs as much as possible. You can invest a large amount in stocks and have a great diversification in your portfolio. On top of that, you have great freedom for customization of the portfolio.

I wish I had access to vested benefits accounts so that I could invest with valuepension instead of investing in my bad second pillar.

And here is great news for Switzerland: finpension is planning to offer a third pillar account! Their third pillar will use the same philosophy as yourpension. And this should come in 2020 and with a mobile application to reach more people. I think this is great to have more options for good third pillars. A new great third pillar should help get the third pillar industry moving.

If finpension offers the same kind of conditions for their pillar, they will likely be better than VIAC. But of course, we will have to wait until they reveal more details about this great. I will be sure to announce it on the blog.

If you still have questions regarding valuepension, let me know in the comments below!

If you are interested in retirement accounts, you may be interested in the best third pillar account at VIAC. Their offer may be challenged soon by valuepension. But VIAC is current the best third pillar provider.

Do you have any experience with valuepension? What do you think of their vested benefits offer?

Mr. The Poor Swiss

Mr. The Poor Swiss is the author behind thepoorswiss.com. In 2017, he realized that he was falling into the trap of lifestyle inflation. He decided to cut on 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.

23 thoughts on “valuepension Review – Great vested benefits account”

  1. Thanks for the article.

    The withholding tax concerns you only if you are not living in Switzerland anymore?

    If you are in Switzerland you will still pay your taxes for the 2nd pillar as income where you live and not where the institution is domiciled. Is this correct?

    Cheers,
    Philippe

  2. Hi MrPS, you wrote…”There is one significant difference between the two offers: the domicile of the foundation. VIAC is in Basel, and valuepension is in Schwytz. 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”.
    This is true if you are resident outside CH. If you are CH resident, you pay withdrawal tax based on your Gemeinde, nothing to do with where 2S is located.

  3. Thanks for the very good article Mr.PS
    I am very interest on it and looking forward for the full comparison with VIAC!

  4. thanks for the great article, I had been emailed by VIAC about there vested benefits account. As I am looking at changing jobs Im really keen to try my luck and move my pillar 2 interest only account to a equity portfolio. Not sure if my new pension provider will chase me or not…

    Switzerland has a great system with the 3 pillars, but not being able invest your pillar 2 if your provider doesnt offer it is such an unfortunate loss considering the time horizon.

    1. Hi FrancInvesting,

      Even though it is highly unlikely to anything will happen while doing that, I believe this is against the law. Normally, you have to move all your vested benefits once you start with a new pension fund. They will probably not chase you. But I would not do.

      Now, I completely agree that the second pillar in Switzerland is really not great unless you have a vested benefits account. I really wish there was more liberty on that side.

      Thanks for stopping by!

  5. Do you have any relation with the advertised solution? How does the solution compare with swisscanto or liberty? Cheers

    1. Hi Mister G,

      No, I do not have any relationship with valuepension.
      I have not done a full review of any of the two solutions you mentioned. After a quick check, it seems that these two solutions are more expensive than valuepension, but there may be other differences.

      Thanks for stopping by!

  6. Thanks for the article, this is very complete.

    However, I was wondering if there is any reason why you haven’t talk about the possibility to split your vested benefits accounts in 2 to benefit from tax saving when it’s time to withdraw your money. Doing it in different fiscal years is not negligible. Therefore, I might consider in my case both solutions Valupension and Viac. What do you think?

    Can’t wait to get your comparison btw ValuePension and Viac. Might be also interesting to have the differences of fees for some operations (leave, relocate, pledging, etc.). Do you plan to take it into consideration into your analysis ? If yes, do you already have this information, as I should take my decision in the coming days ?

    Thanks and regards

    1. Hi Stéphane,

      Yes, there is a reason :)
      You can’t do that. It’s a really grey area because, in theory, this is not legal but in practice, this is rarely enforced. So, I won’t advertise this.

      You can use this technique for the third pillar (with up to 5 accounts in some states), this is called staggered withdrawals. But this is not the case for second pillar, unfortunately. You are supposed to have only one.

      For your second question, yes, I am going to take this into accounts. Overall fees, valuepension is slightly cheaper. As for other fees as you mentioned, VIAC is cheaper because they have no other fees for pledging, leaving, relocating, …
      Something else for VIAC that I did not mention now but I found out in my recent research is that you can only invest 80% in stocks in the mandatory portion of your second pillar where you can go all the way to 99% for your entire second pillar. So I would go with valuepension unless you plan to pledge very soon your portfolio or something like this. And VIAC is cheaper if you want a small allocation to stocks (basically if you are close to retirement).

      Thanks for stopping by!

      1. Actually, splitting the vested benefits account in 2 is legal and recommended, based on the following article at moneyland: https://www.moneyland.ch/en/vested-benefits-how-many-accounts
        I was already aware for the 3rd pillar, but this is new to me for the 2nd pillar.

        For the operation fees comparison at Viac, please note that I got some answers this afternoon and only 300.- CHF is taken when you decide to withdraw your money to buy a house. That’s it.

        1. Hi Stéphane,

          Apparently, you are right.
          The thing that is illegal is not transferring your vested benefits account once you start working again after having a vested benefits account. But it seems indeed completely legal to have up to 2 vested benefits accounts.

          Thanks for sharing the information about VIAC :)

          1. interesting. I believe you can have more than 2 vested benefits accounts, if they originate from different employers. So let’s say you get made redundant from 2 different employers, you could in theory split your 2nd pillar into two, 2 times and end up with 4 accounts in total.
            There are occasions where this is possible.

  7. Hello,
    Do you not what the situation is once you become unemployed?
    Can you move the money away from your 2 nd pillar and into one of your own choice since you do not have an employer?

    1. Hi Ian,

      Everything is explained in the first section of the article.
      After you leave a company, you have to move your funds either to a new company’s second pillar fund or to vested benefits account if you do not become employed directly.

  8. “500 CHF if you relocate abroad”

    What does this mean? Taken literally it sounds really weird. Is this whenever you move abroad, or only if you take out the money (i.e. when leaving for a non-EU country without planning to come back).

  9. So which equities do you recommend to avoid the additional fees? It is not that clear in their overview which have additional fees? Similarly which ones have “better than private market rates”?

    1. Hi,

      You can use the tool to simulate the portfolio and see the fees. The portfolio I have shown in “Investment Strategy” is one with a minimal amount of fees, it’s a good starting example.

      Thanks for stopping by!

Leave a Reply

Your email address will not be published. Required fields are marked *