VIAC Review 2021 – Excellent third pillar in Switzerland

Investing, Retirement, SwitzerlandUpdated on

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

Is VIAC the Best Third Pillar in Switzerland?

There are many third pillar providers in Switzerland. Some of them are good, but most of them are too expensive. You do not want to waste your retirement bank on fees. Therefore, you need to choose the best third pillar provider.

In 2018, VIAC started on the market of third pillars. VIAC is the first mobile third pillar. And they are really interesting! VIAC has very low fees and lets you invest up to 97% exposure in stocks. It is significantly better than what I have found before in other third-pillar providers.

In this post, I am going to do an in-depth review of VIAC! Among other things, we will look at the investing strategies and the fees of this service.

VIAC

VIAC Logo
VIAC Logo

VIAC is a recent actor in the third pillar area. It was launched in 2018. And it is becoming more and more popular.

It is new compared to other big banks. It is important to mention that VIAC is not a bank. The money that you have invested with them is stored in the WIR bank. As such, you will have full protection up to 100’000 CHF like the other banks. This protection is very important. Without that, I would not consider this provider at all. You want your money to have maximum protection.

VIAC is quite different from the other providers. You will only have access through a mobile application or web application. They do not have offices where you can do operations with them. This absence of bank offices is what makes them offer very low fees.

They started with only a mobile application. But since then, VIAC added support for a web application. The web application is great for people like me who are not fond of mobile phones. And most people will probably like the mobile application since people are fond of phones these days.

To learn more about VIAC, you can read my Interview of Daniel Peter, CEO of VIAC.

So, let’s see how good VIAC is as a third pillar in Switzerland.

Investing Strategies

For long-term investors, the investing strategy of a third pillar is extremely important.

VIAC offers three sets of strategies:

  1. Global – Investing in the entire world.
  2. Switzerland – Investing in Switzerland
  3. Global Sustainable – Investing in the whole world but omits some stocks such as nuclear, tobacco, or weapons stocks. This is called sustainable investing.

For each of these strategies, they have five variants: 20, 40, 60, 80, and 100. These variants are specifying the allocation to stocks.

You can also define your strategy by composing it with the different underlying funds that they are using. This is a great way for you to choose exactly what you want to invest in. But then, you need to have a good idea of how to create a custom portfolio. I would not recommend this to a starter investor.

The fact that we can go up to 100% invested is really great! For a long-term aggressive investor, this is ideal. It is actually investing only 97% since they keep 3% in cash in each portfolio. But 97% is already a great amount invested in stocks.

They do not use bonds since Swiss bonds have a negative yield. Swiss cash is currently much better than Swiss bonds. So, if you use a strategy with a lower amount of stocks, cash will be used instead of bonds. Also, you will not pay fees on the cash part, it will even give you a tiny interest rate.

You can also have several portfolios, up to five. This is great if you want to optimize taxes by doing staggered withdrawals.

VIAC Global 100 Fund

VIAC Mobile Application
VIAC Mobile Application

The most interesting strategy is the VIAC Global 100 strategy. This is what I chose for my VIAC account.

This fund invests 97% in stocks. Out of these stocks, 40% are Swiss stocks. Because of regulations, each portfolio is limited to 60% in foreign currency exposure. This is not a limitation on Swiss stocks since you could use CHF-hedged funds to get more foreign exposure while keeping under the limit. But the default portfolio uses Swiss Stocks for 40%. The rest is invested in the entire world based on market-cap weight. The remaining 3% is allocated to cash.

The TER of this strategy is o.45%. And there are no other fees! This makes it a very cheap solution for Switzerland!

Here is the allocation by region of the Global 100 fund:

VIAC Global 100 Region Allocation
VIAC Global 100 Region Allocation (Source: VIAC)

And there is the exact allocation of each sub-fund (as of September 2018):

  • SMI (Swiss): 27.75%
  • SPI Extra (Swiss): 9.25%
  • Europe ex-CH: 10.60%
  • S&P 500: 31.51%
  • Canada: 1.93%
  • Pacific ex-Japan: 2.54%
  • Japan: 4.46%
  • Emerging Markets: 8.96
  • Cash: 3.00%

This offer is great. It is better than most other candidates:

  • The allocation to stocks is high
  • The allocation to international stocks is the maximum permitted by their regulations.

In the long-term, this nice allocation to stocks and the relatively low fees will result in significantly more returns.

Fees

When you are investing for the long-term, it is incredibly important to look at the fees.

The base fee of VIAC is 0.45% per year. But you only pay this fee on the invested part (the stocks). So, if you have more cash, you get fewer fees. Also, some external funds have higher fees, so you may end up with higher fees with a custom strategy.

The fees at VIAC are different for each universe and strategy. For instance, here are the fees for the global strategies:

  • Global 20: 0.17% per year
  • Global 40: 0.28% per year
  • Global 60: 0.40% per year
  • Global 80: 0.45% per year
  • Global 100: 0.45% per year

Fees for Switzerland strategies are slightly higher:

  • Switzerland 20: 0.17% per year
  • Switzerland 40: 0.28% per year
  • Switzerland 60: 0.39% per year
  • Switzerland 80: 0.46% per year
  • Switzerland 100: 0.47% per year

And the sustainable strategies are the most expensive:

  • Global Sustainable 20: 0.18% per year
  • Global Sustainable 40: 0.30% per year
  • Global Sustainable 60: 0.42% per year
  • Global Sustainable 80: 0.52% per year
  • Global Sustainable 100: 0.52% per year

Overall, these are excellent fees! Compared to most offers in Switzerland, this is better!

Life and disability insurance

VIAC has something special that differentiates them a little from other third pillar providers.

Indeed, with VIAC, you can get either life insurance or disability insurance. With each 10’000 CHF invested in your account (only the invested part counts), you get 2’500 CHF insurance.

You have to choose in your account whether you want disability (in case of at least 70% disability) insurance or life insurance. In the case of life insurance, this will be paid to your beneficiaries with the money of your third pillar. And in case of disability, you will get the insurance payment directly yourself.

I think it is a nice bonus, but this is not life-changing. This will only be useful if you die or get disabled (and you have to choose) before your retirement age. And the amount is still quite limited, so for many people, this will not replace a proper life or disability insurance. But this could still be very useful. And since it is free, it is obviously not a bad deal for VIAC users.

Security

We can also take a look at the security of the VIAC third pillar.

The technical security of the applications (both web and mobile) are pretty good. All the communication is encrypted between the application and the server. And since you cannot do anything with your third pillar until you retire (or in few other special cases), the apps are well protected.

The only thing I would like is a proper second-factor of authentication on the web application. But again, since you cannot do much, it is not that important.

If you hold cash, it will be held by WIR bank, the custodian bank of VIAC. This will be privileged in case of bankruptcy up to 100’000 CHF. This protection is the same as the bankruptcy protection of other Swiss banks. If you are an aggressive investor, this should not matter much since you should have very little cash.

The securities themselves are invested in institutional funds. These funds are very stable and are held in your name. The funds are not in the balance sheet of VIAC directly but on the balance sheet of the foundation. So, if VIAC goes bankrupt, these funds are safe in the foundation. It will be up to the foundation to find a new manager for these funds and to get you access to this money again.

Finally, I have never heard of any leak of data that would have occurred at VIAC. This is always a good sign, even for recent companies.

Overall, I think that the security of VIAC is quite good and well regulated. The applications are well done and the foundation is organized in such as way that your assets are well-protected.

Pros

Let’s summarize the pros of VIAC:

  • You can allocate up to 97% in Stocks
  • Very low fees
  • VIAC is very transparent
  • A small interest rate on the cash part
  • Strategies with low allocation to stocks are cheaper
  • Mobile and web applications

Cons

Let’s summarize the cons of VIAC:

  • You need a minimum of 40% in Swiss Francs (CHF)
  • You need to keep 3% in cash
  • Not the cheapest third pillar

Conclusion

The conclusion is pretty simple! VIAC is an excellent third pillar provider in Switzerland. The fees are very low and they offer a high allocation to stocks. This is great for long-term investors. And since most third pillar investors are in for the long-term, this is excellent.

There is something else I like about VIAC. It is their transparency. They communicate well, and they share as much information as possible. VIAC is the best third pillar provider for the information they share. The information is also very clean and modern. They do not try to hide fees. And they have been quite helpful in answering my questions for this article.

When VIAC was introduced, they were the best third pillar available. Now, there have been other competitors. If you want to keep up to date, I have an article about the best third pillars in Switzerland.

I still have a third pillar account at VIAC. When I discovered VIAC, I opened a VIAC account and transferred my previous third pillar there. Now, I also have another third pillar account at Finpension. In the future, I will see if I transfer everything to Finpension or not. But both are excellent options!

Which third pillar do you use? What do you think of VIAC?

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.

71 thoughts on “VIAC Review 2021 – Excellent third pillar in Switzerland”

  1. Hi Poor Swiss,
    Thank you for a great website, I have been trying to soak up as much info as possible and its been a great education.

    I have a question:
    You suggest to have majority of stocks in the 3rd pillar. I understand that this is sensible as your investment horizon is long since these are retirement funds. However if you are moving from one fund to another (e.g. Postfinance to Viac) then aren’t you breaking the long-term aspect. If 5 years later there is a better option/provider than Viac, and I want to move, shouldn’t I NOT be maxing out on stocks as my horizon is until the next time I switch a provider/funds?

    Many thanks,

    1. Hi YamS,

      Yes, the majority of stocks I suggest is well-suited to my personal situation and time horizon.
      You are kind of breaking the long-term aspect yes. There is an opportunity cost in that you are going to have to stay out of the market. And your funds will need to be sold on one side, then transferred, then bought again on the other side. Now, depending on how the market is doing, it may not be that bad.
      If you can switch to a much better provider like VIAC compared to Postfinance, it is worth moving even if you have to stay out of the market for a while.
      If you are trying to switch for a minimum advantage, you may have to weigh the advantages of the new solution compared to the opportunity cost of switching over.

      Now, this does not mean you need less stocks in your portfolio. But it means that you may not be able to sell. If you have to sell in a down market, you may lose several % between the time you sell and the time you buy back. So, you may need to wait and it’s difficult because it’s market timing. So I consider this as an opportunity cost.

      Does that make sense?

      Thanks for stopping by!

      1. Thanks for the reply Mr. Poor Swiss, I really appreciate it. Though, I’m probably not following this well.

        My starting assumption here is that a stock-heavy portfolio is better in the long run and a bond-heavy one better for short term horizons.

        If I decide to change providers (e.g. Postfinance to VIAC) then it technically ceases to be a long-term retirement investment. And having to terminate /change providers in the short-term, it is more likely that a stock-heavy portfolio (with greater volatility) could be at a lower value than a bond-heavy portfolio (lesser returns, but relatively more stable).

        Is the above correct? Or maybe I’m missing something?

        I guess, in any case, the timing of the switch is important such that we have a personally acceptable return from the fund we are terminating before switching to a new one. Thus if the market is down, it is probably not a good time to terminate the fund and better to wait until a favorable time.

        Thanks again for your time.

        1. Hi YamS,

          You are correct regarding long-term.

          But even if you sell to rebuy, the term is not really changed. You are still in for the long-term, but you are rebalancing into a better fund. Just because you change does not mean your term is changed.
          Of course, there is more risk in doing that if you have stocks than if you have bonds. And it will depend on the transaction date on both sides. In the worst case, you are looking at two months out of the market, which can make a significant difference.

          If you are planning to move now, you should move now, not in the future. And you can’t plan to move in the future since you do not know whether there will be a better provider in the future.

          Thanks for stopping by!

  2. Hi Mr. The Poor Swiss,

    Thank you for putting in that much effort in sharing all these life changing tips.

    Did you consider comparing the option to invest the 3A in a Life Insurance such as the swiss life flexsave duo which I believe is an index 100% stocks with a life/death insurance for the partner/kids?

    Just wondering where these kind of products lie compared to VIAC.

    Many thanks in advance for your reply

    1. Hi Alex,

      Thanks for your kind words :) I am glad this helps!

      In general, life insurance 3a is just strictly worse than a banking third pillar.
      Even if this one does not look too bad, you will still have fees on investing that will very likely be much higher than VIAC and you will pay a premium for the life insurance part. It means that not all your money is going to be invested into the stocks.
      If you really need life insurance, there are some great life insurance policies available. So you should take a good third pillar (finpension 3a or VIAC) and a good life insurance.
      And be careful that many states have no tax-advantages for 3b life insurance.

      Thanks for stopping by!

  3. Thanks for an insightful article Mr Poor Swiss,

    Are you aware of any Third Pillar providers that would allow one to invest directly into single-line stocks (Nestle etc.) instead of having to take the equity exposure via ETFs and funds?

    1. Hi Mike,

      No, I am not aware of any such providers.
      It’s unlikely to happen because there are rules against having too much exposure to a single company for a pension provider.

      Thanks for stopping by!

  4. Dear Mr. The Poor Swiss,

    May I know the solvability and rating of the WIR Bank? I read that a few years ago they had troubles so that if you have more than 100k CHF invested in their third pillar, customers should be sure they will have their money at the age of retirement.

    Thank you.
    BR
    Ivan

    1. Hi Infor,

      Indeed, about 5-6 years ago, they had issues. I do not see that as huge issue for VIAC for several reasons:
      * Major reason: most of your money should be invested and not in cash
      * Minor: VIAC is working with Terzo Foundation, from WIR, not directly with WIR
      * Minor: There have not been any recent issues with the WIR bank.

      If you are worried, you can always split your third pillars between several providers.

      I hope that helps.

  5. Hello ThePoorSwiss

    Thanks for this article.
    I too opened a 3rd pillar with VIAC on Monday. The 300 CHF exit fee is a bit annoying but ok.

    Cheers

  6. I had very good experiences with VIAC. The opening and transfer processes work very well. The chat support is provided by very experienced people sometimes the by the VIAC founders itself.
    You have to be careful with transfers at the end of the month. To ensure your money is invested at the beginnig of the next month, do the transfer at best 3 working days before month end.

    Cheers,
    Andreas

  7. Thanks ThePoorSwiss
    Great intelligible blog with useful information!
    One question: You write “The law states that the third pillar must have at least 40% allocated to Swiss stocks.”
    Could you give the source of that information? I did not find it anywhere and it seems to me that there are ways to get around it technically.

    1. Hi Lou,

      That’s a great question. I can’t seem to find an internet source from this.
      It came from my discussion with the CEO of VIAC. This is a regulation from the supervisory authorities. It’s actually not Swiss stocks, but rather a limit in domestic currency.

      I do not know exactly why Finpension allows more than 40% while VIAC does not. It could come from different supervisory authorities or different interpretations of the same rule.

      Thanks for stopping by!

  8. With Viac, do you pay the fees, TER expenses of underlying funds on top of their fees?

    If so, isn’t it better to get the underlying funds directly from CS? Most of their funds are offered by Credit Suisse – and have considerable and TER/fees

  9. I can also highly recommend VIAC as it is possible to open multiple portfolios with different strategies and a large equity exposure.

  10. Hi,

    It seems VIAC decreased the fees retroactively from 1st of March.

    Thank you poor Swiss for this blog!

    Bye,
    F.

    1. Yes, they just decreased several of their fees now that they reached one billion of assets under management! This is great news!

      I still have to update all my articles about VIAC to reflect that.

  11. Hey i have seen different options of 3th pillar, definitely the ones that has an insurance include are the worst ones.
    For you which is the best one with less fees more % per year.
    thanks
    Mia

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