VIAC vs Finpension 3a – Which is the best third pillar for 2021?

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VIAC vs Finpension 3a - Which is the best third pillar for 2021?

Until the end of 2020, VIAC was pretty much unchallenged as the best third pillar in Switzerland. And then came Finpension 3a, another great third pillar offer.

I have already made reviews of these two great services. But we also need to compare VIAC vs Finpension 3a in detail to see which is the best third pillar in Switzerland?

In this article, I am going to compare VIAC vs Finpension 3a in detail. We will see their investing strategies, fees, and everything you need to know to choose!

VIAC

VIAC started in 2018 as the first mobile third pillar. When it started, it was only mobile and started a small revolution in the third pillar world. There are now several mobile alternatives. And now, VIAC also offers a web application.

VIAC has two great advantages:

  • You can invest up to 97% in stocks. They were the first ones to offer this allocation to stocks.
  • The fees are relatively low, at 0.51% per year. For Swiss third pillars, this is as low as it gets.

On top of that, VIAC is a very transparent and honest company with clear communication.

All these advantages made it the best third pillar when they started. And they now have more than 15’000 customers.

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

Finpension 3a

Finpension 3a is the newest challenger in the third pillar world. They started in October 2020. But they are not a new company. Finpension is already behind valuepension – the best vested benefits account there is in Switzerland.

Finpension 3a also started as a mobile-only third pillar. But they added web support only a few months after they started.

So what makes Finpension 3a so interesting?

  1. You can invest up to 99% in stocks!
  2. The fees are very low, at 0.42% per year.
  3. You have large freedom in your portfolio.

So, while they are new to the third pillar world, they are already exciting. And they have great experience managing vested benefits accounts.

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

Investing Strategies

Let’s start by comparing the investing strategies of VIAC vs Finpension 3a.

Both third pillars invest in mutual funds. They do not use ETFs because pension companies have access to much better funds than private investors. Therefore, they have access to funds with close to zero (or even zero) TER. So, it is an excellent reason to invest in mutual funds instead of ETFs.

And both companies invest in passive mutual funds. These funds are all index funds that minimize the costs and try to replicate the market’s performance. Once again, it is a great thing.

Both companies let you invest heavily in stocks. You can invest up to 97% in stocks with VIAC. But Finpension 3a will let you invest up to 99% in stocks. This may not seem like a big difference, but it is still significant when we talk about 30 years of investing term. So, Finpension 3a is better than VIAC for stocks.

Both companies differ quite heavily in what they do with the money that is not invested in stocks. At VIAC, the money that is not invested in stocks will be kept in cash. At Finpension, only 1% is kept in cash. The rest of the money not invested in cash is invested in bonds.

The issue is that Swiss bonds are currently not great. They are yielding a negative interest. Therefore, cash has more return than bonds currently. But this could well change in the future. So, if you do not plan to invest heavily in stocks, VIAC may be a better fit for you.

Overall, both third pillar providers have a great investing strategy! But Finpension 3a is slightly better for stocks investor like me.

Custom Strategies

It is always good to look at what advanced investors can do with custom strategies. So, let’s compare VIAC vs FInpension 3a on that point.

Both third pillars let you choose a custom strategy.

With VIAC, there are some limits to what you can do with a custom strategy:

  • They will only let you invest up to 60% in foreign currencies.
  • You will only be able to invest up to 90% in Swiss Stocks.
  • VIAC will prevent you from having too much in a single company (this impacts only the SMI)
  • They will prevent from having more than 20% in Emerging Markets.

Most of these limitations are not that bad. I wish the first limitation was relaxed. All the other limitations make total sense, and I would not want to overcome them. But having to have 40% of CHF in my portfolio will limit my diversification.

With Finpension 3a, you also have some limits:

  • Maximum of 20% in precious metals
  • Maximum of 50% in Real Estate

And that is about it for the limits. It means you can have 99% in foreign currencies (1% needs to stay in cash). And you can have 99% in a single  World fund, for instance.

And you can even optimize for having 0% TER:

Zero TER for a custom strategy with Finpension 3a
Zero TER for a custom strategy with Finpension 3a

So, Finpension 3a is significantly more flexible regarding custom investing strategies than VIAC. You will be able to boost your international diversification higher. But, VIAC still offers great custom strategies.

Fees

In the long-term, it is essential to consider the investing fees. You are going to pay these fees for a very long time. And you are going to pay regardless of the market conditions. So, we need to compare the fees of VIAC vs Finpension 3a.

Let’s start with VIAC. The fees will depend on which strategy you are using. If you are using the standard Global 100 portfolio (97% in stocks, globally diversified), you will pay 0.51% in fees per year.

On top of that, you pay fees for currency conversion. This fee is 0.75% per conversion. However, this is optimized by netting conversions together. VIAC estimates the annual average to be 0.05%. It is difficult to say if this is accurate or not. I would think it is likely to be slightly higher.

Finally, there are also some subscription and redemption fees in the index funds used by VIAC. I would think that this is almost negligible in the long-term since you only buy and sell once. So, let’s ignore them for now.

This gives a total fee of about 0.56% per year for a fully-invested and well-diversified portfolio at VIAC.

Let’s take a look at Finpension 3a now. The base fee is 0.39% per year. But this base fee is without VAT. So, the real base yearly fee is 0.42% per year.

On top of that, you will pay some extra fees based on each portfolio. The default Equity 100 portfolio will cost you 0.02% per year. But if you use a custom portfolio, you can get that down to 0%!

Finally, there are also some subscription and redemption fees with the funds, just like for VIAC. In fact, they are mostly using the same funds. The foreign exchange fee is 0.05%. With netting, this will be negligible on average.

This gives us a total fee of about 0.44% for Finpension 3a, for an excellent portfolio.

When we compare VIAC vs Finpension 3a, Finpension 3a is significantly cheaper than VIAC. You may think that this is not a significant difference, but a 0.44% fee is 20% cheaper than a 0.56% fee!

If you have 100’000 on CHF in your third pillar, you will save 120 CHF per year with Finpension 3a.

In the previous section, I mentioned that VIAC lets you hold cash. When you do that, you do not pay fees on the cash portion. So, a 100% cash portfolio at VIAC would be free of fees. And with 40% cash, you would only pay 60% of the normal fees. At Finpension, you are always fully invested. Therefore, you will pay more fees at Finpension 3a for a low allocation to stocks.

Extra features – Insurance

We can also take a look at the extra features that these two great services offer. It is actually pretty simple since only VIAC has an extra feature, and it is the only one.

Indeed, VIAC started offering life or disability insurance in their package. For each 10’000 CHF invested in securities, you will get free protection of 2500 CHF. You have to choose yourself if you want life or disability insurance. You cannot choose both.

Let’s try to quantify the value of such insurance. In Switzerland, men have a 6% chance to die before retirement, as of 2021. If you have 100’000 CHF invested in your portfolio, you get 25’000 CHF insurance. Based on the probability of dying before retirement, we can put a value of 1500 CHF for your investments’ entire duration.

If you invest for 30 years, you will get a life insurance value of:

  • 50 CHF per year if you invest 100’000 CHF in your third pillar
  • 100 CHF per year if you invest 200’0000 CHF in your third pillar
  • 200 CHF per year if you invest 400’000 CHF in your third pillar

For disability, about 2% of people in Switzerland are concerned by the disability insurance, as of 2021. So, we will take 2% as the probability of being disabled.

If you invest for 30 years, you will get a life insurance value of:

  • 16.66 CHF per year if you invest 100’000 CHF in your third pillar
  • 33.33 CHF per year if you invest 200’0000 CHF in your third pillar
  • 66.66 CHF per year if you invest 400’000 CHF in your third pillar

These are only rough estimates. But you need a large amount of money invested for this insurance to be interesting. And even then, the amounts are relatively low. I prefer paying lower fees and be optimistic. But, for people that are already customers of VIAC, it is an interesting, although minimal, advantage.

Security

Let’s compare the security of VIAC vs Finpension 3a.

Both applications are technically secure, and both companies have a strong record for security. I have not heard of any leaks or breaches in either of these two companies.

Neither of the applications requires a second factor of authentication. Indeed, you cannot do much from these two applications since the money is blocked until you can use it. Nevertheless, there is plenty of important information, and I would really prefer a second authentication factor.

Now, there is a big difference in the registration process. VIAC will ask you to authenticate your identity during the registration process. But Finpension 3a will wait until you need the money to ask for your identification. I prefer the approach of VIAC here since it could lead to issues when you want to withdraw money.

From a safety point of view, both third pillars are equivalent. VIAC and Finpension 3a manage the assets, but they are held in a pension foundation’s balance sheets. And the assets are saved in a custody bank in both cases. So, in cases of VIAC or Finpension 3a going bankrupt, the foundation would have to find a new manager.

Overall, I feel like the security of both third pillars is acceptable. But VIAC has a slight advantage given that they identify all their users.

Reputation

Finally, let’s look at the reputation of VIAC vs Finpesion 3a.

Both companies are very young, and it is difficult to find a lot of reviews about them. I have never heard any public bad news about either of them. And both companies seem to have an excellent reputation.

VIAC has 82 reviews on Google and got an average score of 5 stars out of 5 stars. It is a really impressive score. There are only two reviews with less than 5 stars, and none of them are pointing out a real issue. Now, most reviews are advertising codes for their referral programs. So, I would probably not pay attention to most of these reviews.

On the App Store, VIAC got 152 notes and an average score of 4.7 out of 5 stars. On the Play Store, VIAC got 239 reviews for an average score of 4.8 out of 5.

Finpension 3a has no reviews on Google. They have 10 reviews on the Play Store with an average score of 5 out of 5.  And they have no reviews on the App Store.

Both companies have the same good reputation. But VIAC’s reputation is a bit more proven since they have been in the game for two years. So, if you want to err on the side of caution, VIAC seems a little more solid. But Finpension has been managing second pillars for a while now, so they are not brand new either.

Applications

Personally, I do not really care about the applications, especially for the third pillar. It is really not important because you use it very rarely and you have to do very little with it.

But some people make this very important. Personally, I would much rather invest in a terrible app (with good security!) and low fees than in a beautiful app with higher fees. But it is up to you to decide what you want to prioritize. So, let’s compare VIAC vs Finpension 3a in terms of applications.

VIAC offers a mobile application and a web application. And I feel like both applications are quite good. They look good and are very easy to use. I think that they did a great job of polishing the applications.

Finpension 3a is also available as a mobile application and a web application. The mobile application could profit from some extra polishing. VIAC is a little better.

On the criteria of applications, VIAC is slightly better than Finpension 3a. Their mobile application feels a little better, but nothing really significant.

Summary – VIAC vs Finpension 3a

We can draw a table summary of our findings:

Criteria VIAC Finpension 3a
Strategies Great Great
Allocation to Stocks Great (97%) Best (99%)
Custom Strategies Good Best
Fees Great (0.56%) Best (0.44%)
Reputation Good Good
Aggressive Investors Good Best
Conservative Investors Best Good
Extra Features Insurance None
Security Best Good
Mobile Application Good Okay
Web Application Good Good

We can draw a few conclusions from this summary:

  • Finpension 3a is better for aggressive investors
  • Better expected returns in the long-term with Finpension 3a
  • VIAC is better for conservative investors (less than 97% in stocks)
  • VIAC applications are a little more polished than Finpension 3a
  • VIAC offers life or disability insurance coverage

VIAC vs Finpension 3a – Conclusion

We are now done comparing VIAC vs Finpension 3a. The first important to note is that both are great third pillars. They are definitely the two best third pillars available in Switzerland.

But we have to choose a better one! And Finpension 3a has a lot of advantages over VIAC for long-term investing! Being able to invest 99% in stocks is really good. And reducing the fees by almost 20% is a great thing as well.

Adding to that the fact that custom strategies can take the fees even lower and push the foreign exposure to a maximum, I think Finpension is an excellent third pillar!

In 2021, I contributed to Finpension instead of contributing to VIAC. Given my long-term horizon and my aggressive investing, it is the better fit for me. And I think it is the better option for most people that will retire in the distant future. For one year, I will keep my VIAC accounts, and I will see if there are some future changes to either of these services. If finpension is still the best in 2022, I will move the remaining money from VIAC to finpension.

The only time VIAC would be better is for more conservative people. If you do not want to invest fully in stocks, VIAC may be better. Indeed, the fees will be slightly lower (especially if you go lower than 80%).

Which of VIAC vs Finpension 3a do you think is the best? Which third pillar provider are you using?

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.

39 thoughts on “VIAC vs Finpension 3a – Which is the best third pillar for 2021?”

  1. No NASDAQ in Finpension is an issue. (Viac has it).

    That said the World ex CH quality in Finpension is interesting as it offers a chance to avoid investing in poor quality “value” stocks that are the bane of index investing.

    I queried this with finpension on twitter but they didn’t get back to me.

    I wonder if any of these providers will ever offer a free choice of individual stocks? It’s bizzare you aren’t allowed to make your own investment decisions in a pillar that is voluntary.

    1. Hi Joe,

      Since I recommend investing in as broad as possible indexes, I do not see the lack of NASDAQ as a disadvantage or an advantage. Most people will not need it.
      I do not think we will see individual stocks any time soon in third pillars. This would need a change in regulations that is going to take decades to happen in Switzerland.

      Thanks for stopping by!

  2. Does Finpension allow …

    – to invest with ESG?
    – to create annually a new portfolio? (important for tax in the future)
    – to adjust the strategy on a monthly basis (or even more frequently)? (diversification strategy)

    I am curious. Thx for replay

    1. Hi,

      * When you choose Sustainable investing, they invest in ESG ETFs
      * Both let you create up to five portfolios, which is enough for tax advantages
      * Both let you change your strategy at any time, but it’s rebalanced once a month.

  3. Hi!

    This was very interesting review. Thank you doing it! I am kind of new in this so may I ask you couple of questions:

    1. I know that the maximum amount in 3a is around 6800 chf a year. Is it possible to have more than one pillar 3a? Is it possible to switch between different 3a providers easily? Does this cost a lot of money?
    2. If I want to leave Switzerland in 3-4 years would I be penalized by one of these 2 companies? I have heard that insurance companies and banks are heavily penalizing people if they don’t stay at least 5 years and leave Switzerland. Is this the case with these new 3a funds?

    Thank you very much for your time and consideration!
    Regards!

    1. Hi George,

      1. Yes, you can have third pillars in several providers, although there is little advantage of doing that. What is interesting is that you can have up to five portfolios with both VIAC and finpension and this lets you optimize taxes. It’s generally free to change providers unless you change more frequently than once a year.
      2. Both companies have a fee for leaving Switzerland. But to my knowledge, there is no fee for leaving before 5 years.

      Thanks for stopping by!

          1. hey, I was on the phone sorry.
            I meant this one:

            CSIF (CH) III Equity World ex CH – Pension Fund ZBH

          2. Hi,

            Yes, that’s correct, some of the funds are hedged by default. The default strategies have a higher allocation to CHF than many people would like. This is common to most third pillars.
            If you want to reduce the hedging to CHF, you can do a custom portfolio, which is great.

  4. Thanks for the article. I am with VIAC since 2-3 years now and won’t change again soon (kind of getting tired to switch again and again).

    I was wondering how the insurance coverage is calculated. I.e. if I have 2 VIAC accounts with each 50’000, I would expect to have 25’000 total coverage (assuming both 50’000 are invested). In my case the VIAC app shows less and I cannot figure out why exactly this is. Is it maybe because I don’t have a “GLOBAL 100” plan (meaning a plan with more cash)!?

    1. Hi P.,

      I completely understand not wanting to change :) VIAC is still very good, there is no issue staying with it.
      I do not know if the portfolios are simply added together or if they do something different.
      However, it’s true that if you have more cash, you will reduce the coverage. Only money invested in equities will count towards the insurance.
      It is a bit counter-intuitive since people with aggressive strategies will get more insurance than more conservative people. And generally people more conservative are the people that want more insurance.

      Thanks for stopping by!

  5. What would be interesting to know is the process of consolidating VIAC invested funds into Finpension and if you recommend this.

    1. I am not sure I understand you question. Do you mean transferring equities from VIAC to finpension?
      This is not possible. You will have to sell all your assets on VIAC, transfer the cash to finpension and wait for it to be reinvested on the other side.

  6. Thank you for your useful information as always!
    Last year I moved to CH and your blog saved my money to a great extent :)

    As for 3a, I almost decided to take Finpension, however, apparently its exit charge is costly when I need to leave Switzerland to another country. As I am an expat, not 100% sure about my future in Switzerland, Finpension may be more expensive for me. So I eventually chose VIAC.

    For the year 2021 I am wondering whether I should open another account/portfolio for 3a. I will keep reading other posts of yours to get more information on this. Thank you in advance again :)

    1. Hi Hiro,

      Thanks for your kind words :)

      It is a good idea to have several third pillars, for tax reasons.
      But if you think you are going to leave Switzerland, it may be good to avoid finpension indeed.

      Thanks for stopping by!

  7. Good comparison, thoroughly researched as always.
    I have used VIAC for a couple of years now and for 2021, I tried Finpension. Can’t say much about it now, since the money there sits around uninvested until February 1st…
    In the end, I think the differences are pretty small, so for “normal” people, it won’t matter too much.
    One comment about the fees: they can be reduced at VIAC by using referral codes. Since the maximum amount managed for free is 5500 Francs, this will give you a discount of 28.60 per year.
    If anybody needs one, here is one of mine:

    mCO6zwd

    Cheers
    Peter

    1. Hi Peter,

      Thanks for sharing your experience. I am in the same boat as you. My previous third pillar is in VIAC and the 2021 one is at Finpension.
      You are right, the differences are marginal. For most people, it won’t make enough of a difference to switch.
      Yes, you can reduce the fees a little with referral, but that would still not be enough to make VIAC cheaper than finpension once you get larger sums.

      Thanks for stopping by!

      1. It is also true that last year viac increased unexpectedly the amount of free managed money from 2000 to 5500 chf, so actually almost 3 times more than before. they justified this with the customer base getting bigger. The program could get bigger anytime soon again

        1. Hi Karl,

          It’s true. If they make it significantly bigger, it could start to make a difference. However, we need to keep in mind that the fee is on the total assets. 0.1% fee on 100’000 third pillar already makes a 100 CHF per year difference. And this only goes higher as the third pillar grows.

          Thanks for stopping by!

  8. I really enjoy your content, keep up the good work! One thing to keep in mind if you switch from VIAC to Finpension: You will be out of the market – I was out of it for 2 months (2 different portfolios) and both months (Nov and Dec) performed rather well. I don’t have much invested yet, so in the bigger scheme of things it will not matter much but something to keep in mind.

    1. Hi Andre,

      Yes, it’s true. Switching from an invested third pillar to another is not great. If you have many years in front of you, it won’t matter much, but still, it’s not a great thing.
      I would only recommend switching for people that have a long time in front of them and only if they intend to stay with the new one for a long-time.
      Switching from UBS/CS/PostFinance/Any other bank to VIAC or Finpension is a no-brainer. But switching to Finpension from VIAC is a small advantage, so, it is important to weigh the pros and cons.

      Thanks for stopping by!

  9. Hi Mr. The Poor Swiss,

    Thank you very much for writing this article. I find it very helpful as I am so new to all this!

    I would like to switch my 3rd pillar from a bank to Finpension this year. Would you have a referral code to share? Thank you!

  10. Bonjour, est ce que vous conseillez de laisser les stratégies finpension 100 et global 100 (viac) par défaut ou conseillez vous des stratégies personnalisées ?

    Cordialement

    1. Bonjour,

      Merci de commenter en anglais sur les articles en anglais.

      Cela dépend beaucoup de vos autres investissements. Pour les gens qui n’ont pas d’autres investissements, je conseille de garder les stratégies par défaut. Pour les gens qui ont d’autres investissements, il faut regarder votre allocation globale pour savoir de quoi vous avez besoin.
      Pour augmenter les profits, il est possible de rendre ses stratégies plus aggressives.

  11. Hi,

    Thanks for the very useful article!

    What do you think about VZ VermögensZentrum AG? They offer 3rd pillar with ETF investment with strategy that I think is a sort of Robo-advisory.

    Thank you!

    1. Hi Pat,

      I am not sure whether it’s robo-advisory. I just think they select a portfolio (fixed) up to 97% in stocks, and you will keep investing in that. They will not adapt the portfolio. This is what happens with other third-pillar providers.
      Given that they have a fee of 0.68%, I do not think they are interesting, this fee is significantly higher than Finpension and VIAC.

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