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Until the end of 2020, VIAC was 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 excellent 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 compare VIAC vs Finpension 3a in detail. We see their investing strategies, fees, and everything you need to know to choose!
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 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?
- You can invest up to 99% in stocks!
- The fees are very low, at 0.39% per year.
- 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.
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 99% in stocks. They were the first ones to offer this allocation to stocks.
- The fees are low, at 0.41% per year, for the most interesting strategy. 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.
We 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 can access much better funds than private investors. Therefore, they can access funds with close to zero (or even zero) TER. So, it is an excellent reason to invest in mutual funds instead of ETFs.
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.
Finpension 3a and VIAC let you choose between Credit Suisse and Swisscanto index funds. On top of that, Finpension 3a also gives you access to UBS, making it a small advantage for Finpension.
Both companies let you invest up to 99% in stocks.
Both companies differ in what they do with the money not invested in stocks. At Finpension, only 1% is kept in cash. The rest of the money not invested in cash is invested in bonds. With VIAC, you can choose between keeping it in bonds or cash.
Some people dislike bonds because they yield negative interest for a few years. However, they are currently earning more than cash again. So, it is a matter of timing. Nevertheless, it is good that VIAC lets you hold cash should you wish it.
However, with Finpension, you can invest in a money market fund. A money market fund is similar to cash and would yield the same.
Overall, both third pillar providers have a great investing strategy! But Finpension 3a is better for aggressive investors like me.
It is always good to look at what advanced investors can do with custom strategies. So, we 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 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 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. 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:
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.
In the long term, it is essential to consider the investing fees. You will pay these fees for a very long time. And you will pay regardless of the market conditions. So, we need to compare the fees of VIAC vs Finpension 3a.
VIAC has a base administration fee of 0.52% on the invested assets. On top of that, the total administration fee is capped at 0.40%. Then, you will also pay some fees for the funds themselves.
So, the fees will depend on which strategy you are using. Using the standard Global 100 portfolio (99% in stocks, globally diversified), you will pay 0.41% 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. This is almost negligible in the long term since you only buy and sell once. So, we can ignore them for now.
This gives a fee of about 0.46% per year for a fully-invested and well-diversified portfolio at VIAC.
We can take a look at Finpension 3a now. The base fee is 0.39% annually and includes VAT and product costs.
Finally, there are also some subscription and redemption fees with the funds, just like for VIAC. 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 0.39% for Finpension 3a for an excellent portfolio.
When we compare VIAC vs Finpension 3a, Finpension 3a is cheaper than VIAC. You may think this is not a significant difference, but a 0.39% fee is about 5% cheaper than a 0.41% fee!
There is another advantage to Finpension 3a: its tax domicile. If you are withdrawing your third pillar abroad if you have left Switzerland, the tax domicile of the pension will be important for the taxes. And Finpension 3a is domiciled in Schwyz, the canton with the lowest taxes for pension withdrawals! This could make a significant difference for people withdrawing from outside Switzerland.
On top of that, you can save money on fees with both products by recommending the service to friends and families.
If you have 100’000 CHF in your third pillar, you will save 20 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 stock allocation.
Extra features – Insurance
We can also look at the extra features that these two great services offer. It is pretty simple since only VIAC has an extra feature, and it is the only one.
Indeed, VIAC started offering life or disability insurance in its 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.
We should try to quantify the value of such insurance. In Switzerland, men have a 6% chance of dying 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 with 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 lot of money invested for this insurance to be interesting. And even then, the amounts are relatively low. I prefer paying lower fees and being optimistic. But, for people already customers of VIAC, it is an interesting, although minimal, advantage.
We should compare the security of VIAC vs Finpension 3a.
Both applications are technically secure, and both companies have a strong security record. I have not heard of any leaks or breaches in these two companies.
With Finpension 3a, you can configure the second factor of authentication (SMS). This helps with security since this will require your phone. I would have preferred other choices than SMS, but this is already better than no second factor, like in VIAC. However, 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 prefer a second authentication factor.
Both services let you identify yourself with your identity documents. This makes sure that nobody can open an account in your name. At finpension, you can choose to do that while it is mandatory at VIAC.
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 must find a new manager.
Overall, I feel like the security of both third pillars is good. But Finpension 3a has the advantage of a second factor of authentication. So, I would say Finpension 3a is slightly safer.
Finally, we look at the reputation of VIAC vs Finpesion 3a.
Both companies are young, and it is challenging to find many 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 out of 5 stars. It is a really impressive score. There are only two reviews with less than five stars, and none point 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 of 4.8 out of 5 stars.
Finpension 3a has no reviews on Google. They have ten 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. VIAC has slightly more experience with third pillars. But Finpension has more experience with second pillars (1e and vested benefits). So, overall, I have high trust in both of them!
I do not care about the applications, especially for the third pillar. It is not important because you rarely use it and you have to do very little with it.
But some people consider this very important. 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, we compare VIAC vs Finpension 3a in terms of their 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. IAC 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 significant.
Summary – VIAC vs Finpension 3a
We can draw a table summary of our findings:
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 that do not want bonds
- 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 the two best third pillars available in Switzerland.
But we have to choose a better one! Finpension 3a has advantages over VIAC for long-term investing! Being able to invest 99% in stocks is good. And reducing the fees by about 10% is a great thing.
Adding to 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 aggressive investing, it is the best fit for me. And I think it is the better option for most people that will retire in the distant future. As of 2022, I now have four accounts at Finpension 3a and will open a new one in 2023.
The only time VIAC would be better is for more conservative people who do not want bonds. Indeed, the fees will be slightly lower (especially if you go lower than 80%). However, you could use a money market fund instead with Finpension 3a.
If you open a Finpension 3a account, please use my code FEYKV5. This will give you a 25 CHF fee credit (if you deposit 1000 CHF in the first 12 months) and will help the blog as well.
Which of VIAC vs Finpension 3a do you think is the best? Which third pillar provider are you using?
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