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People between jobs in Switzerland transfer their second pillar to a vested benefits account. It is essential to choose the best vested benefits account.
There are many vested benefits account providers in Switzerland. Unfortunately, there are not many great options. So, it is crucial to choose the best account for your needs.
VIAC and Finpension Vested Benefits currently are the best options available for vested benefits accounts. So, we will see which VIAC vs Finpension Vested Benefits you should choose!
I compare both options in great detail. We will look at their investment models, their fees, and their security.
VIAC Vested Benefits
I have talked many times about VIAC on this blog. They are providing a great pillar in Switzerland. And in May 2020, they also started offering vested benefits accounts.
VIAC is a digital provider. You will use the web application to manage your account online. They also have a mobile application to manage your account if you prefer.
Their vested benefits accounts follow the same philosophy as their third pillar account:
- Low Fees
- High allocation into stocks
- Good diversification
If you want more information, read my review of VIAC vested benefits.
Finpension Vested Benefits
Finpension Vested Benefits started in 2017 as a vested benefits account provider. Finpension Vested Benefits is a second pillar foundation. The assets of the foundation are managed by finpension.
Finpension is a digital provider. You will use the web interface to access and manage your account.
Finpension also has a great third pillar account. You can read my review of Finpension 3a to get an idea of everything this provider provides.
If you want more information, read my complete review of Finpension Vested Benefits.
We start by comparing the investment models of VIAC vs Finpension Vested Benefits.
Both VIAC and Finpension have very similar investment models. They will invest your portfolio in index funds. They are both using cheap, well-diversified index funds. They are using funds of the same quality. I would say that their investment philosophies are both very good.
Both invest in index funds instead of ETFs. Pension funds can access better index funds than us because they can waive most of the fees. So, it does not make sense to invest in ETFs for them.
One difference is that finpension will let you choose between UBS, Credit Suisse, and Swisscanto for their funds. With VIAC, you can choose between Credit Suisse and Swisscanto.
VIAC will rebalance your portfolio once a month if necessary. Finpension will rebalance once a week. This is a very slight advantage for Finpension, but in practice, it should not matter much.
In both cases, this is done for free. And there is no reason to change more often. So this is a good point for both companies.
They both have different sets of default strategies. We can take a look at the default strategies of VIAC vs Finpension Vested Benefits:
- VIAC uses names with the number of stocks in it. For instance, Global 80 is a globally diversified fund with 80% stocks (note that Global 100 has 99% stocks). VIAC has three strategies: Global, Switzerland, and Sustainable.
- Finpension Vested Benefits has the same naming. For instance, Finpension Aktien 100 has 99% stocks, while Aktien 80 has 80%. Finpension also has three groups of strategies: Global, Sustainable, and Switzerland.
The default strategies of VIAC are more polished than Finpension’s. However, they both allow you to customize your portfolio in detail. This is where we see the limits of both accounts.
It is also important to mention that Finpension has two vested benefits foundations. This allows you to have two accounts with them and save on taxes when you withdraw money!
Here, there are some significant differences between both. They both allow a high level of customization, but their limits are different.
- VIAC only lets you invest 80% in stocks for the mandatory portion of your second pillar. With Finpension, you can invest up to 99% in stocks for both parts of your second pillar. If you want to invest everything in stocks, this will make a huge difference!
- VIAC only lets you invest 60% in foreign currencies (non-CHF) instruments. On the other hand, Finpension Vested Benefits have no limit. This means you could invest 99% of your portfolio in U.S. stocks if you wanted to.
- They have different limits per asset class. For instance, you can only invest 10% in gold at VIAC and 20% with Finpension Vested Benefits. Finpension lets you invest up to 50% in real estate, while VIAC only enables you to invest 30%. Overall, Finpension Vested has higher limits. But these asset classes should not make a large portion of your portfolio anyway.
In light of this, Finpension Vested Benefits offers significantly better vested benefits portfolios! You can invest more in stocks and have a much better capacity to invest in foreign currency instruments.
VIAC lets you choose between cash and bonds for the part not invested in stocks. If you opt for cash, you could reduce slightly your fees, but you may reduce your returns depending on the current bond interest rates.
VIAC still offers excellent conditions compared to all the other vested benefits. However, they do not provide a better account when you compare it with Finpension Vested Benefits.
Fees – VIAC vs Finpension Vested Benefits
Fees are the only thing you control when you invest in stocks. So, optimizing fees if you invest in the long term is essential. So, we must compare the fees of VIAC vs Finpension Vested Benefits.
The most important fees for your retirement accounts are the management fees. These are the fees you will pay every year on your invested amount. This is significantly more than flat fees in the long term. But many people ignore them because they are small numbers.
Finpension Vested Benefits has a fixed fee of 0.49% per year. On top of that, some of their funds have extra fees (real estate, for instance). But you can choose not to use them, putting the base fee at precisely 0.49% per year.
VIAC has a base administration fee of 0.52%, which is only due on the invested assets. This fee is also capped at 0.40% for the total portfolio. Then, there are some fees for the funds used in each portfolio.
I will take the Global portfolio as an example since this is the portfolio that would suit most people. It has a fee of 0.41%. Since VIAC is a pension fund company, they do not pay TVA, so this is the complete fee.
On top of that, VIAC has some fees for foreign currency exchanges. For this, they pay a 0.75% fee. However, this is optimized between customers. It seems like it should be about a 0.05% fee per year. So, VIAC has a total fee of 0.46% per year.
So, for management fees, VIAC is slightly cheaper than Finpension Vested Benefits. This is a difference of 0.03% per year. If you have 100’000 CHF in your portfolio, this is a difference of 30 CHF per year. Such a difference is likely negligible for most people.
On top of that, both companies have other one-time fees. With VIAC, you will pay 300 CHF if you buy a house with the money in your vested benefits account.
With Finpension Vested Benefits, you have a few more one-time fees:
- 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 money while abroad
- 1500 CHF if you do it within one year of joining
So, Finpension Vested Benefits is more expensive for special operations. But in most cases, people will only pay these fees once or even never for some people.
For some people, there is one extra significant difference between the two offers: the domicile of the foundation. If you are retiring in Switzerland, this will not matter to you. But it is important if you plan to leave Switzerland and withdraw your second pillar. The difference is that when you withdraw money from your second pillar account, you will be taxed based on where your assets are managed. If you withdraw in Switzerland, your tax domicile will be used instead.
VIAC is in Basel, and Finpension Vested Benefits is in Schwytz. And Schwytz is the best canton 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.
So, if you want to withdraw your money abroad, Finpension Vested Benefits will allow you to save a lot of money on withdrawal taxes!
More and more people want to invest sustainably. This means they want their money to work on companies that work for a better future and not only for profits. So, we can compare the sustainable options of VIAC vs Finpension Vested Benefits.
Both companies offer a way to invest sustainably. With VIAC, you can choose a Sustainable strategy (Sustainable 100, Sustainable 80, …). You can also create your portfolio and choose sustainable funds. They have some Socially Responsible Investing (SRI) funds and some Environment Social and Governance (ESG) funds.
With Finpension Vested Benefits, you do not have a default strategy with sustainable options. But you can also opt for a custom portfolio and choose sustainable funds. They have a few ESG funds. But they have less choice of sustainable funds than VIAC.
In both cases, you will pay slightly more fees for these portfolios. Indeed, all sustainable funds are more expensive than their non-sustainable equivalent. This will not make an enormous difference, but it is still relevant to realize this.
You can invest sustainably with both VIAC and Finpension Vested Benefits. They each offer sustainable strategies that can change to using sustainable funds.
Safety of your assets
Over the years, you will have much money in your vested benefits. So, it is essential to know that your assets are safe. So, we should compare the safety of your assets between VIAC vs Finpension Vested Benefits.
In Switzerland, pension accounts are well regulated. They are all under the same law.
Your assets are segregated from the pension foundation for both companies. However, the organization is slightly different.
With VIAC, VIAC is your fund manager. WIR Bank holds your cash assets, and Credit Suisse (or Swisscanto) holds your shares. The foundation in charge of the assets is the WIR Vested Benefits Foundation. If VIAC goes bankrupt, the foundation will find another manager for your assets. If WIR Bank bankrupt, your assets are protected by Swiss law by up to 100’000 CHF in cash. Your shares of funds are held in your name and are safe.
Finpension Vested Benefits is the actual foundation in charge of the assets. finpension is the asset manager. If finpension fails, the foundation will find a new asset manager for your assets. And if the bank holding your assets fails, your shares are in your name, and your cash is insured for up to 100’000 CHF.
With Finpension Vested Benefits and VIAC, your assets are as safe as they can be in Switzerland. They have the same level of safety.
Short-term vested benefits
Sometimes, you need a vested benefits account for the short term. For instance, if you are between jobs. In this case, it does not make sense to invest in the stock market because you will have to sell everything to move back to the pension fund of your new employer.
In this case, you have to be more conservative. If you plan to go back to work in the next few years (ideally less probably), you likely want to keep your vested benefits in cash.
So, in this case, VIAC is better because you can keep it fully in cash and because they give a good interest rate on cash.
We can also compare the technical security of VIAC vs Finpension Vested Benefits.
In both cases, there is very little you can do from the account. Security is slightly less important than a bank account since you cannot withdraw money from the application. However, the application still contains much of your data, and your portfolio could be changed, so you cannot neglect security either.
Both accounts are very similarly protected. First, all the connections are encrypted. Then, they are both using second-factor authentication (2FA) using your phone. They will send you an SMS code to confirm your identity. But they are doing it differently:
- Finpension will always ask your second factor when you login
- VIAC will only request your second factor when you do a major action like modifying your information or portfolio.
Now, there are pros and cons to both approaches. However, I prefer having to write my second factor every single time. That way, my personal information is protected from someone having my password.
So, I will say that Finpension’s security is slightly better than VIAC’s. But this is a slight difference. Both companies have sound security for your money.
Summary – VIAC vs Finpension Vested Benefits
Here is a summary of the main points of VIAC vs Finpension Vested Benefits:
In most cases, Finpension Vested Benefits offers a better vested benefits account:
- Finpension Vested Benefits lets you invest more in foreign currency instruments.
- VIAC has slightly lower management fees.
- Finpension has two foundations, so you can have two accounts.
- Finpension Vested Benefits is better if you withdraw money outside Switzerland.
- VIAC has low fees for special operations like pledging.
- VIAC is slightly better for sustainable investing.
Finpension Vested Benefits will be a better fit for most people. For people not investing fully in stocks, VIAC will be cheaper. But these people may want to review this decision.
So, we conclude this comparison of VIAC vs Finpension Vested Benefits. Finpension Vested Benefits is the best vested benefits account available in Switzerland in 2020. They have several advantages over VIAC:
- Finpension Vested Benefits lets you invest more in stocks, which is excellent for long-term returns.
- Finpension Vested Benefits lets you invest more in foreign stocks, which is great for diversification.
VIAC is still a great vested benefits account compared to other alternatives. But compared to Finpension Vested Benefits, it simply falls short!
If you want to learn more about Finpension, you can read my interview with finpension’s CEO, Beat Buhlmann. They also are offering the best third pillar in Switzerland.
So, that concludes our comparison of VIAC vs Finpension Vested Benefits. If you have any experience with one of them, I would love to hear about it!
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