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People that are 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 valuepension are the best options available for vested benefits accounts. So, let’s see which of VIAC vs valuepension you should choose!
I am going to compare both options in great detail. We are going to look at their investment models, their fees, and the security of both accounts.
VIAC Vested Benefits
I have talked many times about VIAC on this blog. They are providing the best third pillar in Switzerland. And in May 2020, they also started offering a second pillar (vested benefits) account.
VIAC is a digital provider. You will use the web application to manage your account online. They already have a mobile application for their third pillar. So it is possible that they provide access to the second pillar as well through this app in the future.
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, I have made a review of VIAC vested benefits.
valuepension Vested Benefits
valuepension started in 2017 as a vested benefits account provider. valuepension is a second pillar foundation. The assets of the foundation are managed by finpension.
valuepension is a digital provider. You will use the web interface to access and manage your account.
Interestingly, they also plan to extend in the third pillar provider world. This means that they will also be an alternative to VIAC for the third pillar. It is going to be an interesting comparison, as well.
If you want more information, read my complete review of valuepension.
Let’s start by comparing the investment models of VIAC vs valuepension.
Both VIAC and valuepension 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 have access to 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.
Both valuepension and VIAC will rebalance your portfolio once a month if necessary. So, if you make any change to your portfolio, it will only be applied at the beginning of the following month. In both cases, this is done for free. And there is really 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 valuepension:
- VIAC uses names with the number of stocks in it. For instance, Global 80 is a globally diversified fund with 80% in stocks (just note that Global 100 has 97% in stocks). And VIAC has three sets of strategies: Global, Switzerland, and Sustainable.
- valuepension has the same naming. For instance, valuepension Aktien 100 has 99% in stocks, while Aktien 80 has 80% in stocks. valuepension has only a set of strategies that are already diversified.
I think that the default strategies of VIAC are more polished than valuepension. However, they both allow you to customize your portfolio in detail. This is where we are going to see the limits of both accounts.
Here, there are some significant differences between both. They both allow a high level of customization, but their limits are different.
- valuepension allows you to invest up to 99% in stocks, while VIAC only allows you up to 97% in stocks. This may sound like little, but in the long-term, this could make a significant difference in your returns.
- VIAC only lets you invest 80% in stocks for the mandatory portion of your second pillar. With valuepension, 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, valuepension has 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 while you can invest 20% with valuepension. For real estate, valuepension lets you invest up to 50%, while VIAC only enables you to invest 30%. Overall, valuepension has higher limits. But these asset classes should not make a large portion of your portfolio anyway.
In light of this, valuepension is offering significantly better vested benefits portfolios! You can invest more in stocks, and you have a much better capacity to invest in foreign currencies instruments.
VIAC still offers excellent conditions when you compare with all the other vested benefits account out there. However, when you compare with valuepension, they do not provide a better account.
Let’s see the differences in fees.
Fees – VIAC vs valuepension
Fees are the only thing you have control over when you invest in stocks. So, it is incredibly important to optimize fees if you invest in the long-term. So, let’s compare the fees of VIAC vs valuepension.
The most important of the fees for your retirement accounts are the management fees. These are the fees you are going to 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.
valuepension has a fixed fee of 0.49% per year. On top of that, some of their funds have some extra fees (real estate, for instance). But you can choose not to use them, and this will put the base fee at precisely 0.49% per year. However, this is without TVA. So, the actual fee you are going to pay is 0.53% per year.
VIAC has a fee that depends on your 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 0.51%. 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 when for foreign currency exchanges. For this, they pay a 0.75% fee. However, this is optimized between customers. In practice, it seems like it should about a 0.05% fee per year. So VIAC has a total fee of 0.56% per year.
So, for management fees, valuepension is slightly cheaper than VIAC. 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.
Now, there is an exception if you do not fully invest in stocks or bonds. With valuepension, you will always pay the same regardless of your investment in stocks or bonds. But with VIAC, you will only a fee for the invested part. If you have 20% in cash, you will only pay 80% of the fee. So, if you have a non-invested portfolio, you will not pay any fees at VIAC, but you will pay the full fee at valuepension.
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 valuepension, you have a few more one-time fees:
- 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
So, valuepension is more expensive for special operations. But in most cases, people will only pay these fees 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 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. If you withdraw while in Switzerland, your tax domicile will be used instead.
VIAC is in Basel, and valuepension is in Schwytz. I (only if you leave Switzerland). And 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.
So, if you want to withdraw your money while abroad, valuepension 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 valuepension.
Both companies offer a way to invest sustainably. With VIAC, you can directly choose a Sustainable strategy (Sustainable 100, Sustainable 80, …). You can also create your own portfolio and choose sustainable funds. They have some Socially Responsible Investing (SRI) funds and some Environment Social and Governance (ESG) funds.
With valuepension, 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.
Note that 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 still relevant to realize this.
You can invest sustainably with both VIAC and valuepension. However, VIAC has more options for sustainable investing than valuepension. They have more funds, and they also offer default sustainable strategies. So, VIAC is better for sustainable investing if this is something you feel strongly about.
Safety of your assets
Over the years, you are going to have a lot of money in your vested benefits. So, it is essential to know that your assets are safe. So, let’s compare the safety of your assets between VIAC vs valuepension.
In Switzerland, pension accounts are well regulated. They are all under the same law.
For both of these companies, your assets are segregated from the pension foundation. However, the organization is slightly different.
With VIAC, VIAC is your fund manager. Your cash assets are held by WIR Bank, and the shares are held by Credit Suisse. And the foundation in charge of the assets if the WIR Vested Benefits Foundation. If VIAC bankrupts, the foundation will find another manager for your assets. If WIR Bank bankrupts, then your assets are protected by Swiss law up to 100’000 CHF in cash. Your shares of funds are held in your name and are safe.
With valuepension, valuepension is the actual foundation in charge of the assets. finpension is the asset manager. If finpension fails, the valuepension 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 up to 100’000 CHF.
With both valuepension and VIAC, your assets are as safe as they can in Switzerland. They have the same level of safety.
We can also compare the technical security of VIAC vs valuepension.
In both cases, there is very little you can do from the account. Since you cannot withdraw money from the application, security is not as important as for a bank account. But the application still contains a lot of your data, and your portfolio could be changed, so security cannot be neglected 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 in a different way:
- valuepension 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 your 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 valuepension’s security is slightly better than VIAC’s. But this is a small difference. Both companies have sound security for your money.
Summary – VIAC vs valuepension
Let’s summarize the main points of VIAC vs valuepension:
|Investment Models||Very Good||Very Good|
|Investment in Stocks||Okay||Very Good|
|Investment in Foreign Currencies||Limited||Very Good|
|Portfolio Customization||Good||Very Good|
|Fees on Cash||Low||Good|
In most cases, valuepension offers a better vested benefits account:
- valuepension lets you invest more in stocks.
- valuepension has slightly lower management fees.
- valuepension lets you invest more in foreign currency instruments.
- VIAC has lower fees if you do not fully invest in stocks.
- VIAC has low fees for special operations like pledging.
- VIAC is slightly better for sustainable investing.
- valuepension is much better if you plan to withdraw the money outside of Switzerland.
valuepension will be a better fit for most people. For people not investing fully in stocks, VIAC will be slightly cheaper. But these people may want to review this decision.
So, let’s conclude this comparison of VIAC vs valuepension.
After this comparison, valuepension is the best vested benefits available in Switzerland in 2020. They have several advantages over VIAC:
- valuepension lets you invest more in stocks, which is excellent for long-term returns.
- valuepension lets you invest more in foreign stocks, which is great for diversification.
- valuepension has slightly lower management fees.
VIAC is still a great vested benefits account compare to other alternatives. But compared to valuepension, it simply falls short!
There is one place where VIAC is better than valuepension: when you want to invest a small amount in stocks. If you invest little in stocks, VIAC is better because you pay a lower fee. But you should ask yourself the question of why you want to invest little in stocks.
If you want to learn more about valuepension, you can read my interview with finpension’s CEO, Beat Buhlmann.
So, that concludes our comparison of VIAC vs valuepension. If you have any experience with one of them, I would love to hear about it!