4) It will be a one-off payment. It makes sence, to have more than one account, so that you can lower the taxes (progression) by taking the money in more than just one year.

1) You can move your money from one bank to an other. Insurances are less flexible. I ve personally never been a fan of insurances, besides when reducing risks (i.e. not using insurances for investing money).

2) If you leave Switzerland, you can get your savings (after taxes).

3) Not quite sure, why you would do that. The main advantag is that the 3rd pillar allows you to deduct a sum from the income you would have to tax. Plus you don't have to pay income tax on the income of the account nor do you have to pay property tax. I highly doubt, but don't know, that other nations would not have you pay taxes on the income. Certainly they won't allow to deduct the sum you pay into the 3rd pillar for your income.

Hey guys, 

I work for a company called Liberty Wealth- who are a swiss company who specialise in this info for free for expats - call us anytime on 022 341 3422. 

there are different ways of setting your swiss pillars up so speaking to us means we can compare the best ones for you and your personal circumstances :)

Best,

Cindy.

Be wary of brokers.  They will want to sell you an insurance linked pension policy.  Usually these things are worth very little for the first few years.  Personally I prefer saving in a bank and then ask the bank to buy the 

Ask the bank to buy the most aggressive equity fund they have (that usually means conservative)

Thank you Marcus for your advice. How do I make a choices then among all the options?

Dear Alan

Thank you very much for all your replies and advices. Appreciate! 

I know this is Switzerland, but how much reliable it is to choose the right bank for so many years? When you mentioned it is possible to transfer the money from one to the other, in which circustomces it refers to? 

Thanks again

Jessica

Completely appreciate what you're saying. However my company help people set up their third pillars and just explain how it works for them - We're a swiss company, no need to sell you anything, especially if you dont need it. 

Best

I made carrer in Generali Insurances & Financial Services, and if you need some information about this sujet, i'm glad to give you our financial 3°pilier solutions and possibilitys.

Pedro

Safest options are probably one of the Kantonalbanken, esp. those which have a government guarantee (not all of them have one anymore though).

With three exceptions, all the Cantonal Banks have a full state guarantee. The Berner Kantonalbank and the Banque Cantonale Vaudoise have none and the Banque Cantonale de Genève has a limited guarantee from the canton. 

http://www.kantonalbank.ch/e/gruppe/markt/staatsgarantie.php

Plus you got a investor protection up to CHF 100'000.00 which will cover most 3rd pillar accounts.

https://www.finma.ch/d/sanktionen/insolvenz1/insolvenzverfahren/Seiten/einlegerschutz.aspx

Of course, both of these are not 100 % safe, but in my opinion, when both of these fail, then we have to worry about much more, than just the loss of money (riots, foot shortage, civil war...).

So either one of the Kantonalbanken, Raiffeisenbanken or Migrosbank. Not Bank Coop, as I had loads of problems with them many times..

I am not too sure about this advice. The problem I have, is that these equity funds are activly managed, which means, that even in good years, the management fees eat of your profits. And in bad years, it increases your losses.

If anyone knows of a passive managed 3rd pillar fonds, I am all ears.

Jessica, investing all depends on your circumstances. What may be great for one person is terrible for another. What timeframe do you have till retirement? The longer the timeframe the more volatility you should accept. For example if you saved for 1 year you should have your money in a bank but over 20 years it should be invested in stocks etc (it’s safer especially when you account for your objectives). In reality most people couldn’t reach their requirement for retirement by saving in an account paying low interest (under 3%). Also, do you need the life insurance that comes with some of these policies?

Financial advice should be tailored to the person rather than generic so even if you find the answers that worked for one person doesn’t mean it’s right for you.

If you want further advice, just ask.

Don

Passive funds are very popular at present due to their low costs. They will typically always give you a return below their respective benchmark because of costs.

There are thousands of different managed investment funds. The problem is a lot of them are simply closet tracking funds. They therefore perform like a passive fund but charge more, in some cases a lot more. There are however a lot of good managed funds that are worth the extra fees over their passive counterparts. The most important figure to consider (assuming the same risk) is the net returns. I'd happily pay 50% fees on a fund that constantly returned 20% per year with an accurate medium risk. No such fund exists of course.

I didn't see you posted it here and not only in the other "Geneva" forum, but as the discussion seems to be going rather here, I'll just copy paste my message:

Hello,

1) basically, products in all banks are the same, the most important choice is to know if you want something with a fixed interest, or with some stocks/bonds to have a bit more risks but a higher potential of interests. You also have the possiblity to make in in an insurance, where you trade the "obligation" to pay a fixed premium every year in exchange of some cover (death and/or not being able to work due to health problems).

2) If you leave Switzerland, you are allowed to claim the current value of your 3rd pillar

3) In theory, you can't pay a 3rd pilalr without being in Switzerland. But there are many people who start one while being in Switzerland, leave for a few years while continuing to pay it, then come back here. Of course you can't deduct it from your tax when it happens, as you're not paying taxes here anymore

4) To my knowledge, in all banking products it'll be a one-time payment (a 3rd pillar in a bank is mostly just like any bank account with a better interest rate but less access to the money + tax deductions). In insurance you usually have a bit more choice, but in most case it's also a one-off payment.

I work as a retirment specialist for the Allianz insurance company, so if you (or someone else reading this) need more details or an appointment to try to look what are the best solutions for you, feel free to send me a message here and I'll get back to you. It's the end of the year, so perfect time to make sure to be able to still get tax deductions for the year.

Regarding what you guys says about the funds, I would mostly agree with Marcus and go over the "aggressive" funds... if the person has enough time ahead (so not over 50 years old, and don't expect to leave Switzerland in less than 10-15years. Don't forget that the funds used for 3rd pillars are strictly regulated, and the most important rule are that they can't have more than 50% equities. Regarding the fees, yes there are of course some fees, but over more than 15 years the net return should anyway be higher (if not much higher) than what you'll have in a "bank account" (1.25% at the moment in the Geneva's Cantonal Bank, as you used it as an exemple).

Actually, for most of my clients we choose something a bit in between, with most (if not all) of what you put that is guaranteed, and some part of the investment in a fund to try to get a better result. That's actually what I have for myself too.

Rémy

Well  done Tom for pointing out an often overlooked point.  If you plan to stay in Switzerland and there are many years to retirement then you do much better being 100% long stocks than in a pension fund which is not permitted to own more than 50% stocks. That's even after allowing for the tax relief.  A simple rule of thumb or guesstimate is that stocks will quadruple over 20  years.   That's assuming we don't all turn communist. 

Agreed Marcus that over the long term one is better to start in higher volatility asset classes (stocks, commodities etc) and then shift to lower risk classes (bonds, cash) when the time to retire nears.

As for the rule of thumb over 20 years a lump sum will quadruple (Average return of circa 7.2% per annum - a fair assumption) however, as the third pillar is being discussed, the likelihood is the money is being invested regularly. Investing regularly with a 7% per annum return it will take roughly 18 years to double one's money.

As for return expectations over the long run there is no reason to assume less than 5% per annum with 7% being reasonable. The biggest risk people take with their money is leaving it in a bank account over 20,30,40 year periods.

Thanks Don, all good points.  For clarity to all I would add that  that only by investing in a 100% equity fund can you hope for long term returns of 7%.  The funds available to pension funds have less than 50% equity and in the long run might grow at only 2% or 3%.  That's perfect if you are near retirement and need low volatility but it's not doing any favours to those aged below 50.

The principle of the risk return trade off is the more risk you take the higher the potential returns. 

Keeping things simple, the major investment categories running from low to high volatility are: cash, fixed interest (bonds), property/stocks, commodities. The other key element of risk is time. If you’re investing regularly thereby benefiting from dollar/pound cost averaging*, the longer the time frame the more volatility your should have for your given level of risk. A return of 7% per annum for a medium risk over time is fair.

Also, take note of fees when investing. Admittedly they shouldn’t be the only consideration as one should always pay attention to net returns rather than costs. An interesting article on the matter can be found on facebook here;

https://www.facebook.com/pages/Liberty-WealthManagement/363978726975944

To answer the original points, as this is a matter of your retirement you should take professional advice if you don't feel completely comfortable in dealing with the matter. 

Anyone interested on a straightforward guide on the subject of investing let me know and I’ll direct you to where you can download one.

*Dollar cost averaging definition - http://financial-dictionary.thefreedictionary.com/Dollar-Cost+Averaging

And Don't combine insurance with saving.  Unbundle that

Actually, I think it's one pf the main problem on the subject. It's trying to say something is obvious for everyone, while everyone's situation is a bit different (even if there are many people with pretty similar ones).

Just to "break" that argument, I'll take the case of one company I know pretty well... the one I work for :)

- If someone take a "mixed" insurance (combining savings + risks), we "charge" the same premium in case of death for smokers and non-smokers (I don't even enter in the "is it good or bad" debate, it's not important here, it's like that anyway).

- If someone take a "death only" insurance, the premium is about twice as expensive for a smoker.

- It means that if I only take your "don't combine insurance", it might be right for me if I were non-smoker, but more expensive if I were a smoker.

There are of course many many other things to take into account and my exemple was maybe too simplistic (not sure if you say that in english ;) ), but you probably got the point.

Rémy