Saving for retirement in pillar 3a requires careful selection of investment products. Differences in returns and costs can make a significant impact on savings.
As the year-end approaches, so does the deadline for contributions to private retirement savings in pillar 3a. This year, pillar 3a securities investments with high equity allocations have shown particularly high returns, as highlighted in an analysis by financial services provider VZ Wealth Management. Many products with equity allocations of 80% or more have performed exceptionally well by the end of September.
### The Top Performers
The pillar 3a product with the highest performance this year is “Aktien Global o-100 R” by insurer Baloise, achieving a return of 18.9% from the beginning of the year until September. Nine pillar 3a investments have yielded returns of 15% or more, including products from Schwyzer Kantonalbank, Frankly, Mobiliar, Viac, and Berner Kantonalbank.
### Stocks Don’t Guarantee Returns
When evaluating pillar 3a investments, it’s crucial to consider their performance over several years. For instance, 2022 was a challenging year for stocks and bonds. Looking at returns since early 2020 reveals significant disparities between products:
– Investments with high equity allocations have outperformed, with products like “Swisscanto BVG 3 Responsible Portfolio 75 RT” offering an average annual return of 8.1%.
– However, not all products with high equity allocations have delivered strong returns, emphasizing the importance of selecting the right investment.
### The Diverse Range of Offerings
The market now boasts over 200 different securities solutions for pillar 3a, with some banks offering up to 18 proprietary funds. This abundance of options raises questions about the actual value these choices provide to customers.
According to Alain Beyeler, head of financial services provider Finpact, the differentiation between these solutions is minimal, making it challenging for customers to navigate the landscape. Cost transparency and product comparison become particularly demanding tasks.
### Navigating the Fee Maze
In the past, total costs of 2-3% for pillar 3a securities investments were common. However, the market has evolved, offering more affordable options that benefit pillar 3a savers. Competition has intensified, leading to a significant reduction in average fees for 3a funds.
Amidst this evolution, a complex fee structure has emerged, with various providers charging different types of fees. It’s crucial to assess the total costs and overall package of each product to make informed decisions.
### Importance of Cost Awareness
Vanguard exemplifies the impact of costs on long-term wealth accumulation through a hypothetical scenario. A difference in annual costs from 0.3% to 1.2% over 30 years can result in a substantial disparity in final savings.
In 2024, the maximum contribution limit for tax-advantaged pillar 3a accounts is CHF 7,056 for those affiliated with a pension fund. Self-employed individuals can contribute up to CHF 35,280 or 20% of their net income and deduct the corresponding amount on their tax return.
In conclusion, selecting the right pillar 3a investment is crucial for long-term financial security. With a plethora of options available, understanding the costs and performance of each product is essential for maximizing returns and achieving retirement goals.