Swiss pension plans



This video is only available in Swiss language.

The Swiss National Bank is currently paying a negative interest on its ten-year bonds. That means if you invest 100 francs with this bank, you will only get 95 francs back after ten years.

You’re obviously thinking to yourself: “I’m not stupid, I’m not giving my money to this bank”. While it might be true that you’re not that stupid, what you might not know is that your bank is giving your hard-earned money to the National Bank, and that is hurting you. Especially if you’re investing your money in a pillar 3a fund.

In our video, we are showing that the interest rates in Switzerland have been around 4% for the last 200 years. Interest rates have never been as low as today.

Pillar 3a funds are mainly doing one thing: They invest in bonds. Now you might think that low interest rates aren’t that dramatic as long as your money is invested in a secure manner. However, unfortunately this isn’t the case.

If the negative interest rates of today were to go back to the 4% that is normal for Switzerland, then the value of the bonds won’t go down by 4%, but by 10 times 4%, because the bonds pay less interest over 10 years. That means the value of your pillar 3a fund might drop by a total of 40%! That hurts.

Should you still invest money into the pillar 3a? Yes, but not in a pillar 3a fund, but rather a pillar 3a interest account.Next year, we will launch a pillar 3a product that you can use to invest your money in a much better way.