2nd pillar interest increase in 2025 - does it make sense to voluntarily add money?

[Baptiste Wicht]

As we're on the topic: is there a way to have your employer consider moving to a second pillar which yields more return? I mean, I'm struggling with 1.25% (which MAYBE next year could be 1.5%)! This is horrendous :-(

It's very difficult. Normally, you should have employee representatives in your company. These representatives should represent the interest of the employees. There are also employer representatives that represent the interest of the company. So, the employee representatives could make a case about the bad returns of the second pillar and try to move. However, this can only be done for all employees inside the plan, so it's not a small move and unless there is a really good reason to do that, it's unlikely that your employer would follow.

 

[OxygeN]

It's very difficult. Normally, you should have employee representatives in your company. These representatives should represent the interest of the employees. There are also employer representatives that represent the interest of the company. So, the employee representatives could make a case about the bad returns of the second pillar and try to move. However, this can only be done for all employees inside the plan, so it's not a small move and unless there is a really good reason to do that, it's unlikely that your employer would follow.

Yeah - this sucks! The system itself sucks!
If you're employed in a company whose CFO is "conservative" to say the least, you're bound to the company's decision, on how to invest YOUR money. Because, in the end (actually already from the beginning) it is YOUR money and belongs only to YOU! So why TF isn't it allowed for an employee to decide on how to manage HIS OWN capital?
The financial ignorance and the lack of financial discussion is the main cause for employees not challenging these situations. Same job I have, different company, and I'd be getting between 3% and 5% interests p.a. on the second pillar. Even more so, there's a friend of mine whose second pillar institution increased for 1 year the interest rate of 1% because of more inflation!
Adding to this that our employee representative is "fearful" when it comes to anything related to money/finance! He's the guy who was trying to explain to me that all the money I put into 3A (not just into an account, but investing it) is guaranteed - I won't lose it at all! #facepalm - how can I trust him in representing the employees rights and "fighting" for better conditions???

 

[gaijin]

Yeah - this sucks! The system itself sucks!

The topic of second pillar should be part of every negotiation between future employee and company and then the employee can make a decision to accept the job or not. This would put some pressure to change the system. Unfortunately most employees (me included) only realize this situation only after some time at their employer.

 

[OxygeN]

The topic of second pillar should be part of every negotiation between future employee and company and then the employee can make a decision to accept the job or not. This would put some pressure to change the system. Unfortunately most employees (me included) only realize this situation only after some time at their employer.

Yes, and this is sad - but more important: it's dangerous for the employee. Not thinking about one's future might be "ok" in your twenties, but dammit - even 40/50+ have no clue about their finances and how to survive after retirement!
This is primarily the government's fault, not wanting to teach financial education in school from young age. This way the population remains "unaware" of what the powerful people (the few who know about finance) do with money (of course only to their own advantage). You even see it now: the government is discussing the increase of taxation on 2nd and 3rd pillars! Is this something to advantage/help the population? Not at all! Richer getting richer - the poorer getting poorer.

 

[zeusone]

My pensionkasse wrote:
- interest on 2024 retirement saving: 4.0%
- provisional interest rate for 2025: 1.25%
can I consider it a good second pillar?

 

[OxygeN]

My pensionkasse wrote:
- interest on 2024 retirement saving: 4.0%
- provisional interest rate for 2025: 1.25%
can I consider it a good second pillar?

I think it's as worse as mine with 1.25% interest rate for 2025...

 

[Max]

My pensionkasse wrote:
- interest on 2024 retirement saving: 4.0%
- provisional interest rate for 2025: 1.25%
can I consider it a good second pillar?

It's fine. There are annual comparisons of Swiss 2nd pillars. It's a bit too early for the 2025 comparison, you can have a look at the 2024 comparison (the interest rate table excerpt can be also found here).

I consider Profond a very good 2nd pillar. Unfortunately, they are not mine

 

[Max]

We asked, and we were told it's being paid once at the end of the year.

Then it looks very promising for adding extra money!

 

[OxygeN]

Then it looks very promising for adding extra money!

... even though "only" aged 45?

 

[Max]

... even though "only" aged 45?

Okay, amendment: Then it looks very promising for adding extra money to profit from the 7,5% interest rate!

Whether it makes sense to add money to the 2nd pillar at 45, is another question. Personally, I never add any extra money to my 2nd pillar, because the interest rate is too low compared to my own long term investment profit.

 

[OxygeN]

Okay, amendment: Then it looks very promising for adding extra money to profit from the 7,5% interest rate!

Whether it makes sense to add money to the 2nd pillar at 45, is another question. Personally, I never add any extra money to my 2nd pillar, because the interest rate is too low compared to my own long term investment profit.

This is what I'm trying to understand. Low income, living in canton Zug, 45y old. Partially (below CHF 100k) invested in VT (via IBKR), so 1 year on 7.5% interest rate would be better than 1 year VT yields, right? Plus, this could be deduced from tax declaration next year - correct?
Is there any other thing to consider and/or be aware of? Any catch?

 

[Max]

This is what I'm trying to understand. Low income, living in canton Zug, 45y old. Partially (below CHF 100k) invested in VT (via IBKR), so 1 year on 7.5% interest rate would be better than 1 year VT yields, right? Plus, this could be deduced from tax declaration next year - correct?
Is there any other thing to consider and/or be aware of? Any catch?

The catch is the long term interest rate vs. long term invetsment profit. I wouldn't expect MPK to pay 7,5% every year or beat the long term performance of VT (even with tax deduction considered).

MPK invests 28% of the portfolio into various bonds and only 30% into stocks, whereas VT is 100% stocks.

 

[OxygeN]

The catch is the long term interest rate vs. long term invetsment profit. I wouldn't expect MPK to pay 7,5% every year or beat the long term performance of VT (even with tax deduction considered).

MPK invests 28% of the portfolio into various bonds and only 30% into stocks, whereas VT is 100% stocks.

mmmhhh.. thanks for feeding my thoughts.
In fact, probably better having the flexibility to withdraw anytime from VT than being bound to MPK for the next 20 years.

 

[Omainec]

As we're on the topic: is there a way to have your employer consider moving to a second pillar which yields more return? I mean, I'm struggling with 1.25% (which MAYBE next year could be 1.5%)! This is horrendous :-(

For a starter: try to get elected into the PK-Stiftungsrat ... employes have 50% representation ... but wait, on second thought, maybe it's easier to change your employer.

 

[OxygeN]

For a starter: try to get elected into the PK-Stiftungsrat ... employes have 50% representation ... but wait, on second thought, maybe it's easier to change your employer.

Sad but true...