Hello to the Swiss FI community and thank you Baptiste for your informative website!
I am an American expat living in Switzerland. My current projection is that I will achieve FI in 2032 when I am 48 years old. This means that my Swiss second pillar will need to be transferred to a vested benefits account if I decide to retire early. I will not be allowed to withdraw from my vested benefits account until 12 years later when I reach age 60.
Finpension offers a vested benefits accounts with an expense ratio of 0.49%. However, this is over 12 times higher than the 0.04% expense ratio for Vanguard’s VTSAX. You might not think that a 0.45% difference matters that much but it adds up for a decent amount of starting principal over a long enough period of time.
I ran some calculations that are displayed in the table below about the expected future value of my vested benefits account vs. Vanguard’s VTSAX.
Table Notes:
Even with a more conservative base interest rate of 5.00% I could lose the money I need for about 7 months of my early retirement just because of fees.
My questions to the Swiss FI community are the following:
I am an American expat living in Switzerland. My current projection is that I will achieve FI in 2032 when I am 48 years old. This means that my Swiss second pillar will need to be transferred to a vested benefits account if I decide to retire early. I will not be allowed to withdraw from my vested benefits account until 12 years later when I reach age 60.
Finpension offers a vested benefits accounts with an expense ratio of 0.49%. However, this is over 12 times higher than the 0.04% expense ratio for Vanguard’s VTSAX. You might not think that a 0.45% difference matters that much but it adds up for a decent amount of starting principal over a long enough period of time.
I ran some calculations that are displayed in the table below about the expected future value of my vested benefits account vs. Vanguard’s VTSAX.
Table Notes:
- 300’000 CHF start principal with no additional contributions and 12 years to grow.
- ER stands for expense ratio.
- The amounts are calculated for the base interest minus the expense ratio.
- For example: 5.0% - 0.49% ER = 4.51%
- FI Months are calculated as follows:
- My planned annual expenses during my early retirement are 44’000 CHF annually.
- I divided the “Difference” value by 44,000 and then multiplied that by 12 months.
My questions to the Swiss FI community are the following:
- Is there a company in Switzerland offering an equities vested benefits account with an expense ratio less than Finpension’s 0.49%?
- Is there a legal way to transfer my second pillar to the US? The vested benefits accounts that I am aware of here in Switzerland are simply not as attractive as the Vanguard index funds that I can directly invest in as a US citizen.
- I know that I could withdraw my vested benefits account earlier than age 60 if I permanently left Switzerland and returned to the United States. However, due to personal circumstances I may stay in Switzerland during at least part if not all of my retirement.
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