Proper retirement planning as an employee with 3a assets

 

Are you employed and already have a lot of pillar 3a assets saved up? Let us show you how you can make the most of your retirement savings with frankly. The following example refers exclusively to private retirement planning.

Example: Martin, 55 years old, in employment

Let’s assume you are Martin, 55 years old, and you work as a sales representative for a chemical company in Basel. You’re married with two grown-up children. Your retirement date is only 10 years away. Getting a good return on your investment products in the 3rd pillar and paying as little as possible in fees is important to you. You have a busy life and don’t want to spend a lot of time getting your 3rd pillar just right.

Possible investment product: Moderate 45 Active

Martin opts for a sustainable, active investment product that contains a medium equity component (45%). The objectives of the investment product are to achieve long-term capital gains and to generate income. On the other hand, Martin is risk tolerant without taking major risks, since his investment product also consists of 40% bonds and 15% real estate.
Active investment products are also designed to “beat the market”, i.e. to achieve a better investment performance than the market average.

To the investment products
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It makes sense for Martin to open several pillar 3a accounts with frankly instead of just one, and to distribute the money or pay it in on a staggered basis. If you pay your retirement savings into several different pillar 3a accounts, you can save on tax later on when you withdraw your money, because the payout is staggered over several years.

 

Tip: We advise Martin to check the fees and performance of the providers of his current pillar 3a assets! frankly is 60% cheaper than comparable securities savings offers (source: moneyland.ch). Compare for yourself, and switch your current pillar 3a assets to frankly now.

To the comparison with competitors

What kind of pension could Martin achieve with frankly by the time he retires?

Based on the initial situation, Martin could achieve the following retirement savings with frankly compared to a traditional pillar 3a banking product:

Statement of changes in net assets:

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Calculation and risk information

Reveal card

Statement of changes in net assets:

If Martin were to leave his money in his original normal 3a account, in 10 years’ time and assuming interest rates remain low at 0.05%, he would have CHF 167,510. If he were to save in securities, however, with a hypothetical return of 3.10% this could rise to CHF 201,400.

The possible savings with securities are worth much more than just a few hundred francs. Martin, for example, is 55 years old and in employment. In future, he pays the maximum amount of CHF 6,883 each year into his pillar 3a account with frankly, and he selects an investment product with an equity component of 45%. He transfers an additional CHF 98,000 from his previous pillar 3a over to frankly. 

Calculation and risk information

Assumptions: equity component 45%, hypothetical return per year 3.10% (net after costs). The future returns and risks presented here are for illustrative purposes only. Securities savings may fluctuate, the hypothetical return cannot be guaranteed, and tax effects are not included in this forecast.

Economic models and statistical methods are used for calculation purposes. The forecast corresponds with the most likely performance, and can be predicted for an investment horizon of up to 10 years. In the event of a longer investment horizon the calculations are continued using the same values, whereby no statements can be made about the probability of the calculated results occurring. In the event of very unfavourable market developments, the performance may be lower than the nominal savings value. The calculated values are net of the frankly all-in fee, and are based on an interest rate on the pillar 3 account of 0.05%. Please note that inflation and the taxes payable when the balance becomes due are not included in this forecast.

Additional tax savings:

Based on the above values (living in Basel, married, two daughters, Roman Catholic, deposit CHF 6,883 per year) and a possible taxable income of CHF 85,000, Martin can save an additional CHF 1,897 per year in taxes with each pillar 3a solution! Source: Zürcher Kantonalbank tax calculator

tax calculator - Zürcher Kantonalbank

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