Around 1.8 billion francs of retirement capital is being transferred to new investment products. On May 16, 2022, Postfinance is converting its four Postfinance Pension pillar 3a retirement funds into actively-managed products with much higher fees. The funds are simultaneously being renamed to PF Pension – ESG. Customers who do not take action will see their fund shares automatically converted to shares in one of the new funds.
The total expense ratios (TERs) of the new funds are around twenty-five percent higher than those of the phased-out funds (see table). The difference is exceptionally large in the case of the Postfinance Pension 45 fund. In addition to having a slightly larger stock component of 50 percent, compared to its predecessor’s 45 percent, its replacement also costs around a third more. As is customary, the funds with larger stock components still have higher fees.
Table: Changes to Postfinance retirement funds
| Old fund |
New fund |
Old TER |
New TER* |
| Postfinance Pension 25 |
PF Pension – ESG 25 Fund |
0.88% |
1.12% |
| Postfinance Pension 45 |
PF Pension – ESG 50 Fund |
0.92% |
1.19% |
| Postfinance Pension 75 |
PF Pension – ESG 75 Fund |
0.98% |
1.24% |
| Postfinance Pension 100 |
PF Pension – ESG 100 Fund |
1.01% |
1.27% |
*Postfinance predictions
For the sake of comparison, it is worth noting that there are pillar 3a funds from other service providers which have annual costs as low as 0.5 percent. Even the 1.08-percent average cost of Swiss retirement funds is somewhat lower than that of the new Postfinance funds. “People who stick with Postfinance will pay above-average fees for the management of their retirement assets,” explains moneyland.ch analyst Felix Oeschger.
Additional costs may apply
When looking at the fees for the new funds, it is important to understand that TERs are calculated at the end of each year based on effective costs. In the case of the revised Postfinance funds, the TERs shown in the table above are the bank’s estimates of future costs. “The effective TERs which customers will have to pay over the next few years should more or less match these estimates,” says Oeschger from moneyland.ch.
The analyst assumes that the revision will result in additional, hidden costs for Postfinance customers. The reason for this is that the bank wants to begin applying sustainability criteria to pillar 3a retirement funds. “The revision could generate internal transaction costs,” says the moneyland.ch analyst. How high these one-time costs are, depends on how many assets have to be bought and sold in order to meet the new criteria.
Rebalancing costs are not normally accounted for in the TER, but they can drive down the fund’s performance. The bank responded to a moneyland.ch inquiry by saying that it tries to minimize transaction costs. But Postfinance did not provide information about the effective portion of assets which will have to be transferred in and out of funds for the restructuring.
Markup for active management
Postfinance names the fact that the new retirement funds are actively managed as a reason for the higher costs. The previous funds were passively managed. “Actively-managed investment products are almost always more expensive than passively-managed ones,” clarifies moneyland.ch CEO Benjamin Manz.
Upon inquiry, Postfinance told moneyland.ch that it hopes the actively-managed funds will deliver better performance than the market as a whole. But moneyland.ch analyses show that actively-managed funds tend to perform worse than passively-managed funds. “A move to actively-managed products is likely to be disadvantageous for customers,” believes Oeschger. “There is no sure way of knowing whether fund managers will even be in a position to outperform the market, but customers will, in every case, have to cover the higher costs generated.”
Expensive sustainability?
Another reason given by Postfinance for the move to active fund management is that it wants to place a stronger focus on ESG criteria.
“But active fund management is not a requirement for sustainable products,” says Oeschger from moneyland.ch. There are regular Swiss sustainability funds which are passively-managed and have much lower TERs. But when it comes to retirement planning solutions, there are still very few options for passively-managed investing.
No more forced exit at retirement
Another change is that Postfinance customers will no longer have to sell their fund shares when they reach retirement age. Instead, the assets can be transferred to non-privileged assets in a regular custody account. “That is beneficial because customers will no longer be forced to exit their investments during recessions or other unfavorable periods when they retire,” explains Benjamin Manz from moneyland.ch. Up until now, customers were forced to close their pillar 3a investments when they retired – even if the forced exit occurred when prices were low and led to significant losses.
Postfinance does not charge fees to transfer pillar 3a assets to a non-privileged custody account which it opens for the purpose. But you do pay ongoing annual fees for the new investment solution. The Fund Consulting Basic service has an annual fee equal to 0.25 percent of the value of your account, plus VAT. A lower fee of 0.15-percent plus VAT applies when customers handle the setting up of the asset management service themselves.
More on this topic:
Compare Swiss retirement funds now
How to choose the right pillar 3a solution
The stocks behind sustainable funds explained
Things to consider when choosing sustainable funds
