Pillar 3a apps and digital investment solutions are becoming increasingly popular. With Pax 3a, retirement insurance provider Pax offers a digital solution that combines wealth building, ETF investments, and disability protection. In this interview, moneyland.ch asks Anda Majic, project manager for personal retirement planning and for Pax 3a, and Christophe Schwyzer, head of digital sales at Pax, to explain how this offer differs from other pillar 3a solutions, and who could most benefit from it.
moneyland.ch: What are the unique advantages of Pax 3a?
Anda Majic: People who want to save for retirement look for solutions that match their individual needs and are easy to integrate into everyday life. Pax 3a provides savers with a solution that combines the security of a guaranteed savings component that earns interest with the potential returns of a diversified stock ETF. Additionally, Pax 3a also includes insurance that ensures your premium payments if you become disabled.
If a disability caused by an illness or accident prevents you from earning an income, Pax will cover all or part of your ongoing premiums, after the pre-agreed waiting period. Which portion of your premium is covered depends on your disability level. This insurance enables you to continue to save for retirement even if you could not otherwise afford to cover your ongoing premiums. It is important to note that the value of the ETF component will continue to fluctuate with the markets. The insurance cover is not a guarantee against possible investment losses.
Many retirement savers want to have a clearly structured savings plan. Fixed, regular payments help you to build up your savings in a clear, systematic way.
Retirement savers today are likely to compare pillar 3a accounts, investment services, and insurance-based solutions. How is Pax 3a different from other pillar 3a offers?
Christophe Schwyzer: Today’s retirement savers want modern investment solutions with a simple, digital interface. That is why we conceptualized Pax 3a as a transparent, digital retirement saving solution. You can sign up completely online. Your answers to the short questionnaire are used to determine your personal situation and your risk profile. Pax 3a then recommends a combination of guaranteed savings and investments that matches your profile. You can also get in-person consultation if you prefer.
The combination of savings and insurance cover is an important aspect. Stand-alone pillar 3a savings accounts and investment solutions do not normally include integrated insurance that covers payments into your retirement savings if you become disabled. Pax 3a does.
Anda Majic: Transparent fees are another point that is particularly important for customers. We use a low-cost global stock ETF for the investment component, instead of actively managed mutual funds.
Pax 3a also differs from stand-alone pillar 3a savings accounts or investment solutions in that it comes with built-in premium payment insurance against the risk of disability. So it combines a wealth building solution with protection against the risk of life not going as you planned.
How does Pax 3a compare to other pillar 3a saving solutions in terms of costs?
Anda Majic: The costs of Pax 3a are made up of two different fees: The asset management fees, and the TER fees for the ETF.
Pax charges an annual asset management fee equal to 0.5 percent of invested assets. This fee is reduced to 0.35 percent if the value of the ETF component surpasses 50,000 francs.
For the investment component, Pax uses the low-cost UBS MSCI World Selection UCITS ETF USD Accumulating. This ETF has a current TER fee of 0.15 percent.
When looking at costs, it is important to also compare the value you get, and not just the fees. Pax 3a not only helps you save and invest, but also ensures that your retirement savings will continue to grow if you ever become disabled. That cover is not automatically included in pillar 3a savings accounts and investment services.
Pax is a mutual insurance company. How does that affect your products?
Anda Majic: As a mutual insurance company, Pax does not have any shareholders. Its commitment is only to its customers. When you become a customer of Pax, you become part of the cooperative, and are entitled to receive dividends when Pax makes a profit.
The cooperative nature of our company also lends itself to a long-term approach in retirement planning. Decisions are not made based on short-term profit targets, but on sustainable solutions for our customers.
Is there a risk of losing money?
Anda Majic: The invested part of your savings is exposed to the same risks as other stock market investments. Pax 3a combines both a guaranteed, interest-bearing savings component with an investment component that can potentially deliver high returns. The savings component earns interest at a guaranteed base rate, and profit distribution dividends are also paid into this component.
For the invested part, Pax uses a globally diversified stock ETF. The value of this component can fluctuate, just like other stock investments.
Christoph Schwyzer: The length of time that you plan to save for is also important. If you leave your money invested for a long period of time, you can benefit from the long-term returns potential of financial markets. At the same time, a part of your retirement savings is guaranteed and earns interest. So Pax 3a is designed for long-term retirement saving.
What would happen if I can no longer afford to save for retirement?
Anda Majic: If your financial situation changes, you can adjust your savings plan to match, within the possibilities allowed for in the terms and conditions. Lowering your insurance premium is one option. Doing this also changes the guaranteed benefits. The lowest possible premium is 50 francs per month.
You also have the option of putting your savings plan on hold. The retirement savings you already accumulated remain intact. Whether or not the insurance cover remains in place, and to which extent, depends on whether or not you continue paying for that insurance cover.
If your financial situation improves down the line, you can increase your premium again, or reactivate your savings plan. You can also make extraordinary payments into your savings plan, within the limits of the pillar 3a and the contractual terms and conditions. The amount that will be paid towards your retirement savings by the premium insurance if you become disabled depends on how much insurance you choose to include, with the resulting price differences.
Who would get the most value out of using Pax 3a?
Anda Majic: Pax 3a is designed for people who want to save for retirement over a long period of time, and prefer to do so using a structured saving plan. It is particularly interesting for people who want to invest in an automated way with a savings plan that also includes protection against the impact of a disability on your ability to save.
Christophe Schwyzer: We kept the online sign-up process as simple as possible. After selecting needed information about your personal situation, risk tolerance, and retirement saving goals, Pax 3a recommends a suitable portfolio. You also have the option of adjusting your premiums to match the going annual pillar 3a contribution limit.
So Pax 3a is a suitable solution for people who want to combine wealth building with additional security in an easy-to-use digital solution.
Information
About moneyland.ch Magazine
The moneyland.ch magazine provides accurate, unbiased information on topics related to finance and money. In addition to research and expert interviews, the magazine contains numerous financial guides. You can find more information about our editors and experts here.
Show categories
Compare Pillar 3a Accounts
Compare Retirement Funds
protected by
