You're planning to leave the company without having a new employer? Then you must transfer your accumulated pension fund assets to a vested benefits account. Swiss Life answers the most important questions related to this topic.

What is the vested benefits account?

The vested benefits account is for your occupational provisions, the second pillar of the Swiss social security BVG system. If you leave a company for various reasons but do not have a new employer, your accumulated pension fund assets will be transferred to a vested benefits account. You can look at it as a kind of parking space where your personal retirement savings are parked until you have a new employer. 

Why is there a vested benefits account?

The law stipulates that paid-in pension fund assets must remain within the group of insured persons. You may therefore not access the money after leaving the company, instead you transfer it to a vestedbenefits account of your choice.

What is a vested benefits foundation?

The vested benefits foundation is the establishment of a bank or insurance company that invests and manages your vested benefits. It thus serves to maintain your mandatory and non-mandatory benefits coverage within the framework of your pension plan savings for your occupational Retirement, Survivors’ and Disability Insurance.

When do I need a vested benefits account?

Whether due to unemployment, a career break, a stay abroad, further training or maternity leave, the reason is: if you leave a company, leave your current pension fund and need a vested benefits solution. 

How can I open a vested benefits account?

If you leave a company, you are responsible for opening a vested benefits account. If you do not open such an account, your personal retirement savings will automatically be deposited with the national employee benefits institution "Stiftung Auffangeinrichtung" (Foundation for the BVG Contingency Fund). 

To open a vested benefits account, please contact the bank or financial institution of your choice. You can decide in self-determination which provider is the right one for you. Most institutions offer their service online. If you are unsure, an advance consultation is recommended.

What do I do when I have a new employer?

If you start working again after a break, the money deposited in the vested benefits account must be paid into the new employer's pension fund. The vested benefits account is closed.

What happens to my vested benefits account in the event of death?

Following death, the account holder's vested benefits go to the following persons in exactly this order. If there is no person in the first group, the persons in the second group are entitled, etc. If there are several beneficiaries in the same group, the capital is divided equally:

  1.  Spouse/registered partner; minor children; children in education under 25
  2. Persons who received considerable financial support from the account holder; a person who had    cohabited with the account holder in a continuous marriage-like relationship in the last five years prior    to their death; persons who must support one or more children from the relationship
  3. Grown-up children who have completed their education; parents; siblings
  4. Other legal heirs according to the certificate of inheritance, excluding the community

How many vested benefits accounts are permitted?

You may transfer your vested benefit to a maximum of two vested benefits foundations. Two accounts at the same foundation are not permitted. The advantage of this split is that you reduce the risk of loss in the event of the bank going bankrupt. Please note that you cannot split your vested benefits retroactively.

When can I have my vested benefits paid out?

Your saved vested benefits are blocked until you reach normal retirement age. However, there are a few exceptional cases whereby early payment is possible:

  • Early retirement, possible up to five years prior to normal retirement
  • Receipt of a full disability pension
  • Commencement of self-employment as principal occupation
  • Insufficient value (if the current vested benefit is lower than your personal annual contribution)
  • Definitive departure from Switzerland according to the applicable provisions of the Federal Law on Vested Benefits (FZG)
  • Purchase of residential property for own use

Can I invest my vested benefits in securities?

Yes. The interest rate at the major Swiss financial institutions is currently at a low point. If you are looking for a longer investment horizon, you should therefore consider investing your pension fund assets in funds.

In addition to the traditional vested benefits account, a large proportion of providers offer securities solutions. The advantage of this method is that the return is much more likely to be higher than with a traditional solution. The disadvantage: you must accept fluctuation risks. You can use an investment horizon of several years to invest your vested benefits profitably. An equity investment usually pays off from a three-year time horizon.

Swiss Life vested benefits account/custody account

Invest your vested benefit with self-determination. We would be pleased to provide you with more information – in a personal and non-binding consultation.

image source: Unsplash, Thom Milkovic

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