What is a Vested Benefits Account?

Are you planning on leaving the company you currently work for without having a new employer? Or are you planning to leave the country? Whichever situation you may find yourself in, you will need to transfer your accumulated pension fund assets to a vested benefits account. If you have never heard of this type of account before, then you have come to the right place! Below, we will discuss everything you need to know about a vested benefits policy.

For starters, let us discuss what this account/policy is. In summary, it is an account into which vested pension capital can be transferred, but only in the case of occupational or Pillar 2 pensions. These accounts differ from normal savings accounts in that they offer a preferential interest rate. Any person that leaves a pension fund without joining a new one is required to preserve their pension entitlements by transferring said funds to a vested benefits account. This is a statutory requirement.

Now that you have a better understanding of vested benefits refer to, we will answer key questions to ensure you have a full scope on this policy.

● Why is there a vested benefits account/policy? As previously mentioned, the law states that paid-in pension fund assets must remain within the group of insured persons. Therefore, the money may not be accessed after leaving a company but should rather be transferred to such an account.

● When would I need a vested benefits account? There are several reasons why you may need to transfer your pension funds, such as the fact that you are unemployed, taking a career break, staying abroad, on maternity leave, or studying further. The main point is that you leave your company, and your pension fund, and need a vested benefits solution to transfer said accumulated funds to.

● When I have a new employer, what do I do with my vested benefit account? If you were previously unemployed, after leaving your previous place of employment, and start working again, you may leave your money in the vested benefit account, or transfer it to your new employer’s pension fund.

● In the event of death, what would happen to my vested benefits account? Should you pass away, your vested benefits account will go to your beneficiaries in a specific order. If there is no person in the first group, the persons in the second group will be entitled, and so forth.

● How many vested benefits accounts are permitted per person? Individuals may transfer their vested benefit to a maximum of two foundations. Two accounts at the same company are not permitted. The reason you might consider retaining your vested benefits account is that it gives you flexibility in the future to optimize your pension drawdown and tax payments.

● When can my vested benefits be paid out? Until you reach normal retirement age, your vested benefits will be blocked. However, there are exceptional cases where early payment is possible, such as early retirement (at least five years prior to normal retirement), disability, or upon leaving Switzerland. This last scenario is the most important one. How you take your pension out of Switzerland can involve a lot of cost and tax if you do not do it in the best way possible. Seek specialist advice from your broker on how to leave Switzerland, making the most of your pension as you do so.

For more information, please go visit: https://swiss-prime.ch/en/vested-benefit-solutions