Retirement benefits

Vested benefits account: What you need to know

If you leave a pension fund and do not transfer your accumulated retirement savings directly to another pension fund, you must usually transfer the assets to a vested benefits account. Learn what you need to pay attention to when transferring, investing and withdrawing vested benefits.

Roman Fäh
Retirement expert

Divide assets when leaving the pension fund

It is possible to divide the credit balance upon leaving and to have the pension fund transfer it to two different vested benefits foundations. The two credit balances can then be withdrawn in different years. As a result, you generally pay less tax than if you had to withdraw the entire balance at once. The following example shows the advantages of this approach: A single person domiciled in Bern pays around CHF 42,240 in taxes if he or she takes a one-time payout of CHF 500,000. If the person is able to draw the capital in two parts of CHF 250,000 each, he or she pays around CHF 8850 less tax.

Important: The division can only be made upon leaving a pension fund. Once the assets are on a vested benefits account, dividing them is no longer possible and you can withdraw them only as a lump sum.

Account, policy or securities custody account?

Contrary to pension funds, vested benefits foundations do not have to pay a minimum interest. That is why the interest rate on a vested benefits account is practically zero today. In the case of vested benefits policies, administrative costs and premiums for the insured benefits are also incurred. If you would like to protect your family and yourself in the event of death and incapacity to work, it is usually advisable to take out pure risk insurance with an insurance company and to invest your vested benefits in a more advantageous way.


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Many vested benefits foundations allow you to invest your assets in securities. Although the value of the assets can fluctuate greatly in such a case, the return is usually significantly higher than on a vested benefits account. At VZ Vested Benefits Foundation, for example, you can select between several investment strategies ranging from conservative with no equities to growth-oriented with an equity share.

You also decide whether you would like to implement your investment strategy by means of actively managed funds or cost-effective index funds.

The securities solution "Pension Equities 50" of VZ Vested Benefits Foundation, for instance, had an average annual return of 3.5 percent from mid-2010 until mid-2020. A vested benefits amount of CHF 300,000 grew to CHF 424,430 in these ten years. This is CHF 106,250 more than if the amount had been invested on a vested benefits account for the same time period. 

Due to their low interest rates, vested benefits accounts and policies are usually only recommended for persons who do not want to accept value fluctuations. Or for credit balances that are expected to be kept there for a few months and then used differently. For example, if you rejoin a pension fund, you are in principle legally obliged to transfer your vested benefits to the new pension fund.

Vested benefits can be transferred from an interest account into a securities solution and vice-versa at all times. Changing the provider is also always possible and usually free of charge.

Save taxes when withdrawing the capital

A tax is levied on the withdrawal of credit balances from pillar 2 and pillar 3a. For the calculation of the lump-sum payout tax, tax authorities add up all payments within a calendar year, in most cantons also those of the spouse. The higher the withdrawal amounts within the same year, the higher the proportional tax load will be. It is therefore advisable to draw your vested benefits not in the same year as your other pension assets. Those who divide their retirement assets between two vested benefits foundations upon leaving the pension fund can later draw the amounts during two different tax periods and save even more tax.


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Assets in a vested benefits foundation can be paid out up to five years before reaching OASI retirement age. Today, most vested benefits foundations allow you to defer the withdrawal of the capital until the age of 70 (women until 69). Withdrawing the credit balance as late as possible can make sense from a tax point of view.

Today, deferring the withdrawal is even possible if a person is no longer gainfully employed when reaching the OASI age. As part of the OASI revision, the Federal Council decided to limit this option to persons who continue gainful employment after the age of 65. However, this amendment will only come into force after a transitional period of five years. This means that persons who reach their ordinary OASI age between 2024 and 2029 (now called reference age) can still defer the withdrawal of their vested benefits for a maximum of five years, even without being gainfully employed. They must have the benefits paid out by 31 December 2029 at the latest, however.

Persons domiciled abroad pay withholding tax instead of capital tax when withdrawing their vested benefits. If there is a double taxation agreement between Switzerland and the country of residence that stipulates that the country in question has the right to tax the lump-sum withdrawal, the withholding tax can be reclaimed. Otherwise, the vested benefits should be transferred to a foundation domiciled in a canton with a low withholding tax rate and only withdraw them afterwards.

How safe is the money in a vested benefits account?

Most vested benefits foundations are owned by a bank. If the bank goes bankrupt, vested benefits account balances up to CHF 100,000 receive privileged treatment. As a result, these deposits belong to the second-class claims. This is a great advantage when the insolvent institute is liquidated, since usually only a small share of the claims is classified as either first or second-class claims.

If you have a 3a account with the same bank, the privileged amount of CHF 100,000 applies to the vested benefits account and the 3a account combined. Those who want maximum security should divide retirement assets in excess of CHF 100,000 between two banks or invest at least a part in securities.

3a and vested benefits capital that is invested in securities are excluded from the bankrupt’s estate. They are treated as separate estate repaid to the rightful owners before the claims of other creditors are serviced.

Tip: Choose a vested benefits foundation that belongs to a trustworthy institution. Every now and then insured persons lose a part of their retirement assets due to dubious management or fraudulent practices.

Who receives the assets in the event of death?

The order of beneficiaries is regulated by law. After the death of the holder, assets in vested benefit foundations go to the persons named below:

  1. to surviving dependents, as defined by the OPA: This includes, above all, the spouse or partner as well as minor children under 25 who are still in education (incl. foster children);
  2. to persons who were financially supported by the deceased, or a person with whom the deceased cohabited in the last five years before death or who is responsible for the support of joint children; 
  3. to adult children who have already completed their education, or to the parents or siblings;
  4. to the other legal heirs.

You can change this order to some extent or determine the shares to be received by persons who are equivalent beneficiaries. If there is at least one person in a rank, the respective rank cannot be skipped. However, the cohabiting partner can be made an equivalent beneficiary to the children under the age of 18 and 25, respectively.

It is best to find out from your vested benefits foundation whether the desired change is permissible and then submit a written declaration of beneficiary. Many foundations have a special form for this purpose.