Transfer of securities in Switzerland
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Guide
Vested Benefits
Vested benefits (Freizügigkeit) refer to the preservation of your second-pillar pension cover when you leave a pension fund. If you change jobs or leave your pension fund without joining a new one, the retirement capital you have built up is transferred as a vested benefits payment to a vested benefits account or a vested benefits securities deposit. The capital stays locked there until it is paid into a new pension fund or drawn at retirement.
The essentials
01
When you leave a pension fund without joining a new one, the pension institution transfers the vested benefits to a vested benefits account or securities deposit; without instructions, the assets pass to the BVG Substitute Occupational Benefit Institution (Auffangeinrichtung) at the earliest after six months and at the latest after two years (art. 4 Vested Benefits Act, FZG).
02
Vested benefits may be split across no more than two vested benefits institutions, which allows a staggered and often tax-efficient capital withdrawal (Vested Benefits Ordinance, FZV).
03
A cash payment is permitted only in three cases: permanently leaving Switzerland, taking up self-employment, or a minimal vested benefits amount (art. 5 FZG).
04
When moving to an EU or EFTA state, the mandatory portion of the retirement capital cannot be paid out in cash as long as you remain subject to compulsory insurance there; only the extra-mandatory portion is payable (art. 25f FZG). When moving to a third country, the entire balance can be withdrawn.
Sources: FSIO · fedlex
Frequently asked questions about Vested Benefits
If a pension fund applies at your new workplace, your previous fund transfers the retirement capital there. If there is no new fund, for example during a career break or unemployment, the vested benefits flow to a vested benefits account or securities deposit and remain locked until you rejoin a pension fund or draw the capital.
A vested benefits account pays interest on the balance like a savings account. A vested benefits securities deposit invests the capital in securities, for example funds with a chosen equity allocation. Over longer horizons the deposit opens up additional opportunities, but it is subject to market fluctuations. Which option fits depends on your investment horizon and personal risk capacity.
A cash payment is only possible in specific cases: permanently leaving Switzerland, taking up self-employment, or when the vested benefits amount is minimal (art. 5 FZG). When moving to the EU or EFTA, the mandatory portion generally remains locked. Tax treatment may change.
Vested benefits can be distributed across no more than two institutions. A staggered withdrawal over different years can break tax progression, because lump-sum benefits are taxed separately from other income. How strong the effect is varies by canton. Tax treatment may change, and reviewing your individual situation is advisable.
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