Not very well known, the vested benefits account is fundamental in the Swiss pension system. It is a flexible and secure solution for managing pension assets during professional transitions.
In this guide, we cover everything you need to know about the vested benefits account!
Definition and operation of the vested benefits account
A vested benefits account in Switzerland is a professional pension solution for people who leave a company without immediately having a new employer. It allows you to transfer and keep funds accumulated in a previous pension fund.
This account is used to maintain pension assets in the legal circuit and to protect them until the person finds a new job or reaches retirement age.
The choice of institution to open a vested benefits account is free, and in the event of resumption of professional activity, the funds must be transferred to the pension fund of the new employer.
In the event of death, the account assets are distributed according to a specific inheritance order.
The usefulness of a vested benefits account
A vested benefits account is essential to maintain the continuity of occupational pensions in Switzerland, especially when a person changes jobs or experiences an interruption in their career.
It is used to keep and manage funds accumulated in a pension fund, while waiting to join a new pension fund or reach retirement age.
This system ensures the protection of pension assets and allows their transfer or use in accordance with the regulations in force, particularly in the event of resumption of activity, retirement, permanent departure from Switzerland, or specific situations such as divorce or the granting of a disability pension.
Role and choice of a vested benefits foundation
Vested benefits foundations play a crucial role in the management of occupational pension assets in Switzerland, particularly when a person changes jobs or is in a transition period without an employer.
They are responsible for placing and managing vested benefits, thus ensuring the continuity of compulsory and extra-mandatory pension coverage.
When choosing a vested benefits foundation, individuals have the freedom to select an institution that best meets their needs, whether that be a bank, an insurance company, or an independent institution.
This choice is important because it has an impact on the way in which pension assets are managed and invested until their future use, such as when moving to a new employer, retirement, or in other specific circumstances.
Situations requiring a vested benefits account
A vested benefits account is necessary in several situations, notably when a person leaves their job without having an immediate new employer. This also concerns periods of unemployment, career breaks, stays abroad, training or maternity leave.
Such an account is required when changing jobs, to transfer pension assets from the old pension fund to that of the new employer. This account serves as a temporary solution to maintain the pension benefits accumulated within the framework of occupational pensions, until a permanent solution is found or the person reaches retirement age.
Process for opening a vested benefits account
To open a vested benefits account, you must first leave a company without having a new employer.
Then, the person concerned must choose a vested benefits institution, which can be a bank, an insurance company, or an independent institution, to transfer their pension fund assets there.
This choice is free, and it is possible to contact the chosen financial institution directly. Most institutions offer this service online.
If in doubt, it is recommended to make a consultation appointment. If the person does not take any initiative, their pension assets will be automatically transferred to the Supplementary Institution Foundation after a certain period of time.
Account management when changing employer
When changing employers, the management of the vested benefits account involves the transfer of assets from the pension fund of the old employer to that of the new employer.
This step is essential to maintain the continuity of pension coverage. The old pension fund will ask for the contact details of the new pension fund. If she does not receive them, the vested benefits will be transferred to the Foundation as a supplementary institution.
It is important to check that the amount transferred corresponds to the statement established by the former pension fund. If the amount transferred is too high to be fully accepted by the new fund, the excess part must be placed with a vested benefits institution.
Disposition of the vested benefits account in the event of death
In the event of the death of the holder of a vested benefits account, the assets in this account are transmitted to the beneficiaries in a specific order defined by law.
First, the spouse or registered partner, followed by minor children and children in training under the age of 25, then other dependents or relatives, according to the specifications of the regulations.
If several beneficiaries belong to the same group, the capital is distributed equally between them.
Legal heirs are considered last, with the exception of public authorities.