The vested benefits account

Are you planning an extended trip before starting your new job? Or are you about to go on materinity leave? There are many reasons to open a vested benefits account. You need the vested benefits account whenever you leave a pension fund and do not join a new pension fund straight away.

As soon as you have opened a vested benefits account, the pension fund can transfer your pension assets. Your credit balance from the 2nd pillar will now be deposited here and you will receive interest until you start your next job, reach retirement age or make an early withdrawal for certain reasons.

Are you about to start your next job? The credit balance will then be transferred from the vested benefits account to the pension fund of the new employer and the account will be closed.

Withdrawing your 2nd pillar balance

You can withdraw the vested benefits balance from the occupational pension no earlier than five years before reaching the AHV retirement age.

Early disbursement is also permitted in Switzerland in the following cases:

• Acquisition of owner-occupied residential property
• Repayment of a mortgage
• Transfer to another 2nd pillar pension scheme
• Taking up self-employment
• Definitive move abroad (emigration), early withdrawal with restrictions for EU/EFTA countries
• Claiming a full disability pension
• If your credit balance in the vested benefits account is less than your annual contribution to occupational pension (negligibility).

Financing residential property with the vested benefits balance

You may withdraw the capital from the vested benefits account if you wish to use it to finance residential property that you yourself occupy. An early withdrawal is possible every five years. You can pay the amount withdrawn back into the second pillar at any time.

Good to know: At many banks, it is possible to use the money in the vested benefits account to repay mortgage loans. However, this means that all or part of a pension balance must be repaid to the pension fund when the property is sold. To enforce this, the pension fund enters a disposal restriction in the land register. 

Your tax advantages

No wealth, income or withholding taxes are incurred in Switzerland during the term. The capital is taxed at a reduced rate upon disbursement. This means that you only pay one third of the tax that would have to be paid on an income equal to the capital payment. This corresponds to one fifth for direct federal tax.

Who benefits from the vested benefits account?

A vested benefits account is required if you need to park your pension fund assets temporarily. This can be due to a number of reasons, such as:

• Discontinuation of employment (e.g. maternity leave, further training, extended trip or professional hiatus)
• Unemployment
• Career-related move abroad