Vested Benefits (Freizügigkeitsleistung)
Vested benefits are the retirement savings accrued in occupational pension provision that must be transferred to a new pension fund, or otherwise preserved, when leaving a pension fund.
Concept
Vested benefits (Freizügigkeitsleistung, also called termination benefits) correspond to the retirement savings accumulated under occupational pension provision that an insured person takes with them upon ending their relationship with a pension fund. When changing jobs, they are generally transferred in full to the new employer’s pension fund to preserve continuity of occupational pension coverage.
Preservation Without an Immediate New Fund
If a person leaves the workforce or has no immediate new pension fund (e.g. due to unemployment or emigration), vested benefits must be placed in a vested benefits account with a bank or a vested benefits policy with an insurer, in order to preserve pension protection and the associated tax advantages. Cash withdrawal is only permitted in legally defined exceptional cases (e.g. permanently leaving Switzerland, taking up self-employment, or a de minimis vested benefit).
Relevance for Advisory Practice
Correctly transferring and investing vested benefits is a key advisory topic when changing jobs, in divorce proceedings (division of vested benefits), and at retirement, as errors in the transfer can lead to pension gaps or unintended tax consequences.