A vested benefits foundation is a legal entity which manages vested benefits. In Switzerland, vested benefits consist of pillar 2 occupational retirement assets which are not managed by an occupational pension fund.
Swiss law requires employers to subscribe to a pillar 2 pension fund and to enroll employees who earn an annual salary in excess of a threshold dictated by the government. Contributions to pension funds are deducted directly from employee salaries by employers, and employers are required to match employee contributions. Contributions are tax-privileged.
When a person becomes unemployed, self-employed or no longer earns a salary above the government-dictated threshold, they become ineligible for membership in a pillar 2 occupational pension fund. The assets which have accumulated in their pension fund remain blocked until they reach retirement age.
For this reason, the assets must be placed in a vested benefits account and held in escrow by an authorized vested benefits foundation until the person reaches retirement age and becomes eligible to withdraw the assets.
All assets held in vested benefits accounts must be managed by a vested benefits foundation. The vested benefits accounts offered by Swiss banks are managed by a third-party vested benefits foundation on behalf of the issuing bank. The vested benefit life insurance policies offered by Swiss insurers and the vested benefit retirement funds offered by Swiss fund managers are also managed in collaboration with vested benefits foundations. Some banks have their own vested benefits foundations, but these too must operate independently of their parent banks.
Swiss vested benefits account comparison