The Swiss Vested Benefits Act was created by the Federal Council to extend existing laws regulating vested benefits. This act states that assets held in an occupational pension fund can be split between a maximum of two vested benefit accounts when employment ends.
Maximum: two vested benefits accounts
Of these, a maximum of one vested benefits account or insurance policy can be opened at any given vested benefits foundation.
In addition to tax considerations, the limit of two vested benefits accounts or policies is also in place to prevent pension savings from being spread over too large a number of accounts and policies, which would make them difficult to manage.
Failing to abide by these limitations may have pension consequences (a lower disability pension, for example) and tax consequences (when closing pension gaps, for example).
You can change your vested benefits account provider anytime
A change of financial services provider is possible at any time, though you may be required by your bank or insurance company to give notice ahead of time. However, the maximum number of accounts allowed cannot be exceeded at any time.
Depending on which bank or insurer you use, you may pay fees to transfer your assets to a new account. Charges and notice periods for all account providers are listed in our vested benefits account comparison.
Exceptions: multiple employer-sponsored account terminations
According to The Federal Social Insurance Office, the limit of two vested benefits accounts only applies to each pension fund withdrawal. However, the same individual may be employed by multiple employers and thus participate in more than one occupational pension fund.
Example: If you leave two different employer at approximately the same time, you will have to withdraw your pension fund savings from both occupational pension funds. In this case you could divide your termination benefits between a maximum of two vested benefits accounts for each terminated pension fund, for a total of four vested benefits accounts.
If you find yourself working for just one employer at a later point and taking part in that employer’s occupational pension fund, all of your retirement assets from all of your vested benefits accounts must be transferred to that employer’s pension fund. If you become become employed by more than one employer and begin participating in each of their pension funds, your vested benefits must be divided between the pension funds which you participate in.
Is opening several vested benefits accounts worth it?
Before you retire, it’s recommended that you transfer your employer-sponsored retirement assets to multiple vested benefits accounts. Doing so can help you stagger retirement asset withdrawals, and thus avoid getting bumped into a higher tax bracket.
When you finally withdraw your vested benefits, these will be taxed at a reduced rate, independently of your other assets or income.
Multiple vested benefits accounts as a safeguard against bankruptcy
In the case of a bank filing for bankruptcy, only up to 100,000 francs of vested benefits per bank and customer are guaranteed. So opening vested benefits accounts at multiple financial institutions can help protect retirement funds in the event of a bank becoming insolvent.
In this case, the vested benefits of up to 100,000 francs per fund fall under the so-called “second level” of bankruptcy, which is advantageous compared to the "regular" third level category of bankruptcy.
Vested benefits accounts: comparison