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Vested benefits accounts have enormous differences and should therefore be compared well. If you want to park your vested benefits in an interest-only account, you have a wide choice here, but will earn a negative return due to inflation. In this article, we would therefore like to examine which providers in the vested benefits account comparison have really attractive offers and allow investments in securities.
To do this, we first clarify what a vested benefits account is and, for example, how it is reported in the tax return.
If you have any more questions on the topic, we look forward to an exchange in the comments!
For now, let's clarify the question: What is a vested benefits account? A vested benefits account can be seen as a kind of blocked account for your pension fund assets. If you give up your job, become unemployed, change jobs or earn less than the insurable minimum wage (CHF 21,510), a vested benefits account comes into play. Your pension assets are then temporarily parked here until they can be withdrawn again.
As a rule, you may draw on a vested benefits account if you resume gainful employment and your pension fund assets are transferred to the PF of your new employer.
Otherwise, a vested benefits account may only be closed in a few exceptions. Examples would be
If you do not draw on your vested benefits account until you reach retirement age, you can also draw on your vested benefits up to 5 years after you reach regular retirement age. An early withdrawal is also possible up to 5 years before the regular retirement age. The latest withdrawal of the vested benefits account lies for men thus at 70 years and at Women at 69.
A vested benefits account comparison depends, as mentioned in the intro, on what goal you have for your vested benefits funds. Do you just want the money to "sit there" and be parked without risk at the highest possible interest rate? Then compare the interest rates of different vested benefits foundations and pay attention to any costs that may be incurred, for example, during withdrawal or otherwise.
If interest of about 0.1% is paid, but inflation is about 15x as high, your money will be less every day if you close the account. A defensive investment of the assets or at least a part of it can make a lot of sense, especially if you have a somewhat longer investment horizon. Innovative providers offer this in an uncomplicated way and make it possible to invest the vested benefits in securities at very low fees. Of course, they also provide support in the form of expertise and advice. Yields of 7% per year are so well possible, if this is also countered by risk.
Some providers even offer sustainable investments (such as ESG) of vested funds, responding to a growing demand among investors.
It is allowed, To split pension assets into a maximum of two vested benefits accounts. The two balances can be staggered at the time of withdrawal, thus spreading the tax burden over two years. Since taxes are incurred on a vested benefits account when it is paid out, and these fall under the capital payment tax, a graduation is worthwhile due to the progression.
For example, if you withdraw funds from pillar 3a, you can stagger them over several years. In order to optimise taxes when withdrawing the vested benefits account, it can be withdrawn 5 years after, but also up to 5 years before reaching the ordinary retirement age. The most even distribution possible of all amounts included in the progression count results in a lower tax burden. Depending on the canton, the taxes on capital payouts vary and even a move may be worthwhile in extreme cases. Here some examples are listed.
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In the tax return, the handling of the vested benefits account is simple. As long as the pension assets are invested in a vested benefits account or in a vested benefits policy, there is no taxation on income or assets.
The vested benefits account therefore does not have to be declared in the tax return.
The vested benefits become taxable only at the time of withdrawal and, of course, thereafter if the amounts are held as free private assets. Interest income on vested benefits is also tax-free until it is withdrawn. Those who have invested their vested benefits beyond retirement age (up to 5 years) benefit from tax-free capital growth.
The vested benefits account is not just a normal account where pension assets are blocked and parked. Rather, some vested benefits accounts offer attractive investment opportunities. Tax optimization and even tax-free capital growth are possible due to the early or delayed withdrawal period. It is crucial to choose a good provider and, if possible, to arrange for splitting between two different vested benefits foundations from the outset.
How did you like our article on the Freedom Account Switzerland? Do you have a topic you'd like us to address in the future? Feel free to leave us a comment.
Transparency Note: This article was created in collaboration with Descartes Finance. Nevertheless, content and presentation have been created freely and independently by Schwiizerfranke.
5 Responses
Thanks for the interesting article.
What happens after a short career break?
Let's say I quit my job to travel for a year, but then get re-employed.
Do I then have to transfer all the money from the vested benefits foundations to my new employer's pension fund?
A high investment risk would not be recommended.
If all the money will be transferred back, I see it the same way. In this case, an interest account would probably be the better choice 🙂
(If splitting is done, this would be a different consideration)
Helpful article, it should become part of new arrivals learnings!
http://www.viac.ch still remains personally the one platform for investing my vested benefits. Its simplicity of the product (desktop and mobile), customer service has been top so far and fees are still in the lower end of the market.
As the end of the year is approaching I'm sharing additional VIAC codes you can use to save 500CHF on admin fees by using one of these codes when signing up:
5JrSGKa
NJGMR1V
sJpghMw
2JsWbAf
HJ8G2TC
Enjoy!
I didn't know that investing with a vested benefits account was possible. Does it make sense? I think so because in a pension fund is also invested. Thanks for the contribution. The link to the provider does not work?
The link works again in the meantime, thanks for your hint 🙂