Vested benefits account

In general terms, the German word “Freizügigkeit” means “freedom of establishment” or “freedom of movement”. For example, there is an agreement on the free movement of persons (“Freizügigkeitsabkommen”) between Switzerland and the European Union, which allows the citizens of these territories to settle, work and study freely throughout the region.

In the context of Swiss retirement provision, the term “Freizügigkeit” refers to the right of individuals to take their pension assets (“vested benefits”) from the second pillar (occupational pension provision) with them when changing jobs or leaving working life in order to invest them with another pension fund or a vested benefits foundation (see below). The Vested Benefits Act (VBA) governs exactly how vested benefits are structured.

In Switzerland, a person’s “vested benefits” are the total of all pension fund assets saved in the occupational pension scheme (second pillar). When the person leaves a pension fund, the vested benefits are transferred either directly to the new pension fund or to a vested benefits foundation (see below). After retirement, these funds are paid out in the form of a monthly pension or as a one-off lump sum.

A vested benefits account is a special type of account that only serves to hold the vested benefits of a person who leaves a pension fund but has not yet joined a new pension fund. Vested benefits accounts are offered by banks, insurance companies and vested benefits foundations.

Not all vested benefits accounts are accounts in the traditional sense that offer a specific rate of interest on the money invested which varies over time. There are also vested benefits accounts that are similar to a securities custody account and are therefore sometimes referred to as “vested benefits custody accounts”. The vested benefits are not booked in these accounts as cash at a specific interest rate. Instead, they are used to buy units in equity, bond, precious metal or real estate funds whose value may rise or fall over time.

relevate is both a vested benefits account and a custody account. With us, you can save your vested benefits as a cash deposit at a fixed interest rate (relevate cash strategy) or invest them with various strategies.

A vested benefits foundation is an institution that holds pension fund assets from people when they change jobs and are temporarily not insured with a new pension fund. This may occur, for example, if someone is looking for work for a while or if there is a gap between the end of one job and the start of the next one.

The most important vested benefits foundation is the non-profit Substitute Occupational Benefit Institution, which operates on behalf of the federal government and with which 1.4 million people have vested benefits accounts.

It is important to note here that, unlike relevate, the Substitute Occupational Benefit Institution does not offer the option of investing vested benefits in securities. And when it comes to interest on the vested benefits savings account, the Substitute Occupational Benefit Institution usually isn’t the best place to go either as the rates it offers are below the general market level.

Anyone who has reached the age of 18 and is under the age of 64 (women) or 65 (men) can register with relevate. Opening a vested benefits account requires you to leave your current pension fund without joining a new fund immediately. Reasons for this may include:

• Switching jobs with a period of unemployment in between
• Sabbatical or career break
• Unemployment
• Start of self-employment
• Maternity leave
• Emigrating from Switzerland
• Divorce

At relevate, you can open a vested benefits account, which also serves as a vested benefits custody account, in just a few steps: keep your vested benefits in cash at an interest rate of 0.7% or invest your assets in index funds or the money market using one of six strategies to improve your return prospects.

As a new client, you can open a vested benefits custody account with relevate in just a few steps:

1. Register and select product
2. Define your risk profile and strategy
3. Make transfer

There is no minimum amount for opening a vested benefits account with relevate.

No, there is no minimum term for vested benefits accounts at relevate.

Once the account has been opened, we will send you all the documents you need to transfer your vested benefits.

We do not charge any fees on deposits to or transfers from the active pension fund. In some special cases, such as a transfer due to emigration, fees are incurred.

When you leave your current pension fund, you may have your vested benefits transferred to a maximum of two vested benefits institutions. There is no legal limit to the number of vested benefits accounts. Depending on the canton, the tax authorities may impose a limit on lump-sum withdrawals.

If you want to open a vested benefits account as an existing client, you can do this quickly and easily via the “Add product” option.

If you already have the same product, you will be able to apply your existing risk profile and investment strategy to the new portfolio.

Yes, only a portion of your vested benefits capital can be invested in your chosen investment strategy. In this case, the rest remains in the account as a cash deposit (relevate cash strategy).

Yes, the funds can initially remain in the relevate account as a cash deposit (relevate cash strategy). They can then be invested at a time to be determined by the account holder themselves. Trading itself always takes place on a weekly basis on the second bank working day.

In principle, the account holder can decide for themselves when to invest their cash deposits in the vested benefits account (relevate cash strategy) with one of the other relevate strategies. Trading itself is carried out once a week on the second bank working day.

No, that is not permitted. You may only make payments into a pension fund. Payments into your vested benefits custody account may only be made from pension funds or vested benefits institutions.

If you leave your pension fund, you have the option of splitting your vested benefits capital and transferring it to two different vested benefits institutions. relevate has two foundations and offers splitting from a single source for vested benefits of CHF 300,000 or more. The pension fund is responsible for executing the split and will receive the transfer instructions for this from us.

Splitting gives you two vested benefits accounts. This means you can choose a different investment strategy for each portfolio and secondly you can stagger the withdrawal of your vested benefits assets. As a result, you gain flexibility and benefit from a lower tax progression when the assets are paid out.

As soon as your career break comes to an end and you join a new pension fund via an employer, your vested benefits account must be closed and the assets transferred to the new fund.

To transfer the vested benefits to a new pension fund, click on “Edit” in the portfolio and then on “Close custody account”. Select “Transfer to a new pension fund” as the reason. You will now receive the termination document from us, which you must complete, sign and return to us by post.

You may withdraw your pension assets in the following circumstances:

• If you leave Switzerland permanently (possibly with restrictions regarding mandatory funds when moving to the EU/EFTA)
• For the promotion of home ownership (PHO)
• Upon reaching regular OASI retirement age (also possible up to five years before this date)
• To transfer them to a pension fund
• When taking up self-employment
• In the event of disability or death

It is possible to withdraw part of your assets early if you are purchasing residential property. Apart from this, partial withdrawals are normally not permitted. The only exception is if you emigrate to an EU/EFTA country and you are not permitted to withdraw the mandatory portion of the vested benefits yet. In this case you may withdraw the super-mandatory portion of the vested benefits.

The vested benefits securities in the relevate investment strategies are specially designed for pensions and therefore cannot be transferred to your private assets.

This is an early withdrawal made in the context of the promotion of home ownership (WEF). You can withdraw vested benefits in full or in part in order to finance residential property that you will occupy yourself. It is also possible to pledge the vested benefits for this purpose.

An early withdrawal to buy residential property is permitted every five years.

No. You may leave the vested benefits account untouched until you reach the age of 70 (69 for women). During this time the vested benefits assets are not subject to income, wealth or withholding tax in Switzerland.

In the event of the policyholder’s death, the vested benefits accrue to the statutory beneficiaries. The Vested Benefits Ordinance (VBO) determines who this is. By defining an individual order of beneficiaries, the account holder can also influence the sequence of beneficiaries themselves within the scope of the legal possibilities available.

In the event of divorce, the court will decide how the vested benefits assets are to be divided up. We will pay out the assets or part of the assets based on the instructions in the final divorce ruling.

Pension assets in a vested benefits account are not subject to income or wealth tax. If vested benefits are paid out, they are taxed in the same way as pension fund assets.

At relevate, the account closing procedure is as follows:

1. Select the “Edit” button in the portfolio overview.
2. Now select the option “Close portfolio”.
3. Enter the reason for the closure.
4. Download the document template.
5. Fill it in and sign it.
6. Send us the template by post.
7. We will then process your request and pay you your vested benefits.