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Pillar 2
What is a vested benefits account, when do I need one and how does it work? And what happens to my pension fund assets when I change jobs or if I die?
A vested benefits account is a dedicated account on which accrued pension capital from your occupational pension (pillar 2) is parked during parental leave, sabbaticals or a job abroad. The vested benefits account is used to securely store your accumulated balance from pillar 2 until it is needed for withdrawal upon retirement or for other cash payout reasons such as purchasing a residential property. It is also needed in the event that you resume work and meet the requirements to join a pension fund.
Pillar 2 consists of occupational pension provision, also called the pension fund or BVG, and accident insurance (UVG). Together with pillar 1, pillar 2 should replace 60–70% of your most recent income in retirement and thus allow you to maintain your accustomed standard of living.
If you are no longer affiliated with a pension fund for one of the reasons mentioned above, your previous pension fund will generally transfer your accumulated assets to the BVG Substitute Occupational Benefit Institution after six months.
There, an account is the only available investment option, which is not attractive in today’s interest rate environment. It makes more sense to open a solution with another foundation. It is also advisable to open a vested benefits account if it is clear when the balance is paid out that the career break will only last a few months.
If you do not plan to take up a new position with a pension fund affiliation for an extended period, it may be more sensible to open a vested benefits account with the option of investing the balance in funds. This protects your pillar 2 capital even during periods without a regular pension fund, with the opportunity to earn an additional return.
What you need to consider when changing jobs
In the event of a change of job, your pension fund assets from the previous pension fund (pillar 2) will be transferred directly to the new pension fund of your new job. The previous pension fund will usually send you the relevant form automatically. Here you can provide the name and address of the new pension institution. Your new employer will report this data to the previous pension fund. The fund will then calculate the exit benefit – called the vested benefits – and usually transfer it to the new pension fund within 30 days.
With most providers such as banks or specialized pension funds, opening a vested benefits account takes just a few steps. Important: Proof of your exit from your pension fund must be available when the vested benefits account is opened. Once your vested benefits account has been opened, your previous pension institution will transfer the existing balance. You can then decide whether you also want to invest in securities to have more money available in old age and, ideally, more money at your disposal.
Many providers of vested benefits accounts offer the possibility to not only store the money safely in an account but also to invest part of it in securities, such as stocks and bonds.
With the UBS Vested Benefits Account, you can invest in Vitainvest investment funds, choose between actively and passively managed funds, and save for retirement in a sustainable way – either as a one-time investment or with an investment plan. Account management is free of charge.
Especially at UBS: You can transfer the Vitainvest fund units of pillar 2 to your free assets upon retirement – you are not forced to sell them when you reach AHV retirement age. You are then flexible and do not have to sell your stocks under potentially unfavorable market conditions.
Flexible retirement provision with the vested benefits account
Secure your pension provision if you interrupt your employment. Here you will find all the advantages and information about the vested benefits account at a glance.
The vested benefits account is not inherited like ordinary assets in the event of death as it is earmarked for a specific purpose. Retirement funds should primarily benefit those individuals who are financially affected by the death. Beneficiaries are usually spouses, registered partners or children. Persons who were financially supported by the account holder, such as life partners or caregivers of joint children, can also be considered. A notification to the provider of the account facilitates the clarification of claims in the event of death.
You can withdraw the retirement savings within five years before or after reaching the reference age and generally only in full, i.e. not as a partial payment or a pension. Important: From 2030, withdrawing from the vested benefits account after you turn 65 will only be possible if you remain employed. You can also withdraw the balance of your vested benefits account early, namely in the following cases:
A vested benefits account helps you secure and optimally invest your retirement assets from pillar 2. When changing jobs or taking extended career breaks, you should definitely open such an account and transfer your balance there to avoid financial disadvantages. With a vested benefits account , you can continue to let your retirement savings work for you, for example by investing your savings in Vitainvest investment funds.
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