Can I Invest My Swiss Vested Benefits?

I will be leaving Switzerland after nearly two decades and will have to transfer my occupational benefits (second pillar) to a vested benefits account.

Since interest rates are virtually null, I would prefer to invest that money in bonds or stocks rather than just letting it vegetate.

Is it possible to invest Swiss vested benefits, and what are my options?

Hi there,

Vested benefits are held in escrow by a vested benefits foundation until you become eligible to withdraw them (typically 5 years before you reach legal retirement age).

Many vested benefits foundations give you the option of having your vested benefits invested in investment funds or investment foundations. These are primarily low-risk funds such as bond funds because vested benefits investments must conform to conservative Swiss laws governing occupational benefits.

There are a number of costs which you should consider before you invest through investment funds. Funds charge fees for managing your investments (the total expense ratio or TER), vested benefits foundation may charge fees for administrating your investment account, and you may pay custodial fees to the custodian bank which holds your investment fund shares.

It is important to review all possible costs of investing your vested benefits and balance the costs with the potential gains. The historical performance of investment funds is not a sure indicator of future performance, but it can serve as a basic guideline for calculating potential returns in relation to costs.

It is also important to consider that vested benefits must be withdrawn when you reach legal retirement age (or a maximum of 5 years after that if you remain employed). If investments perform poorly in the years leading up to your reaching retirement age, you will not be able to "wait it out" and let the investments recover before withdrawing them. In the worst case, you could end up making a loss rather than a profit.

An alternative is to place your occupational benefits in a vested benefits account. Vested benefits accounts typically do not have an annual fee, but interest rates and incidental costs such as withdrawal fees and transfer fees vary between accounts.

You can compare the interest rates or vested benefits accounts using the interactive moneyland.ch vested benefits account comparison.

Best regards from Moneyguru

Viac now lets you invest compulsory vested benefits in portfolios with a maximum 80% stock component and voluntary vested benefits with up to 97% stock component. Another vested benefits asset management service worth looking at is ValuePension.

Hello, 

I left Switzerland 6 years ago having worked there for 5 1/2 years. I am now living in Canada with UK/Canada citizenship, and left my 2nd Pillar in a vested benefits account after moving to Canada. I left it there as I heard withdrawing it would incur huge tax deductions by Canada and did not want to lose a huge portion of my benefits to the tax man. 

Is this correct? Does anyone know what the tax rates are if I were to say;  withdraw the funds from the vested benefits account to pay my mortgage in Canada? 

Would it be cheaper to withdraw and pay off a mortgage or investment in the UK ?

Any advise on this would be most appreciated. 

Hi. Swiss occupational pension funds are tax privileged in Canada, but only within certain limits. The limits are explained in some detail here:
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/guidance-taxpayers-requesting-tax-treaty-relief-cross-border-pension-contributions.html#conditions1

You are taxable in your country of residence, so unless you live in the UK, you are not taxable there (even if you buy a property there). If you are living in the UK when you make the withdrawal, then the UK/Switzerland double taxation agreement applies. In that case, the money is taxable in Switzerland only (Swiss withholding tax in the canton where the vested benefits foundation is domiciled), as per article 18.2 of the DTA.