Changing Vested Benefits Accounts

My financial advisor recommended that I transfer my vested benefits to a new account. Is that even possible and if so, what does it cost?

Hi there,

Changing vested benefits accounts is possible, but as a general rule it only makes sense to do so if you will be using the new vested benefits account for a significant length of time.

Make sure to review the terms and conditions associated with your account and those of the prospective new account to determine whether moving your vested benefits is worth the effort.

You can compare your current vested benefit account to other Swiss vested benefits accounts using the interactive vested benefits account comparison on moneyland.ch. The information pages ("Info" links on each account) clearly show the possible costs associated with early withdrawal or transfer of vested benefits for each specific account.

Be wary if your financial advisor recommends moving your vested benefits to a vested benefit investment fund. Make sure to carefully review the costs, terms and conditions associated with the investment fund (these are generally identical to those of 3a retirement funds).

Best regards from Moneyguru

More on this topic:
Vested benefits account comparison
Possible costs of vested benefits accounts explained
Retirement funds explained

Good Morning

I worked for 3 years in Switzerland for Nestle in Vevey and left in July 2014. Since then I have been and remain a permanent resident in UK.

I have approximately 15 000 CHF remaining in a vested benefits account with Swisscanto Basel. This is the LOB portion. This pays only 0.050%.

I am told by Swisscanto that I cannot withdraw this money until I am at least 59 years old.

I want to transfer these funds to an account which pays a higher rate of interest for the next 3 years (until I am 59 years).

What possibilities do I have? Note that I do not have a Swiss bank account so when I withdraw the money it must be possible to pay the money into a UK bank.

Thanks for your help in advance

Regards

Hi there,

Yes, it is possible to transfer your Swiss vested benefits to a different Swiss vested benefits account even after you leave Switzerland.

You can compare the interest rate paid by your current vested benefit account with those of other Swiss vested benefits accounts using the interactive moneyland.ch vested benefits account comparison.

It is important to note that some banks charge a fee when you close your vested benefits account. This is the case with the Basler Kantonalbank, for example, which charges a CHF 20 account closure fee. If this applies to your current vested benefits account, make sure to deduct this cost when calculating the financial benefit of migrating to a different account.

In addition to vested benefits accounts, vested benefits brokerage accounts and vested benefits life insurance policies are also offered. However, these solutions are complex and better suited to long investment terms.

As a general rule, Swiss banks do not charge non-resident fees for vested benefits accounts.

All Swiss vested benefits foundation will transfer your vested benefits to a foreign chequing account when you reach the legal age for withdrawals or qualify for early withdrawal. You can find more information in this thread.

Best regards from Moneyguru

>This pays only 0.050%.

> I want to transfer these funds to an account which pays a higher rate of interest for the next 3 years (until I am 59 years).

lol, you should be happy it's not -0.75% like on government bonds.

> What possibilities do I have?

Move out of EU or buy a house, then you can normally cash it all out

Hello Moneyland Team,

I moved from Switzerland to the UK this year. I had to leave my company’s occupational pension scheme and was moved to the Stiftung Auffangeinrichtung, where my BVG pot earns 10 bps p.a.

I have a Swiss passport and while I am now a UK resident. I own a holiday home in Switzerland. Can I open up a BVG at another financial institution that will allow me to invest in a low-cost equity mandate, preferably a low cost global equity tracker?

Yes, it is possible to transfer your vested benefits between vested benefits foundations after leaving Switzerland. Doing so is recommended, because it allows you to take advantage of the highest available yields.

However, it is important to consider that the Stifftung Auffangeinrichtung is the only option if you want to receive a lifelong pension at retirement age rather than cash out your benefits as a lump sum. All other vested benefits foundations only offer the lump-sum option. If you want to receive a lifelong pension, you must make sure that you hold a pension plan from the Stifftung Auffangeinrichtung when you reach retirement age.

There are numerous retirement funds which can be used to invest vested benefits. You can compare the cost and past performance of Swiss retirement funds using the interactive retirement fund comparison on moneyland.ch.

The VIAC robo-advisor, a low-cost wealth management solution specialized in Swiss retirement assets, plans to launch a vested benefits solution in the near future. Currently it only services pillar 3a assets. VIAC lets you build a portfolio of low-cost ETFs and manages your portfolio. It charges an administrative fee equal to 0.52% per annum.

If you plan to cash out your benefits at retirement rather than receive a pension, it can be beneficial to divide your vested benefits between multiple vested benefits accounts or investment vehicles. The reason for this is that each vested benefits account (including custody accounts) must be cashed out in full. Staggering account closures over several years can help you avoid being bumped into a high tax bracket.

Best regards from Moneyguru

Hi team,

Who can I turn to for more information about my vested benefits account? The institution I am currently with started charging account management fees and as I am not working in Switzerland anymore, I want to know if I can move to another bank or what will happen if I withdraw my money - will this affect my retirement plan if I retire in another country with under 1 year employment in Switzerland?

Thanks

Hi there,

You have several options:

• You can transfer the money to a different Swiss vested benefits solution which does not charge non-resident fees. Examples of Swiss vested benefits accounts which do not have non-resident fees include: Basler Kantonalbank, Banque Cantonale de Genève, Banque Cantonale Vaudoise, Credit Suisse, Luzerner Kantonalbank, VIAC, and more. Comparing interest rates is also beneficial. Some solutions let you invest your vested benefits in funds or ETFs.
• If you have moved to an EU or EFTA country, you can withdraw benefits made up of voluntary pension fund contributions. If you have moved to a country outside of the EU or EFTA, you can withdraw your compulsory benefits as well. A capital withdrawal withholding tax is deducted by the vested benefits foundation before benefits are paid out. The size of the tax depends on the canton in which the vested benefits foundation is located. If the country you live in has a relevant double taxation agreement with Switzerland you can reclaim the Swiss withholding tax. Pay attention to possible fees for early withdrawal ahead of reaching retirement age. These are listed on the info pages in the vested benefits account comparison.
• If your vested benefits are lower than the sum total of your personal pension contributions (not including your employer's contributions), you can withdraw them. Here too, you should pay attention to possible early withdrawal fees.

There are a number of other situations in which you can withdraw your Swiss vested benefits, such as to buy a primary residence or if you become self-employed.

Withdrawing your Swiss vested benefits will not normally impact your foreign retirement plan. However, the benefits may be classified as taxable income in your country of residence. It is important to look into how Swiss pension benefits are classified by your local tax laws, and whether your country has a double taxation treaty with Switzerland.

Moneyguru von moneyland.ch wrote on September 9, 2020

• If you have moved to an EU or EFTA country, you can withdraw benefits made up of voluntary pension fund contributions. A capital withdrawal withholding tax is deducted by the vested benefits foundation before benefits are paid out. The size of the tax depends on the canton in which the vested benefits foundation is located. If the country you live in has a relevant double taxation agreement with Switzerland you can reclaim the Swiss withholding tax. Pay attention to possible fees for early withdrawal ahead of reaching retirement age. These are listed on the info pages in the vested benefits account comparison.

Hello,

What would be the best way to withdraw the extra-mandatory part of my pension (tax-wise)? or inform myself about the taxation? I have already left Switzerland and moved to The Netherlands, however, I still have my Swiss bank account opened. My pension is held with te AXA.

Thanks for your help!

The best step would be to ask the tax authorities in The Netherlands about the taxes which would apply to pension benefits, and whether there are possible tax privileges. For example, it is worth finding out whether you could "transfer" your Swiss benefits to a Dutch pension fund or tax-privileged retirement saving account. Basically, it's the Dutch taxes that are relevant in this scenario.

The Swiss tax is not very important in this case because you can reclaim it by proving that you are a tax resident in Holland. The vested benefits foundation will deduct the Swiss withholding tax before paying out the voluntary part of your benefits, but you can get this reimbursed by sending them the required forms.