Understanding options after leaving Switzerland

Hi, I have pillar 2 benefits that I tried to sort out >10 years ago but have forgotten what happened and only have some of the documentation. I recently got a statement from Stiftung Auffangeinrichtung BVG Administration Freizügigkeitskonten Zürich where it seems the amount was transferred into a vested benefits account. It is greater than my annual contributions and less than 20k CHF. Do I understand correctly:

• within the EU I can only withdraw for primary residence purchase or retirement, and should be careful about locating it in a low withholding tax canton if doing so (although double taxation agreements likely mitigate this), and possibly a low withdrawal fee fund.
• outside of the EU I can possibly withdraw regardless of purpose, but not into another pension scheme? Ie it would lose the tax wrapper protection in the long run and count as income. Is there any way to transfer to another pension scheme internationally (without first exiting the scheme and paying income tax)?
• I cannot withdraw less than 20k for a house purchase. Is it possible to top up in any way (either to meet this requirement or for any other reason)?
• Self-employed can also withdraw, but only in CH perhaps?
• Withholding tax is irrelevant before withdrawal - if keeping it invested in Switzerland I should only worry about annual/investment fees and investment choices.

Other questions:

• Is there any reason to expect Stiftung Auffangeinrichtung BVG Administration Freizügigkeitskonten Zürich to be different to other vested benefits accounts? I don’t see it mentioned in many places or in the comparison tool on this site. In particular, any inability to transfer elsewhere with better investment choices.
• Is it possible to “top up” AHV to qualify for full state pension?

Sam

within the EU I can only withdraw for primary residence purchase or retirement, and should be careful about locating it in a low withholding tax canton if doing so (although double taxation agreements likely mitigate this), and possibly a low withdrawal fee fund.

Correct on all points. You may also be able to withdraw if you are self-employed. If any of your benefits are made up of voluntary contributions ("Überobligatorium"), you can withdraw those without any special reason.

outside of the EU I can possibly withdraw regardless of purpose, but not into another pension scheme? Ie it would lose the tax wrapper protection in the long run and count as income. Is there any way to transfer to another pension scheme internationally (without first exiting the scheme and paying income tax)?

If you live outside of the EU, you can withdraw all your Swiss BVG benefits with no special reason. Whether or not you can then transfer the money into a tax-privileged retirement savings category in your country of residence depends on what is available in that country. In any case, it would be a withdrawal of your Swiss benefits, followed by a possible deposit into a local tax-deductible solution. So no, a direct transfer without the Swiss withholding tax being applied is not possible, so transferring your benefits to a foundation in a low-tax canton is crucial. However, it is perfectly possible to leave the benefits vested in Switzerland until you retire.

I cannot withdraw less than 20k for a house purchase. Is it possible to top up in any way (either to meet this requirement or for any other reason)?

No, topping up is not possible. However, you can transfer your benefits to a Swiss vested benefits investment solution where they can potentially earn much higher returns. In the best case, your benefits will grow to 20K over time, at which point you can withdraw to finance a home.

Self-employed can also withdraw, but only in CH perhaps?

From a Swiss standpoint, if you are self-employed then you are not subject to the BVG law, and can withdraw your vested benefits. However, you will have to show that you are categorized as self-employed in your country of residence, so the local laws in your country play a role.

Withholding tax is irrelevant before withdrawal - if keeping it invested in Switzerland I should only worry about annual/investment fees and investment choices.

Exactly. However, if you live outside the EU/EFTA, you should make sure to transfer to a foundation in a low-tax canton before you hit retirement age and have to withdraw your benefits.

Is there any reason to expect Stiftung Auffangeinrichtung BVG Administration Freizügigkeitskonten Zürich to be different to other vested benefits accounts? I don’t see it mentioned in many places or in the comparison tool on this site. In particular, any inability to transfer elsewhere with better investment choices.
 

The only possible difference between the vested benefits account from the Stiftung Auffangeinrichtung BVG and vested benefits accounts from other foundations are the interest rates and possible fees. In 2024, the interest rate for the Stiftung Auffangeinrichtung BVG vested benefits account is 1.25% per annum. That is not a bad rate, when you compare it to what is offered by other foundations. You can use the moneyland.ch comparison:
https://www.moneyland.ch/en/vested-benefits-accounts-comparison

But if you decide to keep your benefits in Switzerland for the long term, then I recommend you consider investing them, instead of just earning interest. You can invest them in a retirement fund or in an asset management mandate (like Viac, Finpension, Frankly, etc.).

It is perfectly possible to open a new Swiss vested benefits account or investment service, and then transfer your benefits from your current foundation to the new one. That is also true if your benefits are in trust with the Stiftung Auffangeinrichtung BVG.

Is it possible to “top up” AHV to qualify for full state pension?

No. Of course, if you are able to come work in Switzerland again at some point, that would boost your OASI (AHV) pension.

Thanks, I think that’s clear. I guess you are saying Switzerland does not recognise foreign pension scheme withdrawals by direct transfer as different from a personal withdrawal, thus withholding tax will be applied. Which is fine, but another question is whether such a transfer is possible at all, in case this is advantageous on the receiving side. Must the withdrawal go via a bank account of mine, or can arrangements be made between pension schemes?

You can transfer your vested benefits to any account in your name, including accounts at foreign banks. So theoretically, if the foreign tax-privileged retirement account has an IBAN or SWIFT number, is in your name, and accepts CHF, then a direct transfer should be possible.