The Vested benefits account: what is it really for? 

The Vested benefits account: what is it really for? 

Have you just left your job? Are you moving abroad? Taking a career break or starting your own business? 
Then your second pillar does not disappear. It simply changes form. It becomes a Vested benefits account. 

What exactly is Vested benefits? 

When you work in Switzerland, you automatically contribute to the second pillar, also known as occupational pension provision or BVG/LPP. This savings pot is designed to finance your retirement and complements the AHV, the first pillar. 
But what happens to this money when you no longer have an employer paying contributions for you? 

Your capital does not vanish. It is transferred to a special account called a Vested benefits account. Think of it as a secure, temporary parking space for your money, while you decide what to do next. 

When does a Vested benefits account come into play? 

A Vested benefits account becomes mandatory as soon as your employer stops paying into your pension fund, in the following situations: 

• you leave your job and do not start a new one right away 
• you lose your job and go through a period of unemployment 
• you take a break from your professional life, such as a sabbatical or studies 
• you move abroad, whether temporarily or permanently 
• you start a freelance or self-employed activity without being affiliated to a mandatory pension fund 
• your income falls below the BVG/LPP entry threshold, for example due to a significant reduction in working hours 

In short, as soon as your professional situation changes on a long-term basis, your second pillar passes through Vested benefits. 

What happens next in practical terms? 

The money stays in your name, on an account of your choice. You then have several options: 

• you leave your money on a secure account: your capital is protected, but growth will be limited 
• you choose to invest it: depending on your risk profile, you can opt for more dynamic solutions such as investment funds. This option is particularly interesting if retirement is still far away 
• you transfer your assets to your new pension fund if you quickly find a new job 

One important point to keep in mind: if you do nothing and leave your capital unattended for two years, it will automatically be transferred to the BVG/LPP Substitute Occupational Benefit Institution. This is not always the most attractive solution in terms of fees and returns. So it is better to take action yourself. 

How can you find an old, forgotten asset? 

If you have had several employers in the past, it is possible that you have left behind Vested benefits you are no longer aware of. No stress. There is a simple solution: contact the Central Office of the 2nd Pillar. 

 
They will provide you with all the information about your former assets free of charge. A quick step to keep track of your retirement savings. 

What if you start your own business? 

If you become self-employed, you can even choose to transfer your capital into a pillar 3A account, provided you do so before the legal retirement age, meaning 64 for women and 65 for men. 
This can be very attractive from a tax perspective, as amounts paid into pillar 3A are tax deductible. 

The final tip 

Take care of your Vested benefits account early on. By planning ahead, you stay in control of your money. You can invest wisely, optimise your taxes and, above all, secure your financial future. 
Do not forget that the second pillar represents a significant part of your future retirement income. It is well worth taking it seriously from now on. 

At Pilla, we support you at every step. Simply, clearly and without the headache. So, what do you say about taking your future into your own hands?