What happens to your second pillar if you quit your job?

The right thing to do? Open a vested benefits account. 

It's free, runs in your name and protects your BVG assets, which have to be held somewhere. If you don't do anything, your capital will automatically be transferred to a standard foundation after two years. This isn't always advantageous. It's better to decide for yourself where it should go and who the provider should be.

If you want to find out about vested benefits you saved earlier and are no longer able to contact your former employer(s) and their pension funds, you must contact the 2nd Pillar Central Office, which will investigate on your behalf. The 2nd Pillar Central Office is responsible for enquiries about occupational pension assets and provides insured persons with information free of charge. 

Here is a link to make things easier for you: https://sfbvg.ch/en/tasks/search-procedure. 

I would like to remind you that the vested benefits account becomes relevant in various situations: if you take a career break, move abroad (to work or simply because you want to leave Switzerland), your income falls below the BVG entry threshold (e.g. due to a reduction in working hours), you plan to become self-employed or you want to divide your assets in the event of divorce.

Tip: Take care of this early on so that you remain in control and can invest your assets when you want to. 

Your assets are held by a provider, but that does not necessarily mean that they have to remain inactive. A quick note: the money from the vested benefits can be transferred to a pillar 3a account, but this must be done before the age of 65 (for men) or 64 (for women), as the aim is to save for retirement.

Once you have an overview of your situation, what approach should you take?

There are various ways in which you can deal with this credit balance, which – don't forget – makes up the majority of your assets and therefore your pension: you can leave it with the central office or transfer it to a vested benefits account.

You are free to decide where your money goes. It makes sense to look after it well. Remember that there are solutions to increase your income in retirement, take advantage of tax benefits and invest in your retirement thanks to the third pillar.

If you are no longer subject to compulsory occupational pension provision and take up self-employment in Switzerland, you can withdraw your vested benefits provided that you can prove your self-employment to your pension fund or, if you no longer have a pension fund, to your vested benefits institution. Part of the available capital can also be invested in a pillar 3a account, as this is attractive from a tax perspective. Self-employed persons can pay in 20% of their net income, up to a maximum of CHF 36,288 per year. This tax-deductible amount can lead to considerable savings.

You can also invest the vested benefits from your occupational pension plan in bank accounts, investment funds or shares, or in vested benefits insurance. 

However, you should consider your risk profile and your goals and find out about the various investment options available.

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