Occupational pension provision : focus on vested benefits
23 September 2024 | Comment(s) |
David Charles
In this article, we take a closer look at the concept of vested benefits, i.e. occupational pension assets that can be used in a number of life situations. What are vested benefits, how are they managed and when can they be withdrawn? Find out more.
Interested in our vested benefits solutions? Don't hesitate to ask Groupe Mutuel's occupational benefits experts for advice!
What are vested benefits?
In Switzerland, vested benefits are pension savings in the second pillar (LPP/BVG). Each employee builds up a retirement savings account that includes his or her own savings contributions, those of the employer, any purchases from the pension fund and interest accrued over the years.
Depending on the various situations described below, the assets may be deposited with a pension fund (pension institution) or a vested benefits foundation, which will take care of its investment and management, before the pension assets can be withdrawn at the appropriate time.
How important is the vested benefits account?
Depending on the circumstances, you may need to consider your vested benefits options. In particular, vested benefits offer the following advantages:
- They protect assets after a job, in the event of unemployment or professional transition, for example.
- During this period, they ensure the ongoing financial security of the assets, which are invested and earn interest.
- They offer a degree of flexibility when you retire, depending on your other pension accounts, for example a tied 3rd pillar(a).
How do you manage your vested benefits?
Are you switching employer? Starting your own business? Or simply coming to retirement age? Find out when you need to look after your vested benefits.
Transferring benefits when changing employer
As an insured person, you are obliged to request a vested benefits transfer when you change employer. This procedure allows you to transfer your occupational pension assets from your former employer's pension fund (termination benefit) to your new employer's pension fund (entry benefit).
It is important to ensure that the necessary instructions have been sent to the pension fund in good time, otherwise the termination benefit will be transferred to the Fondation institution supplétive LPP (Substitute Occupational Benefit Institution), an institute which centralises the assets but charges fees. So keep this in mind if you change jobs!
When should I open an account with a vested benefits institution?
If it is not possible to transfer your pension capital to a new institution (or only partially), you can open an account or take out a vested benefits policy with a bank or insurance company. This is particularly the case in the following situations:
- Interruption of gainful employment with the employer without a new job for a certain period (resumption of training, unemployment).
- Early retirement or end of professional activity.
- Start of self-employed activity without cash withdrawal of 2nd pillar assets.
- Receipt of a 2nd pillar credit in the event of divorce or separation from a registered partnership.
- Interruption of gainful employment to look after children for a certain period.
- Definitive departure from Switzerland.
When can I withdraw my pension assets?
The vested benefit credit you have saved is blocked until you reach standard retirement age. However, an early withdrawal is possible in certain cases, such as:
- Early retirement
- The start of self-employment, as a main occupation
- A permanent move abroad
- Buying a home for own use
Does it make sense to combine vested benefits and investments?
As well as depositing your money in a vested benefits account, you can also invest it. Don't let your money lie idle: opt for an invested vested benefits solution. If you prefer a medium- to long-term investment horizon of at least two years, you could consider investing your vested benefits in funds.
The advantage of these securities-based investment solutions lies in the opportunities for higher returns than traditional solutions. However, invested vested benefits also expose policyholders to fluctuations in the financial markets.
Vested benefits : Groupe Mutuel pension solutions
Through its Opsion Vested Benefits Foundation, Groupe Mutuel has set up a 100% digital platform where policyholders can access their data and portfolio developments at any time.
In order to invest your vested pension benefits profitably, it is preferable to choose an investment horizon of several years. The five investment strategies selected by Groupe Mutuel Asset Management have achieved excellent performance, offering you the potential for high returns.
Both private individuals and other financial players can benefit from a flexible, modern structure. Our digital platform offers the following advantages in particular:
- Access to your data and your portfolio at any time
- Five investment strategies for your risk profile
- Opportunity to invest in better-performing investments than a savings solution
- Transparency: no hidden or separately billed charges
- Sustainable and responsible investment policy (ESG)
- Tax benefits
