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-   -   alternatives to vested benefits (https://www.englishforum.ch/finance-banking-taxation/296796-alternatives-vested-benefits.html)

justcamehere 18.02.2020 10:48

alternatives to vested benefits
 
When changing employers instead of taking the existing pension assets to new employer's pension fund, one can also transfer them to a vested benefits account.

However, rates/yields for vested benefits accounts are very low at the moment, so I was wondering if it's possible to transfer to "something" like a U.K. SIPP, where at least an asset allocation between shares, bonds etc is chosen ( either by the individual or by the company that provides it ). If that can happen, what would this "something" be?

Axa 18.02.2020 10:57

Re: alternatives to vested benefits
 
The new employer's pension fund also allocates the money on equities and bonds.

In the company there should be a mitarbeiterausschuss (staff board) that oversees the pension fund. They should know what happen.

justcamehere 18.02.2020 11:22

Re: alternatives to vested benefits
 
Quote:

Originally Posted by Axa (Post 3149274)
The new employer's pension fund also allocates the money on equities and bonds.

In the company there should be a mitarbeiterausschuss (staff board) that oversees the pension fund. They should know what happen.

I'm looking to transfer the old pension assets to a 3rd party. Swiss pension funds are well managed and well run but I' want to be diversified with respect to who holds the pension assets as well.

roegner 18.02.2020 11:42

Re: alternatives to vested benefits
 
Quote:

Originally Posted by justcamehere (Post 3149282)
I'm looking to transfer the old pension assets to a 3rd party. Swiss pension funds are well managed and well run but I' want to be diversified with respect to who holds the pension assets as well.


In principle you should transfer your old pension fund to the new one when you change jobs. However, I read here that not everyone does that.


But whether you can transfer this from a vested benefits account to a normal investment plan? Always thought that that is only possible in limited cases (f.e. when you retire abroad).



As from FMF´s description, he managed to get his pension pot paid out, but afaik that was because he retired.

Axa 18.02.2020 11:49

Re: alternatives to vested benefits
 
Not possible: https://www.bsv.admin.ch/dam/bsv/en/...wechsel-en.pdf


"If you are insured under the 2nd pillar and you change employer, you remain in principle subject to compulsory insurance and your vested benefits have to be transferred to the pension fund of your new employer. This transfer is prescribed by law. Your former pension fund is obliged to ask you for the contact details of your new pension fund. Otherwise it is up to you to ask your new employer for the address of its pension fund and to pass that on to your former pension fund so that the latter can transfer your vested benefits. If your former pension fund does not receive any
details of your new employer’s pension fund, it must transfer your vested benefits to the Substitute Occupational Benefit Institution."


So, there's a law somewhere that says the money goes to the new employer retirement fund when one changes jobs. Perhaps reading the law in detail would provide more information, but that's a challenging search.

roegner 18.02.2020 11:54

Re: alternatives to vested benefits
 
I´m with you Axa, however, have read often enough that people apparently act or at least advocate differently.

Jim2007 18.02.2020 13:03

Re: alternatives to vested benefits
 
Quote:

Originally Posted by justcamehere (Post 3149272)
When changing employers instead of taking the existing pension assets to new employer's pension fund, one can also transfer them to a vested benefits account.

It is not an alternative, it is a parking place for pension funds between employments. If most cases where you leave an employer to join another firm directly the funds are just transferred to the new employer without going over the benefits account.

justcamehere 18.02.2020 13:51

Re: alternatives to vested benefits
 
Quote:

Originally Posted by Axa (Post 3149298)
Not possible: https://www.bsv.admin.ch/dam/bsv/en/...wechsel-en.pdf


"If you are insured under the 2nd pillar and you change employer, you remain in principle subject to compulsory insurance and your vested benefits have to be transferred to the pension fund of your new employer. This transfer is prescribed by law. Your former pension fund is obliged to ask you for the contact details of your new pension fund. Otherwise it is up to you to ask your new employer for the address of its pension fund and to pass that on to your former pension fund so that the latter can transfer your vested benefits. If your former pension fund does not receive any
details of your new employer’s pension fund, it must transfer your vested benefits to the Substitute Occupational Benefit Institution."


So, there's a law somewhere that says the money goes to the new employer retirement fund when one changes jobs. Perhaps reading the law in detail would provide more information, but that's a challenging search.

I see, thanks for this, I guess it's not possible then.
So vested benefits accounts then can only be used if someone is leaving their employer without going to a new employer or leaving Switzerland altogether.

Still though, even if not of immediate concern as it can't be done now, I'd be interested to know what the alternatives exist to vested benefits accounts, which use an asset allocation, not a flat & quite low rate on an account.

Jim2007 18.02.2020 17:02

Re: alternatives to vested benefits
 
Quote:

Originally Posted by justcamehere (Post 3149350)
Still though, even if not of immediate concern as it can't be done now, I'd be interested to know what the alternatives exist to vested benefits accounts, which use an asset allocation, not a flat & quite low rate on an account.

Fairly limited, this kind of thing.

kristianej 18.02.2020 18:12

Re: alternatives to vested benefits
 
Viac is going to start by the end of march according to an email to me.
Here it is mentioned (Freizügigkeitslösung) to start by the end of 2019, but there has been a delay. I love them for their 3a offering:
https://viac.ch/2019/05/viac-ungebremstes-wachstum/

fatmanfilms 18.02.2020 18:28

Re: alternatives to vested benefits
 
Quote:

Originally Posted by roegner (Post 3149290)
As from FMF´s description, he managed to get his pension pot paid out, but afaik that was because he retired.

Not employed & therefore not subject to compulsory insurance is the 'technical' reason.

justcamehere 18.02.2020 20:21

Re: alternatives to vested benefits
 
Quote:

Originally Posted by kristianej (Post 3149418)
Viac is going to start by the end of march according to an email to me.
Here it is mentioned (Freizügigkeitslösung) to start by the end of 2019, but there has been a delay. I love them for their 3a offering:
https://viac.ch/2019/05/viac-ungebremstes-wachstum/

But this is P3a, not P2. E.g. in a hypothetical scenario where someone leaves Switzerland or remains in Switzerland but does not join an employer ( e.g. goes self-employed ), existing P2 assets can't be transferred (?) to a VIAC P3a.

justcamehere 18.02.2020 20:22

Re: alternatives to vested benefits
 
Quote:

Originally Posted by fatmanfilms (Post 3149419)
Not employed & therefore not subject to compulsory insurance is the 'technical' reason.

Did you take it all out in cash, or managed to invest it in a non vested-benefits pension account ?

roegner 18.02.2020 20:23

Re: alternatives to vested benefits
 
Quote:

Originally Posted by justcamehere (Post 3149436)
But this is P3a, not P2. E.g. in a hypothetical scenario where someone leaves Switzerland or remains in Switzerland but does not join an employer ( e.g. goes self-employed ), existing P2 assets can't be transferred (?) to a VIAC P3a.

Why would you want to? If/when I get my pillar II funds I will definitely invest that myself and not in some meager pillar III investment.

fatmanfilms 18.02.2020 21:17

Re: alternatives to vested benefits
 
Quote:

Originally Posted by justcamehere (Post 3149438)
Did you take it all out in cash, or managed to invest it in a non vested-benefits pension account ?

Yes 100% as cash, I invested it in www.fundsmith.co.uk which has doubled in CHF terms since investing 5 years ago.

justcamehere 18.02.2020 22:16

Re: alternatives to vested benefits
 
Quote:

Originally Posted by roegner (Post 3149439)
Why would you want to? If/when I get my pillar II funds I will definitely invest that myself and not in some meager pillar III investment.

Because if you keep it in a pension type of account there are tax benefits.

justcamehere 18.02.2020 22:17

Re: alternatives to vested benefits
 
Quote:

Originally Posted by fatmanfilms (Post 3149447)
Yes 100% as cash, I invested it in www.fundsmith.co.uk which has doubled in CHF terms since investing 5 years ago.

Isn't that taxable from the jurisdiction where you move to ? unless you chose a jurisdiction which happens to be not so penalizing, for most places it probably makes sense to keep the assets in a pension account to grow tax free

kri 18.02.2020 23:51

Re: alternatives to vested benefits
 
Quote:

Originally Posted by justcamehere (Post 3149462)
Because if you keep it in a pension type of account there are tax benefits.

True:
1. Amount not taxed as wealth
2. No witholding tax when you take it out

kri 18.02.2020 23:55

Re: alternatives to vested benefits
 
Quote:

Originally Posted by justcamehere (Post 3149463)
Isn't that taxable from the jurisdiction where you move to ? unless you chose a jurisdiction which happens to be not so penalizing, for most places it probably makes sense to keep the assets in a pension account to grow tax free

If you are resident in CH at time of withdraw, your.place of residence tax rate applies.
If you are resident abroad at time of withdraw, it is the legal location of the institution that holds your money that dictates the "residence" and applies the tax rate.

Example:
-Live in Geneva and withdraw - Geneva tax rate apply
-Live in Hong Kong and withdraw - money is with Schwyz Kantonal Bank - Schwyz Tax rate applies

Important - some banks have branches everywhere but it is not the branch address that counts but the legal address.

kristianej 19.02.2020 07:19

Re: alternatives to vested benefits
 
Quote:

Originally Posted by justcamehere (Post 3149436)
But this is P3a, not P2. E.g. in a hypothetical scenario where someone leaves Switzerland or remains in Switzerland but does not join an employer ( e.g. goes self-employed ), existing P2 assets can't be transferred (?) to a VIAC P3a.

No it's going to be P2, they will start by the end of March. So far it's only P3a. For 3a they are great and offer lots of choices, so I hope it will be similar for P2.


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