Vested benefits institution

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The vested benefits institutions are foundations and ensure pension coverage in accordance with Article 4 of the Vested Benefits Act (FZG) in Switzerland .

Basics

Switzerland has a pension system with three pillars. The first pillar is the state AHV , which pays out pensions according to the pay-as-you-go system . The second pillar is based on the funded system . Around 1950 pension funds manage the retirement assets of the insured and distribute a pension from retirement age. Capital payments are also possible. The third pillar is private provision. Every employed person can pay in a limited amount every year, which he can deduct from taxes. The total assets in the pension funds are around CHF 713 billion and around CHF 94 billion in the 3rd pillar.

As a so-called “parking lot”, vested benefits institutions come into play when an employee leaves the employer. The Freedom of Movement Act provides that the individual retirement assets follow the employee (Art. 2 Para. 1 FZG). The pension fund will inquire of the insured person where the retirement assets must be transferred. If the employee does not have a new employer, the retirement assets will be transferred to a vested benefits institution.

Differences between pension funds and vested benefits foundations

Since vested benefits foundations were designed by the legislature as temporary parking spaces, they differ from traditional pension funds :

Pension fund Vested benefits foundation
Interest At least mandatory BVG interest rate (2019: 1.00%) No limit, currently between 0 and 0.45%
Contributions Yes, the amount is mandatory according to Art. 16 BVG no contributions
Investment strategy Foundation assets are invested collectively in accordance with legal guidelines (Art. 49ff. BVV 2) According to the law, the foundation is obliged to invest the money in a savings account with a bank subordinate to FINMA (Art. 19 Para. 1 FZV). Exception: fall arrest facility
Individual investment options No (except special 1e pension funds according to Art. 1e BVV 2) Yes , interest account or investment in defined investment funds (Art. 19a FZV)
Bankruptcy protection Yes . Submission to the BVG security fund for insured wages up to CHF 126,900. No subordination to the BVG security fund.

The banks have depositor protection up to assets of CHF 100,000 (see Art. 37a Para. 5 Banking Act)

Early purchase options Statutory early withdrawal options due to permanent departure from Switzerland, taking up self-employment, small amount (Art. 5 FZG), as well as promotion of home ownership (Art. 30a ff. BVG) analogous to the pension fund
Ordinary purchase options According to the foundation's regulations. At the earliest from age 58, normal case with proper retirement age (often: age 65), at the latest by age 70. According to the law (Art. 16 FZV) between the ages of 59/60 and 69/70 (women / men).
Free choice foundation No . Linked to employer (Art. 11 Para. 1 BVG) Yes (Art. 4 Para. 1 FZG)
Board of Trustees Consists of equal employer and employee representatives (Art. 51 BVG) Consists of representatives of the founder and at least one independent board of trustees.
At sight External auditors examine the annual financial statements in accordance with the Swiss GAAP FER 26 accounting standard (Art. 52c BVG)

Foundations are subject to the regional supervisory authorities (Art. 48 BVG).

analogous to the pension fund

Selection of a vested benefits institution

In contrast to opening a pillar 3a account, opening a vested benefits account is usually not self-determined. Anyone who leaves their employer is asked where the retirement savings should be transferred to. If there is no response, the pension fund will transfer the retirement assets to the welfare institution in accordance with Art. 4 Para. 2 FZG at the earliest six months after departure, but no later than two years after departure of the insured person. Since the pension fund has to pay interest on the balance during this time, it will take action after six months and transfer the money.

The fundraising scheme has been paying interest on vested benefits at 0.01% since April 2016.

Possible criteria for choosing the vested benefits foundation

However, the interest alone must not be the decisive criterion when choosing the facility. The following features must also be observed:

  • Selection of investment funds
  • Entry and exit fees
  • Transaction fees
  • Account management fees
  • Processing fees for early withdrawals (e.g. home ownership promotion)
  • Notice periods
  • Support (e.g. existence of a hotline)
  • Availability (phone, post, mail, social media)
  • Bank vs. Insurance solution

The media are often limited to comparisons in the area of ​​the 3rd pillar. If you are unsure, you can often contact the vested benefits institution directly and ask about the conditions.

How many vested benefits accounts can I have?

According to Art. 12 Para. 1 FZV, the vested benefits may be transferred from the previous pension fund (= pension fund) to a maximum of two vested benefits institutions. That means that one z. B. can open two accounts at the vested benefits institution of his / her trust, which can be interesting for tax purposes in the event of a payout. However, certain vested benefits institutions require special requirements for this. It is worth clarifying the details with the vested benefits institution before making the transfer.

Since certain insured persons are insured with more than one pension fund, more vested benefits accounts can be opened accordingly. But be careful: not all vested benefits institutions allow the opening of more than two accounts (even if the retirement assets come from different pension funds).

Vested benefits institutions are growing steadily

With the development of society and the increasing mobility of employees, there was a continuous growth of vested benefits foundations. There are many reasons:

  • If you leave Switzerland permanently, the retirement assets can be left in the vested benefits account. When moving to the EU, the legislature requires that the mandatory part of the retirement assets be blocked on the account (Art. 25f FZG).
  • Due to divorce, divorce funds can be transferred to a vested benefits account if the beneficiary does not have a pension fund.
  • If the level of employment is reduced, you may be too highly insured in your pension fund. The difference is transferred to a vested benefits account.
  • Self-employed people can leave their money in a vested benefits account.
  • When a house is sold, the money previously withdrawn flows back into the pension fund or, if it is not available, into a vested benefits account (Art. 30d BVG).
  • When selling a house and then buying a new one within two years, the amount withdrawn can also be parked in a vested benefits account (Art. 30d Para. 4 BVG).

This means that vested benefits foundations have over CHF 55 billion in vested benefits throughout Switzerland with an annual growth rate of around 1%, which means that growth has slowed recently.

organization

In contrast to the ASIP pension fund lobby, the vested benefits foundations have so far lacked a representation of interests. This was founded in December 2014 with the Swiss Pension Fund Association (VVS). As of May 2016, 36 vested benefits and 3a foundations were already members in all three language regions of Switzerland. The association presented itself to the media on May 20, 2016 and emphasized the importance of vested benefits and 3a foundations.

In a survey carried out by the VVS for the first time, it turned out that the penetration of securities by vested benefits foundations is around 13%. The accounts that were netted due to an early payment in the 2015 survey year amounted to less than 2% of the total.

The website Vorsorgewissen.info was launched in August 2018 and publishes information about vested benefits foundations, their account holders and the organization of the foundations free of charge.

Public perception

Vested benefits institutions are often confused with pension funds in public and are not in the foreground in public. In the media coverage, there is regular mention of forgotten vested benefits at the vested benefits foundations and at the rescue facility. Until recently, vested benefits institutions were not the focus of interest even with the authorities. The Swiss Federal Audit Office has taken on the vested benefits institutions and, in its evaluation published on July 5, 2016, made various suggestions for making vested benefits more accessible to the authorities. The authorities accepted the recommendations with reservations, however, as part of the modernization of supervision, they included the point of consistently bringing vested benefits into the pension funds. Ultimately, the insured person's personal responsibility is of great importance. He must find out about his vested benefits and ensure that the relevant pension fund or vested benefits foundation has his correct information.

Latest regulatory developments

The vested benefits foundations have long been viewed as appendages to the pension funds. The vested benefits should originally only serve as a temporary parking space until the money is transferred to the pension fund of the new employer (Art. 4 FZG). The legislation was designed accordingly: what applied to pension funds generally also applied to vested benefits foundations with few differences (see table above). Various legislative adjustments as well as increased mobility on the labor market led to growing vested benefits foundations, which called the regulator onto the scene:

The Swiss Federal Audit Office publishes five recommendations

The vested benefits institutions were scrutinized in a report by the Swiss Federal Audit Office. This resulted in five recommendations, some of which have been adopted by the legislature, for example the audit mandate from a parliamentary commission on the insurance subordination of vested benefits institutions to the BVG security fund.

Prohibition of negative interest

A legal opinion commissioned by the Federal Social Insurance Office at the behest of Federal Councilor Berset comes to the conclusion that negative interest rates are not permitted on vested benefits accounts. The conference of supervisory authorities supported this point of view and wrote to the subordinate vested benefits foundations, informing them that any negative interest rates would not be tolerated. Corresponding pension fund regulations must be amended.

Interest on the divorce balance with the BVG interest

In its judgment 9C_149 / 2017, the Federal Supreme Court comes to the conclusion that the divorce judge must apply a continuous BVG interest rate to determine the divorce payment , regardless of whether the insured person was insured with a pension fund or a vested benefits foundation. In addition, interest must be paid on the divorce amount determined by the judge between the initiation of the divorce proceedings and the disbursement with BVG interest - here too, regardless of whether the credit is deposited with a pension fund or a vested benefits institution.

Central Switzerland: Prohibition of opening two vested benefits accounts

In teaching, it is controversial whether a pensioner can open two vested benefits accounts with the same vested benefits foundation. While the law does not prohibit it, the Federal Social Insurance Office has spoken out against it several times. In May 2018, the Central Swiss Supervisory Authority ZBSA explicitly prohibited the opening of two vested benefits accounts with the same vested benefits foundation after leaving. This prohibition applies to all vested benefits foundations subject to the ZBSA (e.g. Pensfree, Liberty, Independent). Free movement foundations in other regions do not have this ban. Certain foundations allow two accounts to be opened, others do not.

Response to negative interest rates

With the ongoing negative interest rates and the ban on passing the negative interest on to pension fund holders, more and more vested benefits foundations are running into financial bottlenecks. As a countermeasure, more and more fees are being charged. The Credit Suisse Vested Benefits Foundation decided on October 1, 2019 to charge account management fees of CHF 9 per quarter. The PostFinance Vested Benefits Foundation had already charged CHF 9 per quarter for account management fees. In view of the negative interest rates, other foundations are likely to follow.

At the BVG state rescue facility, the negative interest rates, coupled with the poor stock market performance as a result of the Corona crisis, called the SGK-N parliamentary commission into action. On April 29, 2020, they called for guaranteed zero interest rates from the Confederation or the Swiss National Bank SNB for the fall arrest facility in a press release. With total assets of 14 billion and negative interest rates of 0.75%, this corresponds to state aid of CHF 1.05 billion.

Individual evidence

  1. ↑ Federal Chancellery - P: SR 831.42 Federal Act of December 17, 1993 on Freedom of Movement in Occupational Retirement, Survivors' and Disability Pension Plans (Freedom of Movement Act, FZG). In: www.admin.ch. Retrieved May 21, 2016 .
  2. ^ Vorsorgeexperten.ch: Basics of Swiss pension provision: The 3-pillar concept ::: Swiss provision - Vorsorgeexperten.ch. In: www.vorsorgeexperten.ch. Retrieved May 21, 2016 .
  3. ↑ a b c d Federal Social Insurance Office: Swiss Social Insurance Statistics 2018 . Ed .: Federal Social Insurance Office. Bern 2016, p. 67 .
  4. ↑ Federal Social Insurance Office (FSIO). (No longer available online.) In: www.bsv.admin.ch. Archived from the original on May 1, 2018 ; accessed on April 30, 2018 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.bsv.admin.ch
  5. ↑ Federal Chancellery - P: SR 831.40 Federal Act of June 25, 1982 on Occupational Old-Age, Survivors' and Disability Pension Plans (BVG). In: www.admin.ch. Retrieved May 21, 2016 .
  6. ↑ a b Federal Chancellery - P: SR 831.441.1 Ordinance of April 18, 1984 on occupational old-age, survivors' and disability benefits (BVV 2). In: www.admin.ch. Retrieved May 21, 2016 .
  7. ↑ a b Federal Chancellery - P: SR 831.425 Ordinance of October 3, 1994 on the freedom of movement in occupational old-age, survivors' and disability benefits (Vested Benefits Ordinance, FZV). In: www.admin.ch. Retrieved May 21, 2016 .
  8. ↑ Federal Chancellery - P: SR 952.0 Federal Act of 8 November 1934 on Banks and Savings Banks (Banking Act, BankG). In: www.admin.ch. Retrieved May 21, 2016 .
  9. ↑ Supervision Commission for Occupational Pensions: Directive OAK W-04/2014: Pillar 3a foundations and vested benefits foundations. (PDF) (No longer available online.) Supervision Commission for Occupational Pensions, July 2, 2014, archived from the original on May 21, 2016 ; accessed on May 21, 2016 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.oak-bv.admin.ch
  10. ↑ https://doc.aeis.ch/docs/pdfs/445.pdf
  11. ^ Swiss Pension Fund Association ASIP »ASIP. In: www.asip.ch. Retrieved May 21, 2016 .
  12. ↑ DE - Verein-vorsorge.ch. In: www.verein-vorsorge.ch. Retrieved May 21, 2016 .
  13. ↑ There are 92 billion in the third pillar. In: Play SRF. Retrieved May 21, 2016 .
  14. ^ Michael Ferber: Private provision: "Neglecting the third pillar". In: Neue Zürcher Zeitung. Retrieved May 21, 2016 .
  15. ↑ non-profit organization: knowledge database of vested benefits foundations. Retrieved August 18, 2018 .
  16. ↑ Forgotten pension fund monies: How to research. Swiss Radio and Television SRF, February 2, 2016, accessed on July 18, 2016 (Swiss Standard German).
  17. ↑ Retirement provision: Where is my pension fund money? In: Observer . ISSN  1661-7444 ( observer.ch [accessed on July 18, 2016]).
  18. ↑ pdf
  19. ^ Report on modernization of supervision in the 1st pillar and optimization in the 2nd pillar of old-age, survivors' and disability benefits. (PDF) Swiss Confederation, accessed on April 12, 2019 .
  20. ↑ Vested benefits institutions in occupational pensions - Evaluation of the advantages and risks for the insured and the Confederation - Swiss Federal Audit Office. Retrieved May 1, 2018 .
  21. ^ Postulate SGK-N. Retrieved April 30, 2018 .
  22. ↑ Prof. Schneider: BSV Communication No. 147. (PDF) Accessed April 30, 2018 .
  23. ↑ Decision 9C_149 / 2017. Retrieved May 1, 2018 .
  24. ↑ BSV Communication No. 122 margin no. 782. Retrieved December 4, 2018 .
  25. ↑ Transfer of vested benefits: number of vested benefits accounts with the same vested benefits institution in accordance with Art. 12 FZV. (PDF) Retrieved December 4, 2018 .
  26. ↑ Lukas Hässig: CS wants every Stutz: With 2nd pillar, with external printing. Retrieved October 7, 2019 .
  27. ↑ PostFinance fees. Retrieved October 7, 2019 .
  28. ↑ SGK-N: ZERO INTEREST ACCOUNT FOR THE BVG RECEPTION DEVICE. Retrieved May 2, 2020 .