After so many years abroad, my pension was anything but clear. I wanted someone to listen to me and make the best of it.
Prof. Dr. Oliver Zimmer, Historian and Research Director at CREMA
What you should know about vested pension benefits
If you leave a company, you should ideally transfer your pension fund assets to one or two vested benefits accounts. Firstly, this allows you to decide for yourself whether you would like to use an investment strategy and, if so, which one. Secondly, splitting your
pension assets between up to two different vested benefits foundations gives you flexibility and tax savings later on when you withdraw. The following points are worth noting:
On a break
Whether it be parental leave, education, a sabbatical or a world trip, as soon
as you interrupt gainful employment and membership of the pension fund ends, your pension assets will be transferred to a vested benefits solution. Then you can choose whether you want to keep your retirement account assets in a vested benefit account or invest in securities within a vested benefits foundation with a free choice of investment strategy. If you simply keep your capital in your account, you miss out on fluctuations in value, but return opportunities too, depending on the investment horizon.
Without a job, I can’t do anything about my pension.
MISCONCEPTION
In the event of dismissal
There’s never an optimum time to be let go. If you do nothing, your capital will end up with the Substitute Occupational Benefit Institution with a low interest rate. But if you transfer it to a vested benefit account or to a policy with your chosen strategy, you stay in control. When you exit the pension fund, your disability and death insurance coverage with the previous occupational benefits institution will only continue for one month. So, check your insurance coverage ahead of time.
A fresh start
If you’re starting self-employment or returning from abroad, your vested benefits capital is a resource. Returnees like Oliver Zimmer often bring with them foreign retirement accounts and interrupted contribution years, but vested benefits serve as an opportunity to rebuild their retirement provision.
Vested benefits when exiting a pension fund
- Check where and in how many accounts your actuarial capital is held.
- Be pro-active when leaving, otherwise your retirement account will end up with the Substitute Occupational Benefit Institution.
- Choose a solution consciously: vested benefit account for short time periods,
an investment portfolio for more flexibility. - Adapt the investment strategy to the investment horizon. The longer this is,
the greater the return opportunities. - Split capital between two accounts when changing jobs. This is no longer possible later on and saves tax on withdrawal.
- Ensure protection against disability and death.
