Prof. Dr Oliver Zimmer taught Modern European History at the University of Oxford from 2005 to 2021 and is currently a freelance historian, author and research director at CREMA in Switzerland. After living and working in the UK for around 27 years, he decided to return to Switzerland in 2022 for personal reasons.
On his return, he was plagued by a question facing many returnees: what happens to my UK pension fund assets? How can I transfer the pension assets I have accumulated abroad to Switzerland? PensExpert provided him with answers and the personal advice he was looking for.
His story is a good example for many who return to Switzerland after years abroad or dare to start again for whatever other reason.
What are vested pension benefits – and why are these more important than many people think?
Anyone who works in Switzerland and is a member of a pension fund saves their pension assets in the second pillar on a monthly basis. If you leave your employer – for whatever reason – this capital is not simply frozen. You transfer it to a vested benefits account. Thatsounds technical. But it isn’t really: It’s about your actuarial capital continuing to work for you – no matter what life has in store for you.
There are three situations where this becomes particularly relevant:
1. Time out: when you take a break from paid work
Sabbatical, parental leave, parental care or a world trip. More and more people are making a conscious decision to take a break in their gainful employment. What many people don’t know is that pension fund membership doesn’t continue during this period. Capital has to go somewhere, and this “somewhere” makes a big difference.
A vested benefits account with a bank is the simplest solution. A vested benefit policy gives you more freedom to shape your investment strategy. At PensExpert, we offer vested benefits solutions where you determine the investment strategy yourself, tailored to your investment horizon and risk tolerance.
What is often forgotten at this stage is that the compound interest effect doesn’t stop. Anyone passively parking their vested benefits capital in a minimum account may be losing more than they think. Actively managing your capital can make productive use of your break – for your pension too.
Career break, job loss, new beginning: Where do you stand?
In a personal and free initial consultation, we show you how to manage your retirement capital optimally. Schedule a consultation appointment now.
2. Redundancy: when things have to be done quickly
A dismissal rarely comes at the right time. In addition to everything else that needs to be settled, pension fund capital often ends up in a provisional fund – referred to as the Substitute Occupational Benefit Institution. This is a legal solution, but not an optimal one: interest rates are low and investment opportunities are limited.
Taking prompt action in a situation like this will give you more options. The capital can be transferred to an individual vested benefits account or to a vested benefit policy with a self-chosen investment strategy. This gives you back control at a time when you really need it.
Please note that it is possible to split the vested benefits capital between up to two accounts. This creates flexibility for later withdrawals and can make sense from a tax point of view.
See also our video on “splitting”.
3. Life change: reinventing yourself
Self-employment. Returning to Switzerland from abroad. Career change. Semi-retirement. There are life situations that do not fit into the classic categories – and it is precisely at these moments that vested benefits capital becomes a real resource.
Anyone returning to Switzerland from abroad, like Oliver Zimmer, often faces a complex situation: foreign pension fund assets, interrupted contribution years, lack of overview. At the same time, this is the very type of new beginning that offers the opportunity to rethink provision from the ground up and build it up in a targeted manner.
If you become self-employed, you no longer have an employer that pays half of your pension fund contributions. Vested benefits capital can no longer be paid into a pension fund if you are self-employed – unless you voluntarily join one as a self-employed person. All of a sudden, the second pillar is a component you need to consciously manage – not something that happens automatically.
What Oliver Zimmer’s story teaches us
Circumstances that call for a look at vested benefits capital aren’t restricted to situations of dramatic life upheaval. You might just be returning from abroad, making a new start, consciously opting for something different.
It’s not what prompts it, but what you make of it. Managed actuarial capital works for you. Forgotten capital will cost you.
