14 minutes read 1. What is a vested benefits account and how do you end up with one?
When you leave an employer, your second pillar assets are not paid out to you: they leave the pension fund in the form of a termination benefit. If you immediately join a new fund, they are transferred there and the story ends. If you join no new fund, the Federal Vested Benefits Act requires pension coverage to be maintained in another form: that is the vested benefits account.
The situations that lead there are more ordinary than people think: a spell of unemployment, a sabbatical, going back to study, becoming self-employed, moving abroad, dismissal, extended parental leave, or the splitting of pension assets after a divorce. In all these cases the capital has to land somewhere.
The law provides for two forms only. The vested benefits account, opened with a banking foundation or an independent foundation, which is a pure savings container. And the vested benefits policy, taken out with an insurer, which can include death or disability cover. On an account, that cover does not exist: many people discover this too late.
The scale of the phenomenon is documented. At the end of December 2025, the substitute institution managed about 1.6 million accounts holding some CHF 21 billion, of which 960,000 lost-contact accounts — 60% of the total — representing CHF 6.75 billion. In 74% of those lost-contact accounts the balance is below CHF 5,000, often because banks refuse small amounts. Every year, around 5,300 accounts belonging to holders who have reached 75 are transferred to the LPP Guarantee Fund, for an average of CHF 4,700 each.
In other words: close to a million pension accounts are sitting idle without their holder getting in touch. If you have changed employer several times, the Central Second Pillar Office lets you search for forgotten assets free of charge.
2. Can you contribute to a vested benefits account?
No. It is the most counter-intuitive answer in this guide, and the source of the most frequent confusion with pillar 3a.
A vested benefits account accepts no voluntary payment and gives entitlement to no tax deduction. You cannot pay CHF 500 into it at the end of the year to reduce your taxable income, as you would with a 3a. It is not a savings product: it is a holding account.
What can go in
- The termination benefit paid out by a pension fund.
- A transfer from another vested benefits account or policy, for example when you consolidate or move your assets.
- The repayment of an early withdrawal made earlier for home ownership.
- The share allocated when pension assets are split on divorce.
- The interest or investment performance, depending on the solution chosen.
What never goes in
- A free payment from your current account, whatever the amount.
- A buy-in. Buying in years of contributions requires membership of a pension fund. As long as your assets sit in vested benefits, no buy-in is possible — they have to be transferred to an employer's fund first.
- Employer contributions, since there is no longer an employer.
3. Is there a ceiling? The real limits on amounts
There is no ceiling on the amount in a vested benefits account. Assets of CHF 800,000 belong there just as legitimately as assets of CHF 3,000. That is the logical consequence of the previous point: since nothing is paid in, there is nothing to cap. The contrast with pillar 3a is stark — that one is capped in 2026 at CHF 7,258 for a person who belongs to a pension fund and CHF 36,288 for a person who does not.
The only quantitative limit lies elsewhere: the termination benefit may be split between two institutions at most. Not a third, not a fourth. This rule, often seen as red tape, is in fact one of the few optimisation levers in the whole system — we come back to it in section 7.
On minimum amounts, most independent foundations impose none: finpension accepts a transfer from CHF 1. Some traditional banks, on the other hand, refuse balances that are too small, which explains part of the 960,000 lost-contact accounts mentioned above.
For the record, the other LPP limit amounts applicable in 2026, unchanged from 2025: entry threshold CHF 22,680, coordination deduction CHF 26,460, maximum insured annual salary CHF 90,720, minimum conversion rate 6.8%.
4. The five families of solutions compared
Offers number in the dozens — more than sixty vested benefits foundations exist in Switzerland — but they come down to five families whose logics differ widely.
| Solution | Return or fees (as at 31 August 2026) | Death / disability cover | Suited to |
|---|---|---|---|
| New employer's pension fund this is not vested benefits, it is the exit from vested benefits | Minimum LPP rate of 1.25% on the mandatory portion in 2026. Deductible buy-ins possible again. | Yes, included | Anyone who finds a job subject to the LPP |
| LPP Substitute Occupational Benefit Institution the default option | 0.05% since 1 January 2026 (0.40% in January 2025). No account maintenance fee; fees only on early withdrawal or pledging. | No | Nobody: it is the result of a decision not taken |
| Bank vested benefits account | Market average 0.082% as at 1 January 2026; best rate recorded 0.50%. Maintenance fees up to CHF 36 a year and closure fees at some institutions. | No | A short horizon, or a need for nominally guaranteed capital |
| Securities vested benefits foundation finpension, VIAC, Liberty, Lemania… | finpension: 0.49% all-in, from CHF 1. VIAC: commission capped at 0.40% plus about 0.01% in product costs, so under 0.44% all-in for an invested strategy, with the cash portion paying 0.05%. Equity share up to 100% depending on strategy. | No | A long horizon and tolerance for market swings |
| Vested benefits policy with an insurer | Fees built into the premium, returns generally lower than a securities solution. | Yes, depending on the contract | A need for risk cover during the period without an employer |
Two remarks on this table. First, the first row is not really a vested benefits solution: it is the reminder that the best destination for your assets remains a pension fund, as soon as you have one. Second, none of these solutions is inherently superior to the others: a bank account at 0.50% suits you better than a 100% equity strategy if you plan to withdraw your capital in eighteen months to buy a home.
5. What each solution costs and returns
Here is the same decision, translated into francs. The example uses capital of CHF 150,000 left in place for ten years, which matches the typical case of someone in their fifties leaving an employer.
| Solution | Net return applied | Capital after 10 years | Gap versus the default option |
|---|---|---|---|
| Substitute institution | 0.05% (observed rate) | CHF 150,752 | baseline |
| Best bank account on the market | 0.50% (observed rate) | CHF 157,671 | + CHF 6,919 |
| Pension fund, mandatory portion | 1.25% (2026 minimum rate) | CHF 169,841 | + CHF 19,089 |
| Securities foundation, 60% equities | 3.55% (assumption: 4.0% gross less 0.45% in fees) | CHF 212,614 | + CHF 61,863 |
| Securities foundation, 100% equities | 5.55% (assumption: 6.0% gross less 0.45% in fees) | CHF 257,439 | + CHF 106,687 |
The cost of fees deserves a separate look. On the 60% equity row, an all-in commission of 0.45% a year represents around CHF 8,100 in cumulative fees over ten years — roughly the equivalent of the total gain the best bank account on the market would have produced over the same period. This is why comparing fees between securities foundations, where the gaps are tenths of a point, matters far less than the choice of the family of solution itself.
6. The canton of domicile: the parameter nobody looks at
This is the least-known point in the whole system, and the costliest.
If you are living abroad at the time of withdrawal — the case of every cross-border worker who has never lived in Switzerland, and of every expatriate who has left — the tax levied is not that of your residence, nor that of the canton where you worked, nor that of your former pension fund. It is the withholding tax of the canton in which the vested benefits foundation has its registered office.
And foundations are not all domiciled in the same place, while the gap between cantons is considerable.
| Foundation | Canton of domicile | Relative tax position |
|---|---|---|
| finpension Vested Benefits Foundation | Schwyz (SZ) | Among the most favourable |
| Liberty and Lealta Vested Benefits Foundations | Schwyz (SZ) | Among the most favourable |
| WIR Bank Vested Benefits Foundation (VIAC solution) | Basel (BS) | Urban canton, distinctly less favourable |
| Lemania Vested Benefits Foundation | Geneva (GE) | French-speaking canton, distinctly less favourable |
Two worked examples give the order of magnitude. On capital of CHF 500,000, a documented analysis of the Swiss market puts the withholding tax at around CHF 45,300 in the canton of Bern against around CHF 22,800 in the canton of Schwyz, more than CHF 22,000 of difference on the same withdrawal. The Schwyz scale is progressive and starts at 2.50% on the first CHF 25,000.
The canton of Zurich, for its part, publishes its official scale in force since 1 January 2026: for a single person, CHF 10,425 on the first CHF 150,000, then 8.60% on the portion between CHF 150,001 and CHF 750,000. On a withdrawal of CHF 300,000, that comes to CHF 23,325, or 7.78% of the capital. For a married person the same withdrawal gives CHF 22,988, or 7.66%. Pensions are taxed at 7%, with the tax waived below CHF 1,000 a year.
7. Withdrawal conditions and minimums
The capital is locked as a matter of principle. It comes out only in an exhaustive list of cases, each with its own conditions and, sometimes, its own minimum amounts.
The ordinary withdrawal, tied to age
Payment may take place at the earliest five years before the reference age, so at 60 for a man whose reference age is 65. It must in principle occur at the reference age.
Since the AVS 21 reform, the reference age for women has been rising by three months per year of birth: 64 years and 3 months for women born in 1961, 64 years and 6 months for those born in 1962 — who reach that age in 2026 —, 64 years and 9 months for 1963, and 65 from 1964 onwards.
Deferral beyond the reference age, by up to five years and therefore to 70, is possible only if gainful activity continues. A transitional provision softens the rule: people who reach the reference age between 2024 and 2029 without being in employment may defer payment until 31 December 2029 at the latest.
Early withdrawal for home ownership
This is the only case with a minimum amount: CHF 20,000. The withdrawal is possible only once every five years, and at the latest three years before the reference age. It requires the written consent of the spouse or registered partner, with official or notarised certification of the signature. Up to age 50 the whole of the assets can be mobilised; beyond that, only part of them can. The property must be for the holder's own use. The alternative to a withdrawal is pledging, which leaves the capital in place and serves as mortgage security.
Becoming self-employed
The whole of the assets can be paid out in cash to anyone setting up on their own account who is no longer subject to mandatory occupational pension provision. The request must be made within the year following the start of the activity, with proof of registration with a compensation office as self-employed.
Permanent departure from Switzerland
This is the most common reason for an early withdrawal among cross-border workers and expatriates, and the rule differs by destination.
- Departure outside the European Union and EFTA: the whole of the assets can be paid out in cash, mandatory portion included.
- Departure to a European Union or EFTA country: only the extra-mandatory portion is immediately available. The mandatory portion stays locked in a vested benefits account in Switzerland until five years before the reference age, unless you demonstrate that you will not be subject to compulsory insurance under the social security scheme of your new country of residence.
In both cases you must prove the departure is real: deregistration from the municipal register and actual establishment abroad.
The other cases
- Total disability recognised by the disability insurance.
- Minimal amount, where the assets are below the amount of one annual contribution.
- Death: the capital goes to the beneficiaries in the statutory order.
8. Tax on withdrawal and reclaiming it
Vested benefits capital is taxed separately from the rest of your income, on a reduced scale. It never enters your ordinary income for the year, which avoids a brutal progression effect.
For a person living in Switzerland, the tax is that of the canton and municipality of residence at the time of payment. For a person living abroad, it is the withholding tax of the canton where the foundation is domiciled, as detailed in section 6.
That Swiss tax is not necessarily final. Where the double taxation treaty between Switzerland and your country of residence assigns the latter the right to tax the lump-sum benefit, the Swiss withholding tax can be refunded within three years. The claim is filed with the tax administration of the canton that levied it, together with a certificate from the tax authority of your country of residence confirming that the capital has been declared and taxed there.
On the French aspects of this question, our guide on withdrawing the second pillar for a property project abroad details the treatment of social levies. For the general mechanics of a lump-sum withdrawal, see understanding your second pillar and simulating your withdrawal.
9. The cost the table does not show: the exchange rate
Every line above is denominated in Swiss francs. But a cross-border worker withdrawing vested benefits at 60, or an expatriate leaving Switzerland for good, does not spend in francs: they spend in euros, in pounds or in their own country's currency. Between the gross capital and the money actually available there is a conversion — and it appears on no foundation comparison table.
The order of magnitude is easy to state. On a withdrawal of CHF 300,000, a bank exchange margin of 2% represents CHF 6,000. That is more than ten years of interest on the best bank vested benefits account on the market, and it is taken in a single operation, often without the amount being shown separately.
| Capital converted | Cost at a 2% margin | Cost with ibani | Difference |
|---|---|---|---|
| CHF 300,000 | CHF 6,000 | CHF 450 | CHF 5,550 |
| CHF 500,000 | CHF 10,000 | CHF 750 | CHF 9,250 |
The ibani scale is degressive: 0.40% up to CHF 10,000, then 0.35% from CHF 10,000 to CHF 50,000, and down to 0.15% above CHF 250,000 — that last tier is the one applying to the amounts in the table. No opening fee, no account maintenance fee and no SEPA transfer fee is added.
An account with a personal Swiss IBAN opened remotely, 12 currencies, free SEPA transfers and a transparent exchange margin from 0.40% down to 0.15% depending on the amount. ibani is a Swiss financial intermediary established in Geneva since 2018, not a bank: the aim is to bridge capital denominated in francs and spending in another currency, with no hidden margin.
Open an ibani account →On the timing of the conversion, which often weighs more than the margin itself on an amount of this size, our CHF/EUR exchange rate forecasts set the frame, and the real-time CHF/EUR converter gives the exact amount received.
10. The five costliest mistakes
- Deciding nothing. This is the most frequent and the most mechanical mistake: once the deadline passes, the assets go to the substitute institution and earn 0.05% a year. Over ten years and CHF 150,000, that inertia costs around CHF 19,000 compared with a pension fund, and considerably more against an invested solution.
- Forgetting to transfer to the new fund. Finding a job does not bring the money back on its own. Until the transfer is requested, the assets stay without death and disability cover, and no deductible buy-in is possible.
- Choosing your foundation without looking at its canton of domicile. For anyone living or about to live abroad, that single parameter weighs more than ten years of return differential.
- Putting everything in one account. The law allows two. Giving that up means giving up spreading the withdrawal over two tax years, and therefore paying the full progression.
- Withdrawing before checking the tax treatment in your country of residence. Reclaiming the Swiss withholding tax depends on the applicable treaty and presupposes a declaration in the country of residence. The withdrawal decision is not reversible.
To place vested benefits back in the wider pension picture, our cross-border worker pension and pillars guide brings the whole silo together, and the Swiss second pillar (LPP) guide details how the pension fund itself works.
Institutional sources: FSIO, occupational pension provision · LPP Substitute Occupational Benefit Institution, lost-contact accounts · LPP Substitute Occupational Benefit Institution, interest rates · Canton of Zurich, ZStB 99.1, withholding tax on pension benefits (in force since 1 January 2026) · Canton of Schwyz, tax administration, withholding tax · FSIO, AVS 21 reform · FSIO, promotion of home ownership · ch.ch, the second pillar · Central Second Pillar Office, search for forgotten assets · finpension, vested benefits foundation · VIAC, vested benefits · Liberty, vested benefits foundation · Lemania Vested Benefits Foundation
Frequently Asked Questions
Can you pay money into a vested benefits account?
No, and this is the main confusion with pillar 3a. A vested benefits account accepts no voluntary payment and gives entitlement to no tax deduction. The only inflows are the termination benefit paid out by a pension fund, a transfer from another vested benefits account or policy, the repayment of an early withdrawal made for home ownership, the share allocated when pension assets are split on divorce, and the interest or investment performance. A buy-in, on the other hand, is never possible on a vested benefits account: it requires membership of a pension fund, and therefore that the assets be transferred there first. This is also why a vested benefits account carries no death or disability cover, unless it takes the form of an insurance policy.
How many vested benefits accounts can you have in Switzerland?
Two at most. The vested benefits ordinance allows the termination benefit to be split between a maximum of two institutions, and no more. There is, however, no ceiling on the amount: unlike pillar 3a, capped in 2026 at CHF 7,258 for a person who belongs to a pension fund and CHF 36,288 for a person who does not, a vested benefits account can hold any sum. This two-institution limit is not only a constraint, it is a tool: two accounts allow the capital to be withdrawn in two instalments, in two different calendar years, which breaks the progressive scale of the tax on lump-sum pension benefits. The split has to be decided when the transfer is made, not afterwards.
What interest rate does a vested benefits account pay in 2026?
Very little, and it should no longer be compared with the minimum LPP rate. The minimum interest rate of 1.25% set by the Federal Council for 2026 applies to the mandatory portion of assets held in a pension fund, never to a vested benefits account, whose remuneration is entirely unregulated. The LPP Substitute Occupational Benefit Institution, where assets nobody looks after end up, pays 0.05% on vested benefits accounts since 1 January 2026, against 0.40% a year earlier. On the banking market, the average stands at 0.082% as at 1 January 2026 and the best rate recorded at 0.50%. That gap is what explains the success of foundations invested in securities, where performance depends on markets rather than on a rate that is granted.
At what age can you withdraw a vested benefits account?
At the earliest five years before the reference age, so at 60 for a man whose reference age is 65. The reference age for women is being raised in three-month steps per year of birth under the AVS 21 reform: it stands at 64 years and 6 months for women born in 1962, who reach that age in 2026, and will reach 65 for those born in 1964. Payment must in principle take place at the reference age. It can only be deferred by up to five years beyond it, so to 70, if gainful activity continues. A transitional provision softens the rule for people who reach the reference age between 2024 and 2029 without being in employment: they may defer payment until 31 December 2029 at the latest. Outside retirement, an early withdrawal remains possible to buy a home, to become self-employed, on permanent departure from Switzerland, in case of total disability, or for a minimal amount.
Which canton should you choose to pay less tax when withdrawing vested benefits?
For someone living abroad at the time of withdrawal, the tax is not determined by their residence or their former place of work, but by the canton in which the vested benefits foundation has its registered office. This parameter is chosen when the account is opened and it is decisive: on capital of CHF 500,000, a documented example puts the withholding tax at around CHF 45,300 in the canton of Bern against around CHF 22,800 in the canton of Schwyz. Schwyz, Zug, Nidwalden and Appenzell are among the most favourable cantons, with a progressive Schwyz scale starting at 2.50% on the first CHF 25,000. The canton of Zurich, for its part, publishes a scale that came into force on 1 January 2026, providing for a single person CHF 10,425 on the first CHF 150,000, then 8.60% on the portion above. Foundations do not all share the same domicile: finpension and Liberty are in Schwyz, the WIR Bank vested benefits foundation used by VIAC is in Basel, and the Lemania Foundation is in Geneva.
What happens to the second pillar if you leave Switzerland for an EU country?
Only the extra-mandatory portion can be paid out in cash. The mandatory portion stays locked in a vested benefits account in Switzerland until five years before the reference age, unless the person demonstrates that they will not be subject to compulsory insurance under the social security scheme of their new country of residence. Departure to a country outside the European Union and EFTA does, by contrast, allow the whole amount to be withdrawn, mandatory portion included. In every case the payment is subject to Swiss withholding tax, levied according to the scale of the canton where the foundation is domiciled. That tax can be refunded, within three years, where the double taxation treaty assigns the right to tax the lump-sum benefit to the state of residence: the claim is filed with the tax administration of the canton concerned, together with a certificate of taxation from the country of residence.