Changing jobs or unemployed: what happens to your 2nd pillar?

What happens when you leave your employer

Your pension fund calculates your termination benefit: everything you have saved in your 2nd pillar with that employer, including buy-ins and assets you brought with you. It sends you a statement and asks where to pay the money.

The termination benefit is due as soon as you leave and earns interest from that date (Art. 2 FZG). If the fund does not pay it within 30 days of receiving all the necessary information, it also owes default interest.

For one month after you leave, your former pension fund still covers you against the risks of death and disability, as long as you have not joined a new fund (Art. 10 para. 3 BVG).

You have a new employer

Your termination benefit must be transferred to your new employer’s pension fund (Art. 3 FZG). Give its details to your former fund: your HR department can provide them.

If you still have money in vested benefits accounts or policies, the law also requires it to be transferred to your new fund (Art. 4 para. 2bis FZG). This is a good time to take stock and check that no old assets have been forgotten.

A break, leave or leaving without a new job

Without a new pension fund, you choose a vested benefits institution: an account with a bank foundation or a policy with an insurance company. You can split your benefit between no more than two institutions (Art. 12 FZV).

If you give no instructions, your former fund pays the money to the Substitute Occupational Benefit Institution, no earlier than six months and no later than two years after you leave (Art. 4 para. 2 FZG). You lose nothing, but the money earns very little interest there and it is easy to lose track of it.

To help you choose, read our guide Vested benefits account or policy: which should you choose?

Unemployed: what is covered and what is not

Your termination benefit goes into a vested benefits account or policy, just as it would during a break between two jobs.

If you receive unemployment daily allowances above a certain amount, the Substitute Occupational Benefit Institution insures you against the risks of death and disability. Old age, however, is not insured: while you are unemployed, your retirement savings stop growing, apart from the interest on your vested benefits account (aeis.ch).

You can top up this cover on a voluntary basis with the Substitute Institution. Your unemployment insurance fund can tell you more.

You become self-employed

Once you work for yourself, you are no longer subject to compulsory occupational pension provision. You can then request a cash payment of your termination benefit to finance your business (Art. 5 para. 1 let. b FZG), or leave it in a vested benefits account.

Institutions generally require the request to be made within a year of starting your business, with proof that you are registered with the AHV as self-employed. If you are married or in a registered partnership, the written consent of your spouse or partner is required.

Mistakes to avoid

• Not replying to the letter from your former fund: the money ends up with the Substitute Institution.
• Leaving your accounts scattered: several vested benefits accounts mean several statements to keep track of and paying fees twice.
• Forgetting to tell your new pension fund about an old account.
• Throwing away your pension certificates: they are the best record of your assets.