Leaving Switzerland next month - rethink 3rd and 2nd pillar..sustainably?

Hello everyone. I am very happy that a colleague recommended me this forum. I’ll be a great help in my current, quite urgent, situation.

I am leaving Switzerland to move to the UK end of October for two years. Not sure if I will come back - I am a researcher, and therefore go where opportunities are!

Despite the contradiction between sustainability/anticapitalism and capital investiment (which still puzzles me), I am forcing myself to think in the long term and especially want to have more control on where my money is and how it is used. For this reasons, in the next weeks I plan to do two things:

  1. I don’t have to, but want to take out my 3rd pillar which I had mistakenly opened with a life insurance when I arrived in Switzerland in 2017. My insurance allows me to switch from a 3a to a 3b, or take it back. N.B. that I can only get back half of what I’ve put so far, as per contract conditions (about 4900CHF). I have not put too much, so I’d loose approx. 3500CHF.
    My first question would be – how? There are several ways from what I understand:
    a. transfer it to another 3rd pillar (like VIAC or Inyova), which however would loose the advantages it provides in Switzerland, etc. (therefore the question, does it make sense?)
    b. take it back, and invest it with some additional money. (I suppose I’ll pay a tax on it, in this case?)

  2. Since I am leaving the country, I want to take back my 2nd pillar - instead of storing it into some bank or untransparent place. Again, what makes the most sense?
    a. take it and invest it in Inyova (no 2nd pillar anymore)
    b. take it and ‘store it’ in the libre passage of VIAC (keeping 2nd pillar)

N.B. What bothers me of VIAC is that it is affiliated with Crédit Suisse, and that the companies that are considered for the ‘sustainable’ investments are often Nestlé and others, which is not the case for Inyova. I’d be more interested in the second, depending on the 2nd pillar strategy you’ll recommend me.

Some background…
I grew up in an environment in which nobody ever discussed about economy and finance, and I’ve studied and conducted research in the past years on topics that were not addressing it directly. Working in the field of sustainability, I’ve always looked with diffidence all what was related to investments. But I did hear several talks of sustainability experts encouraging young generations to use their money wisely. These talks and messages slowly started making more sense to me in the last months.

At the end of my PhD, several things happened simultaneously. The reading of the book The Ministry for the Future, a stimulating discussion with my colleagues on sustainable economy, a documentary on BlackRock, my move to the UK and the letter of my current employer clearly asking me to decide where I wanted to put my pension money, as my contract came to an end.

I am now encouraged to study, inform myself, and understand better. I think this process also involves discussions that I have not engaged in so far, and that I am now willing to.

I am sure I will find help through your experience and knowledge.

Looking forward to your advices!


To question 1: I recommend that you review your life insurance policy’s guaranteed cash value schedule. I generally always advise against using cash value life insurance, and definitely recommend that you quit it ASAP.

The exception to this rule is if you would lose much less money by keeping it for another year or two, then that may be the better option. For example the Helvetia Garantieplan cash value life insurance offer does not pay out any cash back on termination in the first 2 years, but then repays a substantial portion of your paid premiums if you terminate in the third year or more. There can be cases where keeping the policy another year can make sense. But you have to calculate this individually based on the guaranteed cash back schedule found in the GICs. If your policy does not have guaranteed cash back (investment performance only), I would suggest terminating it immediately.

You can cash out pillar 3a assets when you leave the country. My suggestion for investing would be to buy shares in the lowest-TER sustainable ETFs which meet your criteria on your own using the cheapest reputable online broker (e.g. IB, or if you want a Swiss bank, Flowbank or Cornertrader).

To question 2: The UK is no longer in the EU. AFAIK, the current social security agreement with Switzerland is basically a replica of the former EU agreement which prohibits you from withdrawing your pillar 2a (compulsory benefits) when you move to an EU country. But this seems to be a work in progress, so it may be worth asking your pension fund whether a move to the UK entitles you to cash out. My hunch is that it does not, in which case you would have to keep your benefits in a Swiss vested benefits foundation. Vested benefits asset management services (e.g. Viac, Finpension) do give you some room to pick the funds you want to invest with, and there are some sustainable investment funds available. If the current social security agreement with the UK does let you withdraw, then my suggestion for investment would be the same as for your pillar 3a assets.

You should be aware though, that nearly all sustainable investment products include stocks which are questionable in terms of sustainability. Many “sustainable” funds are nearly identical to their non-sustainable counterparts. A lot comes down to your personal interpretation of sustainability. For example, many companies which you can invest in through Inyova would not fall under my definition of sustainable. There is, of course, the option of buying individual stocks in the companies of your choice directly, but unless you have a lot of capital to invest, it’s very difficult to get a similar diversification to what you get with ETFs without incurring high costs.


Mostly, as far as I know. But…

There‘s no restriction on the withdrawal of 2nd pillar pension benefits upon leaving Switzerland (for good!) for the United Kingdom. In this regard, the UK is now on the same footing as Uganda, Uruguay or the United States, so you would be entitled to a full withdrawal, including mandatory benefits.

Thank you so much for your extensive reply, Daniel, and San_Francisco.

I react to the points here:

  1. Unfortunately, I am not sure whether I have a guaranteed cash back. I am trying to understand it in the contract (see attached, in italian). I don’t think it’s the case, and it’s stealing so much money… it’s probably best to withdraw it as soon as I can.

  2. Regarding the 2nd pillar, yes, I can withdraw it all. However, my contract ended September 30th and I’m leaving Switzerland November 1st. I’ve been told that one month gap should be ok and PUBLICA won’t push me to move the money earlier (it wouldn’t make sense, also, to open a vested benefit account to then leave a month later).

Would you be so kind to explain me what would be the (dis)advantages of investing it in a vested benefits foundation versus buying shares using IB?

I know they are currently trying to make any possible effort to revise the criteria with which they define ‘sustainable’ investments. I’d like to try to do the ‘least worse’ for now…hopefully…

These are the disadvantages of keeping vested benefits vs. investing directly:

  • Your choice of investment options is much more limited. This is especially relevant if you are particular about what you want to invest in.
  • The costs are higher. Pillar 2 retirement funds are generally more expensive than similar funds outside the pillar 2. You can use an asset management service with low-cost ETFs for your vested benefits, but you pay the asset management fee. So all in all, the cost of investing is higher than direct investment in low-cost ETFs with a cheap online broker.

As a non-resident, you don’t get any tax benefit from the pillar 2.

The only real reason to keep assets in a Swiss vested benefits foundation is if you want to hold that wealth in Switzerland. In that case, vested benefits foundations are a relatively secure option, and you generally do not pay non-resident banking fees for vested benefits accounts.

I don’t think that’s generally true, as pension assets, 2 and 3a are taxed advantaged in many places (untaxed growth that compensates for higher fees).

Actually that will depend on the DTA between Switzerland and the respective country. Risk for the country you are resident in is that people will have a double solution (contributing to the 2nd pillar and the local solution), thus hiding wealth (or even income) from the resident country

Thus I guess in most cases this type of accounts will be handled as normal accounts in any other country than Switzerland, expect if the destination country has a similar 3 pillar system, where this wealth can be transferred to (if possible).

That is one point I did not look at yet until now, but if anyone has done that analysis already, please share.

You can’t contribute once you’re no longer resident, so that shouldn’t be a problem. Anyway for the cases I checked, it wouldn’t be taxed (and I suspect it’s the case for most EU countries, wouldn’t make sense to not recognize another countries pension system), and taxation on withdrawal is similar to the local pension taxation.

So if I understand correctly, in that case, putting my 2nd pillar in VIAC would be more profitable than investing it using IB (right?)

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