Most of the fund, but some funds (quite rare) use a formula based on the assets
No, it’s not.
All 2nd pillar assets should be transferred, up to a very high threshold (that has nothing to do with mandatory/non-mandatory but rather how much pension assets people are allowed by law to have at their respective age and which I can’t find again right now - haven’t yet checked the actual laws and probably won’t take the time to do it. They’re publicly available for those who want to dig into it (SR 831.4 and followings, the language can be changed on the top right of the page: Fedlex))
Edit: to note that a huge chunk of regulations are delegated to the pension fund’s own regulations. These apply too and should be read carefully when joining a new pension fund (new employment).
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I also split into two different VB accounts when I quit my previous employer.*
When I joined my new employer (who happens to be in finance), I moved the smaller part to the new employer.
I even told my new boss/CEO about the other VB account – he didn’t even blink let alone respond. And he actually has an interest in having as much money as possible in the company’s pension fund as the pension fund invests into our company’s funds which in turn generates fees for our company …
So in practice, nobody cares or it’s a well known “secret” that people just do this …
Even the professional financial advisor I consulted with recommended to split into 2 VB accounts and then decide myself what to do when I would join a new employer.
Of course, he didn’t recommend to keep one VB account as that would be advising against the law, but it was pretty clear that he suggested that between the lines.
Also note that with the money in a VB account you bear the risk and you have no downside protection nor a guaranteed minimal return.
I’m guessing that’s why the law says you should must transfer everything the new employer: some VB investor will probably generate negative return on their VB portfolio, some possibly so much that they’re in trouble at retirement and society will have to finance whatever gap needs to be filled.
* You should do this anyhow just for tax reasons so you can benefit from lower progression if you decide to do lump sum withdrawal.
Possibly this benefit of reduced taxes will go aways as there is a proposal for that in Vernehmlassung … we’ll see.
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@_MP this topic keeps coming up again. We have contributors that brag about them breaking the Swiss laws. Everyone to their liking but we should not write about this here in this community. Can you please clarify how you see this? Do you support this in your community?
Btw - the laws are black and white. You MUST transfer it all, unless the transfer amount exceeds the max that your new pension fund (based on its regulations) can take in (which is an age based multiplier of your insured salary). There are very valid reasons why the law is the way it is. Yes, I don‘t like it as well and yes there is plenty of people that don‘t comply… but still ifs the law.
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Relax.
Technically, the law is about rights and obligations of pension funds. It says, among many other things, in one sentence that the VB has to transfer it, if/when the insured person requests it.
Well, I guess this kind of implies you are supposed to tell them 
.
Pension fund regulation do tell you directly. Mine does, anyway. Followed in the next sentence by “oh, but if you do happen to keep your VB assets, please tell us when doing a buy-in so we can calculate the amount correctly”.
So yes, it’s against the regulation, but let’s not criminalize people exploring options on their very own pension assets or cite “Swiss laws”, when all I have seen quoted is this one little sentence that most likely haven’t even read themself.
Could you name them?
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That is important. Don’t do any buy-in at the new employer pillar 2 if you have vested benefits accounts outside. No one can tell where that mess may lead ( if your vested benefits grows so much in size that it is bigger than the max possible buy-in left in let’s say 10-15 years)
You may still make higher contributions if your employer offers you the choice of employee contributions to pillars 2 (typically called basic / standard or higher like medium/plus/…)
Don’t forget you pay for these invalidity and widow/orphan pensions in form of an insurance that is deducted from your and your employer’s contributions.
So it’s not like one leeches invalidity/death benefits from the rest of the pension fund’s members that did not keep part of their assets in a VB account.
Also there are pension funds that don’t deduct the one-off, lump-sum payment upon death/invalidity from your assets, so even these are paid by the insurance.
Some people will manage to lose their vested benefits, as they simply invest inappropriate. Those people will then end up on the social welfare’s pocket. Clearly, the risk that anyone in this community started to trade was low… but not everyone reading here has the maturity to follow a long-term investment plan.
Further, Pension funds all work based on risk pooling. Risk pooling means that sometimes we win, sometimes we lose and in average we just right break even. This is relevant for both the risk of e.g. premature death that was covered by the capital kept in the pension fund. If you don’t keep your money there but still participate in the insurance, you live on the expense of the community there (depending on how the pension fund was structured; different implementations apply).
A more sever point is that pension funds as well constitute a risk pool with regard to sequence of return risk. Its not fair to take out an annuity, but not beeing part of the risk pool. Clearly, some people will now claim that they would anyways never take out an annuity but to be honest… everyone thinks this way in their 30ties… and in their 60ties still ~50% of the money is consumed as an annuity.
As long as we talk about a well managed pension fund, it is in my view just antisocial to pull your money out of the pension fund. You then essentially live on the cost of the community. With some pension funds, its less of a problem as the pension fund operates based on a regulation that offsets and mitigates that risk - so the pension fund doesn’t realy care anymore if they actually had your money. Thats generally the case with large corporates. But with other pension funds, you do live on the expense of and hurt your co-workers if you pull out your funds.
Just to give you a practial example. The pension fund I currently participate (which is not that well managed)… takes out disability insurance but it does not take out death insurance. Last year, we had a few unexpected, pre-mature deaths and as a consequence thereof… the coverage ratio fell given the pension fund had to account for widow and child pensions that were not covered by any insurance. So if I didn’t transfer my assets there, I would still get the benefit of the “insurance”, but I wouldn’t pay for it and if anything happened to me - I would cause a burden to my co-workers.
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I always thought so, but anyway, if you do transfer the BVG part but technically you should transfer all, then it won’t raise any suspicions whatsoever, so certainly seems much better than not transferring anything at all.
Fair enough. VB are not some trading account, though. They are regulated and restricted, albeit less then a regular pension fund.
You kind of would, though. Widow / orphan pension are not only covered by the risk contributions, but also the existing capital. Even when they are not calculated based on it.
Even without pension, a one-time death payment is optimal, I thhink, and in my fund would be smaller than my accrued capital, also the non-obligatory one.
But that’s why pension funds will most likely inquire carefully about any additional VB accounts before paying that out. Or reduce the pensions, right away. So I’d consider that a risk to the insured person, but no anti-social behavior towards the colleagues, either.
That’s the neat part: it isn’t.
The annuity is purely based on your capital in the fund. You only receive it based on whatever you paid in. Half of it in VB? Well, you only get half the annuity.
It’s not even supposed have a redistribution character, it’s your personal saving that the pension fund manages for you.
You are right, we do have this topic over and over, but often it’s just a side discussion, and answer are somewhat between “no it’s illegal” to “great idea, I’ve done it before”.
I think it’s very valid to have a specific thread like this as to why or if it’s considered either illegal or a grey zone, and what could be possible consequences or risk for the insured person’s perspective.
If you heartily disagree to the concept, that’s ok, but it doesn’t make the question and the discussion around it goo away or less valid.
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I believe that people following money or law in general.
Law
What is a bit strange to me is that if keeping VBs when employed is illegal, then it is a 5 min exercise for authorities. No VB can be opened without AHV number. So why they do not enforce the law? I am starting to question if this is even a law.
Money
15 years back, no one would even consider all this. Defined benefit plans were much better. But when we moved to defined contribution, employees need to accept the pension fund of the employer & the “lower” interest on their life savings. This is a driver for some to do their own thing and use VB. I believe the benefits of 2nd pillar used to be much higher than VB in past. But now for some VB tends to be a more profitable idea.
In the end, I think it would be much better for everyone if some provisions are built for partial transfer of the VB i.e. the BVG Mandatory part and then simply enforce them.
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Yourfullname mentioned this and that this is maybe reason why regulation says you should transfer.
But … Isn’t the same true for people that take lump sum at normal retirement but lump sum is too small or they can’t invest? I have no numbers but probably the FIRE people are probably very educated for investing.
LOL
Unless you are young. Then you just always lose because you pay for 6.8% conversion rate for the old.
No comprende.
Can you get an annuity from your money in VB acount?
Related to my above reply: unless you can get an annuity from your VB account, you don’t live on anyone else’s cost. If you could get a pension from VB account, you would pool risk with other people in VB at that provider. Would not make sense if VB account holder can choose investment strategy for themselves.
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The discussion has indeed come up before. I feel it’s a valid discussion for the reasons you describe.
While I feel I only tried to provide a data point for the OP (instead of, say, bragging about breaking the law), the accusatory replies had the possibly desired chilling effect on me: I’ll abstain from engaging in such discussions going forward. At best I’ll link reply to one of my previous answers or the one in this topic and then just mute the thread.
No hard feelings. Bye for now from me on this topic.
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And thanks for providing that data point, that was very helpful! I think it’s important to be able to have these types of discussions. The fact that a law is not being enforced by anyone should also be something people (voters and politicians) take into account in the next LPP reform
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What about for the 1e pension where there is no risk pool and no annuity. Are you OK with people taking that out and keeping it in a VB ‘illegally’ or are there arguments also here?
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Not with our pension fund, where the accrued capital is not reduced when paying out lump-sum benefits. Or maybe I misunderstood something.
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So what happens with the rest? I understand any voluntary buy-ins are paid out, but then it’s either a lump-sum payment, for example based on 3 annual pensions, or a pension itself.
Different for invalidity, where you get your pension, along with additional contributions to your capital, and eventually the regular pension.
Haven’t studies those topics in detail, yet.
With regards to keep a part in VB, I’d focus on whether this could have any implications on widow / orphan pension and if yes, how I should weight it.
I just pulled up the e-mails from our pension fund broker, where I asked this question a while back. According to him, in case of death, 100% of accumulated funds are paid out to widower/children, no matter if a widower/orphan pensions are also paid or not. But this is a voluntary bonus from this particular pension fund (Profond), not mandated by law.
Interesting. Sounds like a very comfortable coverage, almost too comfortable. Let’s hope it’s not needed, either way.
More related to the original topic, I checked the documents from my current one regarding VB assets and voluntary buy-ins.
One document states that you need to transfer any VB first, before you can accept any buy-ins.
Another document states you just need to declare them so they can deduct them in the max buy-in limit 
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Loophole’s getting closed by new legislation (not really, though 
)
“Bereits heute kommt es vor, dass Vorsorgeguthaben in der Freizügigkeitseinrichtung bleiben, obwohl sie eigentlich auf eine neue Vorsorgeeinrichtung übertragen werden müssten. Melden Versicherte ihrer neuen Vorsorgeeinrichtung nicht, wo sie bisher versichert waren, so müssen die Vorsorgeeinrichtungen neu aktiv nach dem Guthaben der Versicherten suchen. Veranlasst die versicherte Person die Übertragung nicht selber, muss die neue Vorsorgeeinrichtung die Übertragung verlangen.”
Question remains if the involved parties will actually feel the need to enforce this regulation 
There’s no sanctions whatsoever if they don’t.