Will 2nd pillar optimization end?

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Hi all

NZZ writes on how authorities want to prevent building wealth outside of pension funds:

so, at what point should I get real estate, when the other option only is having my stash rot at the pension fund ?^^

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If you manage to FIRE (or work in a capacity that generates employment income below the Koordinationsabzug, i.e. about 26k per year), you can split your pillar 2 into two vested benefits (VB) accounts and manage those yourself (within the limits of the VB rules).

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It was already illegal so not much change, just making sure it actually happens.

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Thanks for the article. Related: Invest pillar 2 in ETFs by moving it into a FreizĂŒgigkeitsdepot?

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Note that this will apply only to future transfers to Pensionskassen when the law goes into effect:

From the article (highligting mine):

Das Bundesamt fĂŒr Sozialversicherungen (BSV) bestĂ€tigt auf Anfrage, der neue Gesetzesentwurf sehe vor, dass Vorsorgeeinrichtungen kĂŒnftig bei jedem Eintritt abklĂ€ren mĂŒssten, ob noch weitere Vorsorgeguthaben bei FreizĂŒgigkeitseinrichtungen bestĂŒnden

Full article content and translation courtesy of NZZ and Chat-GTP:

Pension Splitting Is a Popular Trick to Save Taxes — But the Federal Government Wants to Put a Stop to It

Some insured individuals choose not to transfer all of their pension assets into their pension fund. A new law is now set to close this loophole.

Albert Steck
June 4, 2025, 5:30 AM | 4 min read

The practice is technically impermissible, but it goes unchecked: insured persons can shift part of their pension fund (PK) assets into vested benefits.

The trick is controversial, yet it happens regularly in practice. The goal is to extract part of the retirement capital from the pension fund. Since occupational pension plans are a form of state-mandated compulsory saving, the law only allows early withdrawals in a few exceptional cases — such as for buying residential property or becoming self-employed.

However, there’s a loophole that exists in a legal grey area. The precondition is a job change. Normally, the money transfers directly from one pension fund to the next. To prevent this, the person takes a short break between jobs. During this pause, the assets — often several hundred thousand francs — are parked in a vested benefits institution. The law allows splitting this capital between two different providers — a maneuver known as pension splitting.

Up to this point, the process is legal. The trick happens when transferring into the new pension fund: instead of transferring all the pension assets as required, the individual only moves the funds from the first vested benefits account. The second, split-off portion remains untouched in the vested benefits system.

Two Main Advantages

This move has two key benefits:

  1. More investment freedom: The money in vested benefits can be invested according to personal preference, rather than following the mandatory investment strategy of the pension fund. Many people who use pension splitting are high earners and choose a higher equity allocation, aiming for better long-term returns.

  2. Tax savings: Pension splitting enables staggered withdrawal of retirement capital at retirement, which lowers the tax burden due to progressive taxation. Funds can remain in vested benefits until age 70. Staggering withdrawals reduces tax progression significantly.

The company Finpension, which operates a vested benefits foundation, illustrates on its website how the savings can quickly amount to tens of thousands of francs. For example:
A single person in Zurich withdrawing CHF 500,000 as a lump sum would owe CHF 56,300 in taxes.
By using pension splitting and withdrawing in two installments, the tax drops to CHF 34,500.

There are no official statistics on how many people use this trick, but industry experts believe the practice has grown sharply — especially as pension funds have reduced their conversion rates, resulting in lower annuities. The federal government’s planned increase in the lump-sum withdrawal tax might make splitting even more attractive.

Legal and Practical Criticism

Lukas MĂŒller-Brunner, head of the Swiss Pension Fund Association (Asip), criticizes this trend. He states that the law clearly does not permit such splitting and provides no choice regarding how much of the pension assets one contributes to the new fund.

“If insured individuals fail to fulfill their duty to transfer, they are violating the law,”
he writes in a statement.

He also warns of the risks: in a market crash, the money is less protected. And since vested benefits cannot be drawn as a lifelong annuity, there’s a risk of financial hardship in old age.

What Do Vested Benefits Providers Say?

When asked about Asip’s accusation that withholding pension assets from the new employer’s fund is illegal, Finpension writes on its website:

“Even though the law requires you to transfer all vested benefits to the pension fund of your new employer, no one can actually verify whether you do this.”

However, the company also warns of potential downsides — such as reduced protection against disability and death due to incomplete pension coverage.

A Sign of Systemic Dissatisfaction

When contacted, Ivo BlÀttler, CEO and co-founder of Finpension, explained:

“We inform all our clients of their obligation to transfer all assets when opening an account with our vested benefits foundation.”
However, whether clients comply cannot be verified. If some individuals disregard the rule, it reflects growing dissatisfaction with the second pillar system.

Finpension, founded in 2016, already manages 40,000 clients and views vested benefits as a key, fast-growing business area.

Lydia Studer, deputy director of the Federal Supervisory Commission for Occupational Pensions, also affirms that the law requires all assets to be transferred to the pension fund.

“But the law does not specify who is responsible for monitoring compliance.”
Pension funds lack access to the necessary databases that track vested benefits accounts.

Government Plans to Close the Loophole

Research by NZZ shows that the Swiss government now intends to close this loophole. The Federal Social Insurance Office (BSV) confirms that the new law would require pension funds to check whether new employees have additional assets in vested benefits institutions:

“This obligation applies if the insured person does not voluntarily report them.”

If further assets are discovered, the pension fund must demand their transfer —

“The insured person’s consent is explicitly not required.”

The BSV has not yet stated how pension funds will obtain this information, but expanding the central second pillar registry is one option. The Federal Council plans to submit the draft legislation later this year. Parliament would then have to approve it to formally block the pension splitting trick.

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FYI if you want primary sources, the change is part of the Motion Dittli (for 1e), https://www.news.admin.ch/fr/nsb?id=102810 has the link to the draft proposal.

GeschÀft Ansehen for following the process.

edit: btw even if it’s not retroactive (not so sure personally, at least doesn’t seem obvious, but yeah in practice I don’t think they’ll bother spending time on that), keep in mind that an insurance event (death, disability) would also force a transfer.

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We have a loophole in an archaic, restrictive regime. Of these two problems which one should our government restrict? :person_facepalming:

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As a foreigner with limited knowledge of the space I can only assume that the grey area in the law was lobbied in, otherwise it’d be black and white. But I am oblivious to how CH works so could be wrong.

I find it impossible to be impossible to verify - wouldn’t it show up in the tax declaration whether a person has a VB account and a 2nd pillar elsewhere? Does a tree falling in the forest make sound if nobody hears it?

“They inform their clients” to cover their ass from liability. I’m not convinced that disregarding the rule says anything about dissatisfaction with the second pillar system, my finger in the wind idea is that people want more flexibility and to put their money to work in something better than 1%/year and this sentence is marketing for Finpension (“FP is one of us!”).

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I’d be surprised, VB used to be a fairly bad deal (either no returns beyond what you’d get from a savings accounts, or very high fees, and not much freedom of investment).

Most people would not even think about transferring and it would end up at the default foundation (FZK Vested benefits accounts - Stiftung Auffangeinrichtung BVG)

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Possibly. As a lifelong Swiss I know about equally as much as you about the space 
 :wink:
Maybe it’s just virtually impossible to define things as black and white, otherwise we wouldn’t need any lawyers 


Actually, you don’t declare any tax sheltered wealth anywhere on your tax return. The new law thus introduces additional Meldepflichten for VB institutions so that the pension fund of your new employer at least theoretically has a handle on finding your “forgotten” other VB account.

I expect the pension funds to lobby against this as it’s additional work for them, but if it goes into law, they’ll do the least necessary to satisfy the law.

"
Did you transfer all your VB assets to us?
:white_medium_square: Yes!
⌧ Not sure 


Seems you answered with “not sure”. Second chance:
Did you transfer all your VB assets to us?
◯ Yes!
"

Or, more cynically, they’ll follow up based on market conditions:

  • if they can generate a decent return on additional capital in the pension fund (and thereby higher management fees based on higher return or what not), they might be interested in more assets in the pension fund.
  • if market conditions are shitty, say, the rate on Swiss government bonds are zero or lower, they’re not interested in having additional AUM that they need to guarantee a government determined rate of return (plus additional rules of what they can put into fixed income versus equity such that they can guarantee the pensions they need to pay)

When I started at my then new employer in 2020, I disclosed that I had two VB accounts and that I would transfer one of them to their pension fund.
The CEO didn’t even blink and had zero interest (pun intended) in getting addition funds from my other VB account.

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Wait what happens with existing vested benefit accounts? Will I be soon forced to close my Finpension account?

First they want to dramatically increase withdrawal taxes and now this? What is their goal? Making everyone poorer?

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What exactly is changing? The page is behind wall

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They need the money to fund old people‘s retirement is my guess


Can‘t have young people using loopholes to better prepare for their own retirement.

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The official goal is to close tax loopholes and increase the tax intake to fund increasing demand for public services.

As a trained economist, I second those efforts because it is more productive to lower the tax rate for everyone and decrease the hunt for loopholes which is an unproductive use of time. I am skeptical if they will suceed.

The more cynical view, of course, is to see where you can pluck the most of the goose’s feathers with the least amount of hissing (Quote Origin: Taxation Is the Art of Plucking the Goose without Making It Squeal – Quote Investigator¼).

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It’s changing the setup so that pension funds have to request the funds when people transfer in (regardless of what the employee tells them).

This is part of a change adding flexibility to 1e, so my guess is that it wouldn’t pass if it ends up getting a referendum anyway.

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The official goal is that they want to make 1e more flexible, and that’s the tradeoff they ended up with (allow people to keep stuff out for up to 2y, in exchange for stricter controls). Sounds like a fairly swiss way of handling things.

edit: I think as an employee not happy with the status quo, the most productive for you is to go lobby your pension representative to switch to a better performing fund, and/or allow 1e.

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The NZZ article says kĂŒnftig, i.e. when you change your employer in the future (after the law goes into effect), the new pension fund is obliged to check whether you have forgotten VB accounts.

I can’t spot anything saying rĂŒckwirkend in the primary sources that @nabalzbhf provided links for above.

Y’all misunderstood the topic title: of course the 2nd pillar optimization will not end – it’s just that the government now optimizes 


I'll see myself out.
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See my post #5 above.

And post #6 by @nabalzbhf for the primary sources.

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I like the “if you don’t like it, change it” attitude. As a matter of fact, I have tried to move my company to a better performing 2nd pillar provider, but they wouldn’t take us.
Additionally, not all of us earn more than 150k where a 1e would start making sense


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IMO it’s trickier than usual and at least to me it isn’t so clear cut. The obligation isn’t new, just the tools to enforce it are changing.

For example I’m fairly sure that a pension fund could claim all the missing VB money in case of insured event (death, disability).

(FYI reading the commentaries rather than the draft law is probably more useful)

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