Investing vested benefits when changing to a job with different pension fund regulations

 

You do not need to transfer the full amount of your retirement capital to the new pension fund, and you can invest the surplus amount elsewhere as vested benefits.

When you change employer, you contribute your termination benefit to the new employer’s pension fund. The new fund confirms that it does not require the full amount of your termination benefits to purchase the full regulatory benefits, and agrees to transfer the surplus to a vested benefits foundation on your behalf. In this case, you can transfer the surplus portion of your pension fund assets to a vested benefits institution of your choice. frankly shows you how it’s done.

For example: Felix, 50, changes to a job with a pension fund with lower regulatory benefits

Let’s assume you are Felix, 50 years old, and you work as a senior consultant at a university hospital. Thanks to your high salary, in recent years you have been able to make additional contributions into the pension fund to ensure you are well covered in old age. However, you now want to realise your childhood dream of speeding down the motorway as an HGV driver. You soon find a new employer. When you come to transfer your termination benefit to the new pension fund, you are informed that you don't need to contribute the full amount of your termination benefit to purchase the full regulatory benefits. Your new pension fund therefore agrees to allow you to transfer the surplus portion to a vested benefits account of your choice.

Possible investment product:
Strong 75 Responsible

Felix opts for a sustainable, active investment product that contains a high equity component (75%). This equity component exceeds the maximum amount of 50% which applies under the investment regulations for pension fund assets. The investment product is therefore only suitable for pension fund members with a very long investment horizon and a high risk capacity and tolerance. The objectives of the investment product are to achieve long-term capital growth and to generate additional income. In exchange for this, Felix is willing to accept higher risk. Active investment products are also designed to “beat the market”, i.e. to achieve a better investment performance than the market average.

Strong 75 Responsible exceeds BVV2 category limits

To the investment products
ZKB_frankly_contentseite_5tipps_ziele_605x510px_201012_jdh

What kind of pension could Felix achieve with frankly by the time he retires?

Estimated pension assets at age 70 or in 20 years: 

Statement of changes in net assets

Reveal card

Calculation and risk information

Reveal card

Statement of changes in net assets

If Felix were to just leave his money in a vested benefits account, in 20 years’ time, assuming interest rates remain low at 0.15%, he would have CHF 206,086. If he were to save in securities, however, with a hypothetical return of 3.97% per year (net after costs) this could rise to CHF 442,600.

The savings you can make with securities are worth much more than just a few hundred francs. Felix, for example, is 50 years old and in employment. He makes a one-off payment of CHF 200,000 into his vested benefits account with frankly, and he chooses an investment product with an equity component of 75%.

Calculation and risk information

Let's assume, for example: an equity component of 75% and a hypothetical return per year of 3.97% (net after costs).

The future returns and risks presented here are for illustrative purposes only. Securities savings may fluctuate, the hypothetical return cannot be guaranteed and tax effects are not included in this forecast.

Economic models and statistical methods are used for calculation purposes. The forecast corresponds with the most likely performance, and can be predicted for an investment horizon of up to 10 years. In the event of a longer investment horizon the calculations are continued using the same values, whereby no statements can be made about the probability of the calculated results occurring. In the event of very unfavourable market developments, the performance may be lower than the nominal savings value. The calculated values are net of the frankly all-in fee and are based on an interest rate on the vested benefits account of 0.15%. Please note that inflation and the taxes payable when the balance becomes due are not included in this forecast.

Please rotate device