Investing vested benefits if you leave gainful employment early

Have you already had a successful career and now want to take things a little easier?

Are you leaving gainful employment early and planning to live off your assets in the future? You will need to transfer your pension fund assets to a vested benefits institution until you reach the earliest age at which you can withdraw the assets or when you reach retirement age and must withdraw the assets (no later than the age of 70, or 69 for women). Let us show you what might be the right investment strategy for you.

For example: Lukas, 55, is giving up his gainful employment and becoming a person of independent means

Let’s say you are Lukas, 55 years old, and you are leaving your job at a consulting firm after a long career. However, you are not yet ready to retire completely, so you plan to provide consulting/advisory services in a self-employed capacity until you reach normal retirement age. You decide to not withdraw your vested benefits until you reach the age of 70. Until then, you invest the retirement assets you have accumulated over the years with frankly vested benefits.

Possible investment product: Moderate 45 Active

Lukas opts for a sustainable, active investment product that contains a medium equity component (45%). The objectives of the investment product are to achieve long-term capital gains and to generate income. However, Lukas is risk tolerant without taking major risks, since his investment product also consists of 40% bonds and 15% real estate. Active investment products are also designed to “beat the market”, i.e. to achieve a better investment performance than the market average.

To the investment products

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

Estimated pension assets at age 70 or in 15 years: 

Statement of changes in net assets 

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Calculation and risk information 

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Statement of changes in net assets 

If Lukas were to leave his money in his original normal vested benefits account, in 15 years’ time and assuming interest rates remain low at 0.15%, he would have CHF 1,534,107. If he were to save in securities, however, with a hypothetical return of 3.73% per year (net after costs) this could rise to CHF 2,624,900.

The savings you can make with securities are worth much more than just a few hundred francs. Lukas, for example, is 55 years old and in employment. He makes a one-off payment of CHF 1,500,000 into his vested benefits account with frankly, and he chooses an investment product with an equity component of 45%.

Calculation and risk information 

Let's assume, for example: an equity component of 45% and a hypothetical return per year of 3.73% (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.

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