Vested benefits (Freizuegigkeit): your pension when you leave or pause work
When you stop working in Switzerland - a career break, or leaving the country - your pension capital moves to a vested-benefits account. Handled well, splitting and staggering it can save you thousands in withdrawal tax.
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What vested benefits are
When you leave a pension fund without immediately joining a new one, your second-pillar capital transfers to a vested-benefits (Freizuegigkeit) account.
This happens more often than expats realise: a career break, a period of unemployment, becoming self-employed, or leaving Switzerland altogether. In each case, your accrued 2nd-pillar capital needs somewhere to live - and a vested-benefits foundation is where it goes.
Once parked, the capital keeps growing. A traditional interest account credits a modest yearly rate; an investment-based vested-benefits account holds funds and lets the capital stay in the markets - which matters if you're several years from needing it.
You generally can't simply cash it out on demand - withdrawal rules apply, tied to retirement, home purchase, self-employment, or leaving the country permanently. For how the 2nd pillar itself works, see our pension fund guide.
Splitting across two foundations
You're allowed to split your vested benefits across up to two foundations, which lets you withdraw in different tax years and cut the tax.
Lump-sum pension withdrawals are taxed separately from your income, at a reduced but still progressive rate. That progression is the key: two smaller withdrawals in different years almost always beat one large withdrawal in a single year.
The tax also depends on where the foundation is domiciled. Some cantons apply noticeably lower lump-sum tax scales than others, so choosing foundations in low-tax cantons can lower the final bill even further - regardless of where you live.
An investment-based vested-benefits account also lets the capital keep growing while you wait. For a horizon of several years, that's usually more valuable than the marginal interest you'd earn on a default account.
Withdrawing when you leave Switzerland
If you leave Switzerland permanently, you can usually withdraw the extra-mandatory part, while the mandatory (BVG) part must generally stay put if you move to the EU/EFTA.
Your destination matters. Moving outside the EU/EFTA usually allows a full withdrawal of both the mandatory and extra-mandatory portions. Moving within the EU/EFTA locks the mandatory portion in a vested-benefits account until close to retirement, while the extra-mandatory portion can typically be paid out.
The withholding tax on payout is levied in the canton where the vested-benefits foundation sits, not where you live. That means moving your capital to a low-tax-canton foundation before you leave can shave a real amount off the final bill.
And - because the tax is progressive - plan the timing across tax years. Splitting the withdrawal across a December and a January can put the two halves into different tax years without waiting long.
Getting it right - why advice pays
Vested-benefits decisions are high-stakes, time-sensitive and hard to reverse.
Don't leave the capital sitting in a default, low-interest foundation for years if your horizon allows investing it - the opportunity cost compounds silently.
Plan withdrawals before you move, not after. Once you're abroad, changing foundation or splitting the pot is harder and, in some cantons, much slower.
Coordinate with pillar 3a withdrawals too - those can also be staggered across years and accounts, and they interact with your vested-benefits payout under the same lump-sum tax rules. See our pillar 3a guide.
Finally, US persons and some destinations (with their own reporting and tax quirks) have extra wrinkles - get advice early rather than after the fact.
How much could staggering save you?
Compare a single lump-sum withdrawal against splitting across two foundations and years.
Splitting could save about CHF 4'000 in withdrawal tax.
Illustrative only, as of 2025 - real rates depend on the amount, the canton and your situation. We model your exact case.
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OpenVested benefits - your questions, answered
What are vested benefits?
They're your second-pillar pension capital, parked in a vested-benefits (Freizuegigkeit) account when you leave a pension fund without joining a new one - for example during a career break or when you leave Switzerland.
When do I get a vested-benefits account?
Whenever you exit a pension fund without a new one to receive the capital: a gap between jobs, unemployment, becoming self-employed, or leaving the country.
Can I split my vested benefits?
Yes - across up to two foundations. That lets you withdraw in two different tax years, which usually reduces the total tax because lump-sum withdrawals are taxed progressively.
How is a lump-sum pension withdrawal taxed?
Separately from your other income, at a reduced but still progressive rate. Because it's progressive, splitting a large amount into two smaller withdrawals in different years typically lowers the effective rate.
Can I withdraw my vested benefits when I leave Switzerland?
Usually you can withdraw the extra-mandatory portion. If you move within the EU/EFTA, the mandatory (BVG) portion generally must stay until close to retirement; moving outside the EU/EFTA usually allows a full withdrawal.
Should I invest my vested benefits?
Often, yes - default accounts pay very little interest, so if your horizon allows, an investment-based vested-benefits account can grow the capital meaningfully. It depends on when you'll need the money.
Don't let your pension capital drift - plan the move
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