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Vested benefits funds can be invested in securities. Unlike the «normal» securities custody account, however, there are certain restrictions for the vested benefits custody account. For example, the insured person cannot buy individual shares.

Investments for the vested benefits custody account

The following investments are permitted under the Vested Benefits Act:

1. Securities funds

Vested benefits may be invested in funds. These funds must be licensed for distribution in Switzerland or issued by a Swiss investment foundation.

Pension funds which are subject to investor group control are recommended. If the fund provider controls the investor group, it can ensure that only pension assets flow into the fund. Shareholders benefit from this because such funds can reclaim more withholding taxes on foreign income such as dividends or interest.

In Switzerland, these taxes on dividends and interest are known as withholding tax. It amounts to 35 %. Abroad, it is often similarly high.

Click here for a comparison of fees and returns of 3a and vested benefit funds.

2. Asset management contract

Alternative to funds are asset management contracts, whereby two variants are to be distinguished from each other:

a) Asset management contracts with investments in individual securities

  • They are only permitted by fund managers that are subject to supervision by Finma.

b) Asset management contracts with investment in funds:

  • They are permitted by all asset managers (as per chapter 1).

The investment guidelines of BVV 2 must also be complied with for asset management mandates.

3. Risk-free investments in Swiss francs

The third option, which theoretically exists, is direct investment in bonds guaranteed by the Confederation or the cantons, in Swiss mortgage bonds, and in medium-term notes and time deposits of Swiss banks.

This category is not very attractive even compared to the vested benefits account, which is why it has been labeled «theoretical». Many of these investments have a negative return. Vested benefits accounts in the form of a pure savings solution, on the other hand, may not have a negative interest rate.

Money «stored» with a vested benefits foundation

The majority of offers for the investment of vested benefits are distributed by banks. However, the legal entity behind the offers is not the bank itself, but a vested benefits foundation. This is because the law stipulates that vested benefits must be managed by a vested benefits foundation, regardless of whether it is an account or securities solution.

In many cases, there is a strong link between the foundation and the relevant bank. However, there are also independent vested benefits foundations that are not controlled by a bank, such as the finpension vested benefits foundation, which also offers a securities solution.

Reason for restricting investment options

Legislation aims to prevent the speculation of pension fund assets that are managed by the insured person himself within the framework of vested benefits. The rules are intended to protect the purpose of the pension fund.