Career transition: how to preserve your financial wealth

A career transition is a key milestone in one’s life journey. It can be demanding on both a personal and emotional level and often involves financial challenges that extend beyond a simple reduction or interruption of income. Matters related to pension planning, for example, deserve particular attention and should not be overlooked. 

A professional change also represents a valuable opportunity to take stock of your overall financial situation. It is the ideal time to review, structure and, where appropriate, optimise your wealth in order to approach this transition with greater peace of mind. Which key aspects should you pay particular attention to? 

Before the end of your employment contract

Ahead of the end of your employment contract, several steps are essential to ensure the long‑term protection of your assets. In particular, it is recommended to open a vested benefits account to transfer the assets from your pension fund, whether you are planning to:

• take up a new salaried position;
• start an independent business;
• opt for early retirement;
• or move abroad.

As each situation is unique, a personalised strategy should be defined based on your profile, your projects and your wealth objectives.

If a severance payment is planned, it is also important to anticipate its tax implications. In certain cases, purchasing additional pension years may be considered in order to optimise taxation. Depending on the age at which the severance payment is received, part of it may be treated as pension income and therefore not subject to income tax. It is advisable to discuss this matter in advance with your employer and your advisor.

Good to know
After the end of your professional activity, you remain covered by accident insurance for 31 days. This coverage can be extended for up to six months, subject to the payment of the corresponding premiums.

After the end of your employment contract

Maintaining affiliation with your former pension fund

If you were 58 years of age or older at the time your employment contract ended, Swiss legislation allows you to request the continuation of your affiliation with your former employer’s pension fund. At a minimum, this option requires the payment of risk‑related contributions (both employee and employer portions), as well as the coverage of administrative fees.

If you wish, you may also continue contributing to the savings component of the pension plan. This arrangement offers several advantages: it allows you to retain the possibility of making voluntary pension buy‑ins and, at retirement age, to preserve the choice between receiving a lifelong pension or a lump‑sum payment — an option that is not available with a standard vested benefits account. In addition, the contributions paid remain deductible from your taxable income.

Please note: the request to maintain pension fund affiliation must be submitted within three months following the end of the employment relationship.

Vested benefits

After the end of your salaried employment, it is essential to comply with the deadline for transferring your second‑pillar pension assets to a vested benefits account, generally within six months.

As pension assets often represent a significant portion of overall wealth, it is recommended to:

• retain control over your funds and avoid them being transferred by default to the supplementary pension fund;

• consider splitting your assets between two vested benefits accounts, which provides greater flexibility, particularly if you later return to salaried employment. 

If you take up a new job, your assets can be transferred to your new employer’s pension fund. However, certain situations may restrict a full transfer. Conversely, if you decide to become self‑employed, these funds may be used to finance the start‑up of your business. Holding two vested benefits accounts allows you to withdraw funds from only one account, while preserving part of your capital for future pension planning.

In the event of unemployment

During a period of unemployment, you remain insured against the risks of death and disability. However, no contributions are made to the savings component, which may lead to gaps in pension provision. You nevertheless have the option to make voluntary savings contributions to the supplementary pension fund in order to mitigate these interruptions.

This period also represents an opportune time to carry out a wealth assessment, work on retirement planning and structure your assets in a coherent manner. If you return to employment, analysing the pension scheme offered by your future employer allows its relevance to be assessed and your strategy to be adjusted with the support of an advisor.

Preparing your future

At Piguet Galland, we support you throughout your career transition by taking into account your personal situation, your aspirations and your wealth profile. Together, we develop a tailored strategy to secure your assets and better prepare your financial future.

Because a career change is a significant step in your life journey, it deserves careful consideration and appropriate guidance. Feel free to contact our experts to discuss your situation and benefit from personalised advice.