Crédit Suisse debacle - What does this mean for my pension provision?

UBS takes over Crédit Suisse for around 3 billion francs. The federal government is helping with a de facto bailout with a whole arsenal of tools and guarantees worth billions. However, Finance Minister Karin Keller-Sutter refuses to talk about a state bailout. But many people are currently concerned with the question: What will happen to my assets in my private/savings account, my retirement savings account 3a and my vested benefits account?

Depositor Protection at Banks and Securities Companies

Depositor protection serves to protect customers' account balances (deposits) in the event of the insolvency of licensed banks and securities houses. Deposit insurance protects deposits up to a maximum total amount of CHF 100,000 per customer and bank or securities firm.

If bankruptcy proceedings are instituted against a bank or securities firm or a protective measure is ordered pursuant to Art. 26 para. 1 lit. e-h Banking Act, depositors lose access to their account balances (deposits). The deposits fall into the bankruptcy estate and, without the deposit guarantee scheme, would only be covered with the distribution of the bankruptcy proceeds and, if necessary, only in part. The deposit guarantee system, on the other hand, ensures that deposits up to a maximum total of CHF 100,000 per creditor are paid out within a short period of time. This is intended to prevent depositors, fearing for the safety of their funds, from withdrawing them from their bank, thus leading to a banking storm.

How depositor protection works

Swiss depositor protection is based on a three-tier system:

• Privileged deposits are credit balances at domestic and foreign branches of Swiss banks and securities firms up to a maximum of CHF 100,000 per creditor (Art. 37a BankA). These privileged deposits are initially paid out of the available liquid assets of the bankrupt institution and outside the collocation proceedings under bankruptcy law.
• Insofar as the liquid assets are insufficient to cover them, esisuisse, the deposit guarantee institution, finances the payment of the deposits at Swiss branches up to a maximum of CHF 100,000 per creditor. The benefit obligation of esisuisse is limited by law to 6 billion Swiss francs.

Does depositor protection also apply to Pillar 3a and vested benefits deposits?

• If the privileged deposits have not already been paid out to the depositors (level 1 or 2), they are collateralized up to a maximum amount of CHF 100,000 in the second bankruptcy class. The payment of the privileged deposits will then only take place with the distribution of the bankruptcy proceeds and, if necessary, only in part. In addition to the above-mentioned privileged deposits, the bankruptcy privilege also applies to claims of bank foundations for occupational pension plans (so-called pillar 3a assets) and vested benefit foundations (a total of CHF 100,000 per beneficiary is considered privileged).

Does depositor protection also apply to pillar 3a and vested benefit assets?

How are vested benefits and pillar 3a assets protected in the event of bankruptcy?

The credit balance on the vested benefits or pillar 3a account (account solution) is not protected by the deposit guarantee. However, the credit balance is privileged under bankruptcy law up to a maximum of CHF 100,000 per client and pension foundation (collocation in the 2nd bankruptcy class). The privileged status of the vested benefits and Pillar 3a assets applies in addition to and independently of the individual client's other secured and privileged assets at the bank (e.g. savings account at the bank). Claims from vested benefits and pillar 3a accounts are only paid out during or at the end of the liquidation procedure. The credit balance is paid out to the pension foundation.

What is the "depositor protection" for insurance policies (3a and vested benefits)?

A credit balance in the form of a policy (FZG or 3a policy) with an insurance company is neither protected by the deposit guarantee nor privileged under bankruptcy law in the event of the insurance company's bankruptcy. However, the credit balance (without limitation) is protected under insurance law. The insured's claim constitutes tied and specially segregated assets https://www.finma.ch/de/ueberwachung/versicherungen/spartenuebergreifende-instrumente/gebundenes-vermoegen-und-anlagerichtlinien

Important for you: If the insurance company falls into bankruptcy, the insured will be satisfied from the proceeds of the tied assets before any other creditors. Conclusion: with an insurance policy your deposits are 100% protected or secured. 

You want to know more about depositor protection? Here you can find further useful information about depositor protection: esisuisse.

We at Caveo are happy to help you find the right pension plan for you. We are there for you at 044 278 80 60, by mail broker@caveo.ch or download the app directly.