Vested Benefits in the Event of Death: Who Really Receives Your Pension Assets?

The Forgotten Pension Account

Many people hold vested benefits accounts without ever taking a closer look at them. They often arise after a job change, a career break, a move into self-employment, a divorce or shortly before retirement. The assets then remain with a vested benefits foundation for years. Once a year, a statement arrives, the amount is briefly noted — and the topic disappears back into the files.

From a financial planning perspective, this is risky. A vested benefits account is not an ordinary savings account. It belongs to the occupational pension system. And in the event of death, occupational pension assets follow their own rules. What matters is not automatically the will, not automatically inheritance law, and not necessarily what the family would consider “logical” or “fair”. What matters is the beneficiary order.

The Most Common Misconception

This is where one of the most common misconceptions arises in financial planning. Many people assume that their pension assets will automatically go to the people closest to them. That may be the case. But it does not have to be.

Take a 52-year-old entrepreneur. He is divorced, has been living with his new partner for seven years and has two children from his first marriage. From a previous employment relationship, he still has a vested benefits account with a substantial balance. His partner works part-time and is partially financially dependent on him. His daughter is 24 and still studying. His son is 27 and fully employed. His ex-wife is also still alive.

In his mind, the situation is clear: his partner should be protected, his children should be treated fairly, and his ex-wife no longer plays a financial role. Then he unexpectedly passes away.

When Intuition and Pension Law Diverge

Many would intuitively assume that the vested benefits assets are distributed according to his presumed wishes or according to general inheritance logic. Perhaps part would go to his partner and part to both children.

From a pension law perspective, however, the situation is more complex. After a divorce, the ex-wife is generally no longer the key beneficiary from the pension arrangement. The cohabiting partner may be relevant if the legal and regulatory conditions are met, for example in the case of a long-term partnership or significant financial support. The daughter who is still studying may also fall into a privileged category. The adult son who is fully employed, however, is not automatically treated in the same way.

The outcome can therefore differ substantially from what the deceased would have expected.

Not All Assets Follow the Same Logic

The key point is this: CHF 300,000 in a private bank account and CHF 300,000 in a vested benefits account are not the same from a financial planning perspective. The private bank account forms part of the ordinary estate and generally follows inheritance law. The vested benefits account remains part of the occupational pension system and follows its own beneficiary logic. Anyone who fails to make this distinction is planning on the wrong basis.

This becomes particularly complex in modern family structures: cohabitation, second marriages, blended families, children from different relationships, self-employment, several vested benefits accounts, different pension foundations, or existing arrangements in a will, marital agreement or inheritance contract. In such cases, an isolated view is not enough. Pension assets, inheritance law, tax consequences, liquidity needs and financial dependencies within the family must be assessed together.

What Changes on 1 June 2027

As of 1 June 2027, the Swiss Vested Benefits Ordinance will be clarified in this area. The new rule provides more precise guidance on how far the entitlement of a beneficiary may be reduced when defining individual shares. A beneficiary in the first or second order may not be reduced to less than 10 percent of the pension capital.

The purpose is to prevent a person from remaining formally listed as a beneficiary while being economically almost excluded.

This is a sensible clarification. It creates more certainty and reduces room for interpretation that could previously lead to uncertainty in practice. At the same time, occupational pension planning remains flexible enough to reflect specific life situations. For example, someone who wants to protect a financially dependent cohabiting partner can still do so in a structured way.

More Clarity Does Not Replace Planning

The new rule does not replace individual planning. It does not remove the need to review the existing beneficiary order, nor does it replace the coordination with a will, marital agreement, inheritance contract and the broader asset structure.

This is why vested benefits accounts belong in every serious financial plan. Not only because of the investment strategy. Not only because of the withdrawal timing. Not only because of tax optimisation before retirement. But also because of the fundamental question: in the event of death, are the right people actually protected?

What You Should Review

Anyone who holds vested benefits assets should review three key points.

First: Which vested benefits accounts exist, and with which foundations are they held?

Second: Which beneficiary order applies to each account, and has an individual beneficiary declaration been submitted?

Third: Does this still reflect the current family and financial situation?

Many mistakes do not happen because people refuse to plan. They happen because people believe everything has already been taken care of.

In a Nutshell

A vested benefits account is not passed on like an ordinary bank account. The beneficiary order can lead to outcomes that differ from one’s personal sense of fairness. And while the amendment as of 1 June 2027 provides more clarity, it does not replace proper pension and financial planning.

Good financial planning does not only answer the question of how wealth is built. It also answers the question of what happens to that wealth when it truly matters.