A vested benefits account is a savings account for your pension funds. In Switzerland you are required to transfer your occupational provisions into a vested benefits account if you leave a company but do not have a new employer. At which point your vested benefits account balance is held in trust by a vested benefits foundation until certain conditions are met.
A vested benefits account tends to offer a preferential interest rate, compared to that offered by a typical savings account. This type of account affords you greater investment choice, low fees and the ability to grow your wealth in a tax efficient manner. However, once you leave Switzerland, you cannot make any additional contributions.
The rate of income tax that you pay when drawing money from your second pillar is determined by the canton in which your pension fund is held rather than your location when you contributed to it. By opening a vested benefits account in a pension tax friendly canton such as Schwyz or Zug, you can significantly improve your tax efficiency, and in turn reduce how much of your second pillar falls into the hands of the tax man.