Every year, provident funds lose track of tens of thousands of former policy holders - half of them foreign - who would be entitled to pension money. Billions of francs are waiting to be claimed.
Many former policy holders simply disappear into thin air, with no forwarding address. It is estimated that a total of around CHF5 billion ($5.5 billion) remains unclaimed, accumulated in Swiss pension funds.
This generally occurs when someone changes employer – even if, in theory, it shouldn’t be possible. In fact, the occupational pensions law states each policy holder is entitled to a free movement service, in other words their pension fund capital is paid on to the provident fund of their new employer.
If the policy holder doesn’t find a new employer straightaway, the accumulated assets ought to be deposited in a blocked account with the Substitute Occupational Benefit Institution (SOBI) (see box) or with a bank or insurance company.
These assets should remain there until the policy holder asks for the transfer to a new pension fund or until payment at retirement age.
Nevertheless, a considerable part of these funds is left unclaimed. And much of it can no longer be traced back to anyone by the institutes which manage the free movement of assets as people have changed residence many times or have moved abroad without giving a new address.
SOBI alone has lost contact with 600,000 account holders, half of whom are foreigners, equivalent to CHF2.5 billion. A similar amount is estimated to lie dormant in banks and insurance companies.
“We know exactly how much is due to every single person whose assets are held with us. We can account for every franc,” said Max Meili, head of SOBI.
“What we don’t know, however, are these people’s current addresses or bank accounts, which would enable us to transfer the money.”
A fund into which the employer and the employee both pay money regularly, so that when the employee retires or leaves the company, he or she receives a sum of money
(Source: Financial Times)
Substitute Occupational Benefit Institution
A national occupational benefits organisation. It acts on behalf of the government as a 2nd pillar safety net. It is the only benefits scheme in Switzerland that accepts any employer and any individual who wants to join, without exception, providing the statutory requirements are met.
(Source: Substitute Occupational Benefit Institution)
Contact is often lost when a work contract expires. At this point, the pension fund is bound to tell the policy holder the amount of capital accrued and to ask them where to pay the money. But sometimes employers notify pension funds of an employee’s departure too late, namely when they have already changed address or left Switzerland.
Not infrequently these policy holders simply don’t know about their pension fund. Every year thousands of people simply don’t reply to questions from their pension fund and forget to indicate where their assets are deposited.
In each case, the money isn’t lost – at the latest two years after a policy holder leaves a company, pension funds are obliged to pay dormant assets to SOBI. But this often happens without the policy holder knowing about it.
According to the unions, this shows there’s room for improvement when it comes to employers and pension funds informing policy holders about their rights.
“Many problems might be avoided by introducing an obligatory form which policy holders have to sign when their work contract ends,” said Matthias Kuert Killer, responsible for social policy at union federation Travail.Suisse.
It’s likely that a lot of money, above all belonging to foreigners, is also left behind in the old-age and survivor’s insurance (OASI) system, the state company which together with all pension funds guarantees the accustomed standard of living in retirement.
OASI doesn’t have any figures – connected to the fact that in this system, policy holders do not accumulate capital in their name which remains unclaimed if not paid on retirement. Instead, income for pensioners is financed year on year with premiums paid by working policy holders.
“The government has signed agreements with about 40 Europe countries, thanks to which we collaborate strictly with the relevant state provident fund. We are regularly contacted by these institutes when a former policy holder gets in touch with them and says he or she also worked in Switzerland,” said Rolf Camenzind, head of communication at the Federal Social Insurance Office.
But not all immigrant worker countries have signed such agreements, such as, for example, Kosovo. What’s more, in the case of a death of a former policy holder, spouses and children often don’t know about their entitlements in Switzerland.
And OASI does not actively look for beneficiaries, even if they have reached pension age.
In the pension fund sector, this duty is assumed by the Second Pillar Central Office, the liaison office between the occupational benefit schemes and insured people of retirement age.
This was created by the Swiss government – on the request of Italy, Spain and Portugal – after the problem of dormant assets came to light in these countries.
For its part, the central office maintains contact with the provident funds of European countries, but often the searches abroad are fruitless.
“In Switzerland, we almost always find beneficiaries. But it’s a lot harder to find foreigners who have left Switzerland. And it’s pretty much impossible if they don’t return to their country of origin or if they go home but don’t register with the local provident fund,” explained Daniel Dürr, director of the central office.
In this case, the only hope is that the beneficiary sooner or later registers of their own accord. And it’s never too late: the dossiers are kept in the central office until the person is 100.
“We’re inclined to pay even if the owner of the assets registers at the age of 101,” added SOBI’s Meili.