Whenever your Pillar 2 capital cannot be transferred directly into a new employer's pension fund, it must by law be moved to a vested benefits account or vested benefits foundation. This protects the tax-privileged status and ensures the capital remains earmarked for retirement.
Funds can be held as cash (low interest, often 0.05–0.50%) or invested in vested-benefits securities solutions with up to 95% equity exposure. The latter typically outperforms cash dramatically over 10+ year horizons, although volatility is the trade-off.
Withdrawal rules mirror Pillar 2: capital is normally available 5 years before AHV age and up to 5 years after, taxed at a separate reduced lump-sum rate. Splitting the capital across two vested benefits accounts at different foundations and withdrawing them in different years can further reduce the tax bill.
A 40-year-old leaving Switzerland for an unpaid 18-month sabbatical transfers CHF 250,000 to a vested benefits foundation. Invested 80% in equities for 25 years at 5% nominal return, that capital grows to roughly CHF 850,000 by age 65.