Trust and Pension Assets: Jurisdiction Rules Across Borders

Trust and pension assets jurisdiction is a question of fit, not of transfer. Retirement entitlements are usually governed by their own statute, scheme rules and tax regime, and in most countries they cannot be assigned to a trustee like a portfolio or a company. What a trust can often do is sit beside them: receive life insurance proceeds, hold policies, and give structure to what happens once pension benefits are paid out.

This page explains where the lines fall, why they differ from one country to the next, and what a confidential assessment can clarify for a family with pension rights in more than one place. It is general information, not advice on your situation.

Why pension rights and trusts rarely combine directly

A pension scheme and a trust follow opposite logics. A pension is a statutory or contractual promise tied to a person, usually protected from assignment so that it actually funds retirement. A trust, as defined in Article 2 of the Hague Trusts Convention, places assets under the control of a trustee, as a separate fund, with title in the trustee's name. Those assets are managed for beneficiaries or for a stated purpose.

Putting the first inside the second would usually defeat the purpose of the pension rules. That is why many regimes restrict transfers, withdrawals before a qualifying event, or changes of beneficiary. The Hague Trusts Convention helps a trust be recognized abroad. It does not override a pension law that says the benefit stays with the scheme.

The Convention also makes clear that a settlor can reserve certain powers, or that a trustee can also be a beneficiary, without the trust ceasing to exist. This matters when pension payouts, once in private hands, are later settled into a trust.

What the Swiss framework says

Switzerland treats pension and insurance rights through dedicated statutes rather than trust law. Under Article 82 of the Federal Act on Occupational Retirement (LPP / BVG, SR 831.40), contributions made exclusively and irrevocably to recognized forms of tied pension provision, held with an insurer or a banking foundation, are deductible. Beneficiaries of a recognized form hold their own right to the benefit, and the Federal Council sets the circle and order of beneficiaries.

Life insurance follows the Insurance Contract Act (LCA / VVG, SR 221.229.1):

• Article 76: the policyholder may name a third party as beneficiary without the insurer's consent.
• Article 77: the policyholder may freely dispose of the right, during life or on death, unless a written waiver of revocation was given in the policy handed to the beneficiary.
• Article 78: a beneficiary clause gives the beneficiary a right of their own over the claim.
• Article 80: where a spouse, registered partner or descendants are named, the right is shielded from enforcement by the policyholder's creditors, subject to existing pledges.

Switzerland also has no domestic trust statute. Motion 18.3383, "Introduction of the trust into the Swiss legal order", filed on 26 April 2018, asked the Federal Council to create a legal basis for a Swiss trust; its Curia Vista status is "Liquidated" as of 27 February 2024. For the broader picture, see Switzerland as a trust seat.

Pension asset treatment by country

The table gives a qualitative orientation only. Each entry depends on the type of scheme, the residence of the member and the wording of the deed.

Where a trust still helps

A trust becomes useful at the edges of a pension. Typical roles include:

• Holding life insurance policies. The trustee owns the policy and receives the proceeds, which can then be applied under the trust deed, including for beneficiaries who are minors or who live in different countries.
• Receiving benefits once paid. Capital drawn from a pension can be settled into a trust so that its later use follows a single set of rules.
• Providing liquidity. Insurance proceeds can fund obligations that would otherwise force the sale of illiquid assets.

A trust holding insurance is not free of friction. Swiss law gives the named beneficiary a right of their own on the policy, so a clause naming the trustee must be read together with the deed, and with any waiver of revocation. Tax treatment also varies: for an irrevocable fixed interest trust, Swiss practice may treat the beneficiary like a life tenant, attribute assets and income to them for tax, regard the creation as a gift from the settlor, and tax distributions as income, with the beneficiary subject to wealth tax on their share. The position of a discretionary trust differs, and your adviser must analyze it case by case.

Cross-border frictions

When a family has pension rights in several countries, three issues come up repeatedly.

1. Different definitions of "pension". A scheme recognized as retirement provision in one country may be an ordinary savings product in another.
2. Conflicting beneficiary rules. A statutory order of beneficiaries in one country can collide with a trust deed governed by another law. Forced heirship rules add a second layer.
3. Change of residence. A member who moves may find that a pension is taxed or restricted differently, and the governing law versus the seat of the trust may no longer match the family's life.

Families with a US connection face an additional set of constraints, covered in US person settlor and seat choice. Those moving between legal traditions should also read about families moving between civil-law and common-law countries.

How the service works

The service addresses how a trust works next to life insurance and pension assets, so that nothing overlaps and nothing is left uncovered. It is relevant to settlors with a policy portfolio, members of foreign pension schemes, and families who expect pension payouts to reach heirs in different countries.

The confidential assessment typically looks at:

• the holding of life insurance policies by the trust, including ownership and premium arrangements;
• beneficiary designations and whether they are coordinated with the trust deed;
• the treatment of foreign pension entitlements;
• liquidity that policies can provide for future needs.

Useful documents include the trust deed, policy schedules, beneficiary clauses, scheme statements and any letter of wishes. The decisions that follow concern who should own each policy, who should be named, and whether the existing seat still suits the structure, a question explored in the jurisdiction fit review.

The service does not move a pension into a trust where the law forbids it, does not give tax filings, and does not replace advice from counsel in each country concerned. Fees depend on the structure and are indicated after the confidential assessment.