The Federal Court was recently asked to rule on a case where a member of a pension fund applied to withdraw his pension assets in cash because he was becoming self-employed.

His application to the pension fund was filed on a notification of departure form which was incorrectly and ambiguously filled in: of his total vested termination benefit of CHF 253,792.30, he instructed the pension fund to transfer CHF 215,250 to life insurance company A, while the balance was to be transferred to his own personal bank account.  

During the divorce proceedings, it appeared that the husband had withdrawn amounts totalling CHF 218,695 against the life insurance policy. In this connection, the spouse claimed that the pension fund had not obtained her consent for the transfer of the pension assets to a non-blocked policy. The wrongful conduct on the part of the pension fund meant that, in the subsequent divorce, she received a much lower termination benefit than she would otherwise have been entitled to.  Accordingly, she claimed damages from the pension fund. 

Pursuant to Article 5(2) of the Law on Vesting in Pension Plans (FZG/LFLP), lump-sum benefit payments may not be disbursed without the spouse’s prior written consent. This provision is designed to protect the family; compliance must take the form of a clear, unambiguous and unconditional written confirmation of consent.

In this instance, on the form filled in by the member, under the heading “transfer of vested termination benefit to the new employer’s pension fund in accordance with Article 3(1) FZG/LFLP”, there was the handwritten comment “see attached payment slip” and, under the heading “lump-sum payment in accordance with Article 5 FZG/LFLP”, the comment “only the balance net of the transfer amount on the payment slip”.

Based on Article 3(1) FZG/LFLP, the pension fund should not have considered the handwritten comment as an instruction to transfer CHF 215,250. Nor should it have considered the notification of departure form as constituting explicit transfer instructions for the maintenance of pension coverage in another permissible form in accordance with Article 4 FZG/LFLP.

In its ruling (9C_862/2012), the Federal Court decided that the pension fund had the obligation to verify and make inquiries. Had the pension fund used all due diligence, it would have noticed that the written consent of the member’s spouse was not clear, unambiguous and unconditional since the payment instructions themselves already gave rise to several questions which could only be resolved by speculation or supposition. Accordingly, the Court ruled that the pension fund had breached its duty of diligence (mere negligence such as the failure to verify a (false) signature, for example, already suffices), and ordered the pension fund to pay damages.