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Can I postpone the age of capital withdrawal from the 2nd pillar?

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Can I postpone the age of capital withdrawal from the 2nd pillar?

Let's explore the benefits of delaying the 2nd pillar withdrawal for a more comfortable and financially stable retirement.

On average, each citizen between 25 and 65 years old has CHF 12’838 in vested benefits!

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What is the withdrawal of the free passage account and why is it considered a crucial pillar of providence in Switzerland? Often overlooked, the free passage of the 2nd pillar represents a key financial strategy during a work interruption or as retirement approaches. With the possibility of financing a main residence or transferring the funds for optimized management, the free passage account positions itself as an essential planning tool for a serene retirement.

This article aims to demystify the 2nd pillar withdrawal and explore the advantages of postponing it. As tax regulations evolve and management and investment decisions greatly affect long-term benefits, understanding the financial impacts and deferral options becomes indispensable. By examining practical cases, we will delve deeper into the reasons and implications of such a move, providing a complete guide for the optimal management of your free passage account withdrawal.

Reasons to postpone capital withdrawal

Postponing the withdrawal of the free passage account can be wise for several reasons, mainly financial and tax-related. Here are some key points to consider:

  • Capital growth: By leaving the money in the account, it continues to generate interest, which can significantly increase retirement funds over time. This is even more relevant in the context of pension funds that can invest in higher-yield assets.
  • Tax advantages: Early withdrawal of retirement savings in cash is subject to tax. By deferring this withdrawal, it is possible to stagger and thus mitigate this taxation over several years.
  • Financial stability: By keeping retirement savings in the current pension fund, continuous growth of the funds until actual retirement is ensured. This also helps avoid prematurely using these funds, ensuring financial stability during retirement years.

In summary, postponing the withdrawal of the 2nd pillar not only allows for leveraging financial effects through the accumulation of interest but also offers significant tax advantages. This strategy contributes to preserving and increasing wealth intended for retirement, ensuring a better quality of life in the golden years.

Financial and tax impacts

When it comes to withdrawing funds from the 2nd pillar, French residents must be aware of the tax consequences in France and Switzerland. Here are some key points to consider:

Taxation in Switzerland: In Switzerland, the tax rate for early withdrawal varies approximately between 4% and 12%, depending on the canton and the amount withdrawn. The transfer of the pension fund to a new employer is not taxed, but the withdrawal of funds is.

Investing free passage assets: Although interest rates for pension assets parked in free passage accounts have become negligible, these assets can be invested in yield-bearing securities, albeit with some restrictions compared to regular deposit accounts. (Legal Framework)

Tax efficiency of capital withdrawal: Withdrawing pension funds as capital can be more tax-efficient than receiving a pension, depending on individual circumstances. In France, the withdrawal can be taxed with a lump-sum levy or as exceptional income, eligible for a tax mechanism called quotient.

No Double Taxation: There is no double taxation, as the French tax can be reimbursed by Swiss authorities upon presentation of a payment proof.

By understanding these financial and tax impacts, individuals can better plan the free passage account withdrawal and maximize their benefits.

Continuing to work after retirement age

Working after the retirement age presents several advantages, both financially and personally. Here are some elements to consider for those thinking of extending their professional activity:

Additional income: Post-retirement employment can enhance retirement income and reduce dependency on pension funds, thus offering better financial security.

Balance and satisfaction: Aligning work opportunities with personal skills and interests is crucial to ensure job satisfaction. Part-time or project-based work can offer more flexibility and a better balance between professional and personal life.

Health and insurance: It's important to consider personal health, endurance, and to secure adequate accident and health insurance coverage when continuing to work after retirement age.

Considering working after the retirement age can also have implications on pension payments and benefits. For instance, from 2024, contributions paid after the reference age can influence the amount of the annuity. Retirees can pay additional contributions to increase their pension amount if their current pension is not at the maximum. Moreover, individuals who continue to work after retirement age can choose to waive the AVS deduction, which can result in a higher pension. A new pension calculation can be requested if a person has worked and paid AVS contributions after the retirement age, which could lead to a higher pension.

Practical Cases of postponing withdrawal

When an individual leaves their job in Switzerland and does not have a new employer, they are legally required to transfer the accrued benefits from the company's pension fund to a free passage account. This account acts as a parking zone for retirement assets until the individual finds a new employer.

Here are some key points to consider:

Choice of Financial Institution: The individual has the freedom to choose the bank or financial institution where they open their free passage account. This decision can influence the future growth of assets depending on the investment options offered.

Automatic Transfer: If the account is not opened by the individual, the assets will be automatically transferred to the Substitute Institution Foundation after a certain period.

Number of Transfers Allowed: It is possible to transfer one's benefits to a maximum of two free passage foundations, but not twice to the same foundation.

Free passage benefits are generally locked until the individual reaches the normal retirement age, but there are exceptions where withdrawal is possible, for example:

  • Early retirement: if the individual retires before the normal age.
  • Incapacity: in case of disability or invalidity.
  • Self-employment: if the individual becomes self-employed.
  • Low balance: if the amount of benefits is considered low (less than an annual contribution).
  • Leaving Switzerland: for those permanently leaving the country.
  • Buying a house: to finance the purchase of a main residence.

It is also possible to invest the free passage benefits in securities, which can offer potentially higher returns than traditional savings accounts, but also comes with a higher risk. For optimal management of the free passage account withdrawal, it is crucial to understand these options and make informed decisions based on one's personal situation and financial goals.


At the end of our detailed exploration, it is clear that the strategy of postponing the withdrawal of the free passage account constitutes an important financial decision, allowing to take advantage of significant financial and tax benefits. Deep knowledge of the ins and outs of the 2nd pillar, combined with thoughtful planning, offers future retirees the opportunity to optimize their savings and strengthen their confidence in a comfortable and secure retirement.

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BVG Withdrawal
Melvin Plumez

Melvin Plumez

Brevet fédéral de planificateur financier
Économiste d’entreprise HES