In which cases can I withdraw my 2nd pillar assets?
The 2nd pillar, also known as occupational pension provision, is an essential element of the Swiss retirement system.
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It is a mandatory savings account for all Swiss workers that complements the benefits of the BVG (1st pillar) and ensures a decent standard of living in retirement. However, there are certain situations that allow for the early withdrawal of the 2nd pillar. How and when is this possible? What are the cases for early withdrawal? Let's take a closer look.
What is the 2nd pillar?
The 2nd pillar is an integral part of the Swiss provident system. Its aim is to ensure the maintenance of the usual standard of living after retirement. In addition to the BVG (1st pillar), it is one of the main pillars of old-age provision in Switzerland.
The 2nd pillar is funded by contributions paid by both the employer and the employee. The amount of these contributions is proportional to the salary and increases with the employee's age.
When can one withdraw the 2nd pillar?
In principle, the capital of the 2nd pillar is locked until retirement age. However, the law provides several scenarios in which early withdrawal is possible. These cases include:
- Purchasing a primary residence
- Starting an independent activity
- Definitive departure from Switzerland
- Buying back a missing year of contribution in the BVG
It is important to note that early withdrawal of the 2nd pillar can have tax consequences and may reduce future retirement benefits.
Cases of early withdrawal of the 2nd pillar
Purchasing a primary residence
One of the most common cases of early withdrawal from the 2nd pillar is the purchase of a primary residence. You can use your provident fund capital to finance the purchase of your house or apartment.
However, there are certain restrictions:
• The dwelling must be used for personal purposes
• Early withdrawal is only possible every five years
Starting an independent activity
If you are planning to start your own business, you can also withdraw your occupational provident fund capital. This can be particularly useful to finance the startup costs of your business. To do this, you must prove that you are no longer affiliated with a pension fund and that you are engaging in an independent activity as your main occupation.
Definitive departure from Switzerland
Individuals who leave Switzerland permanently can also withdraw their provident fund capital. This also applies to foreigners returning to their home country. However, if you move to an EU or EFTA country, you can only withdraw the extra-mandatory part of your capital.
In the event of total or partial disability, you can also withdraw your occupational provident fund capital. The amount of the withdrawal depends on the degree of disability and the conditions of your pension fund.
Buying back a missing year of contribution in the BVG
If you have missing years of contribution in the BVG, you can use your provident fund capital to buy them back. This can allow you to increase your BVG pension in retirement.
In the event of a divorce, the provident fund capital can be shared between the spouses. The amount of the division depends on the length of the marriage and the conditions of your pension fund.
How to withdraw the 2nd pillar?
To withdraw your provident fund capital, you must submit a request to your pension fund. This request must be accompanied by supporting documents, such as the purchase contract of a dwelling, the certificate of independence, or the divorce decree.
Once your request is approved, your provident fund capital will be paid out as a capital benefit. Note that this withdrawal is subject to capital benefit tax.
What are the tax consequences?
Early withdrawal of the 2nd pillar is subject to capital benefit tax. The tax rate depends on the canton of residence and the amount withdrawn. It is generally more advantageous to withdraw the 2nd pillar in several installments to benefit from a lower tax rate.
Can the withdrawn capital be repaid?
Yes, it is possible to repay the withdrawn capital before retirement. The repayment can be made at any time up to three years before the retirement age. It allows rebuilding the provident benefits reduced by the early withdrawal.
Withdrawing from the 2nd pillar is an interesting option in certain situations. However, it is important to consider the tax consequences and the impact on your future retirement benefits. Before making a decision, it is recommended to consult a provident advisor.
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