The best time to withdraw your 2nd pillar assets

The 2nd pillar is a crucial component of your retirement in Switzerland, covering around 60% of your final salary when combined with the AVS. Withdrawing your 2nd pillar assets offers several options tailored to your needs: as a lump sum, a monthly pension, or a combination of both.

The 2nd pillar withdrawal conditions are varied and deserve special attention. Whether at the legal retirement age, for the purchase of a primary residence, or in the case of early retirement, each option has specific tax implications, with rates varying by canton.

In this 2025 practical guide, we will explore in detail the key moments for withdrawing your assets, the essential conditions to meet, and strategies to optimize your decision from a tax perspective.

Key Moments for Withdrawing 2nd Pillar Assets

Withdrawal of your 2nd pillar assets generally occurs at three key times, each responding to specific needs and subject to particular rules.

At Legal Retirement Age

Your 2nd pillar assets become accessible when you reach legal retirement age. However, some pension funds offer flexibility, allowing you to defer the withdrawal until age 70 if you continue to work. This option allows you to increase your retirement capital while remaining professionally active.

In Case of Early Retirement

Early retirement is possible from age 58. However, it leads to a reduction in future pension benefits. To maintain adequate coverage, your pension fund may offer complementary insurance or act as an intermediary for such policies.

For Real Estate Purchase

The acquisition of a primary residence is one of the main reasons for early withdrawal. The following fundamental conditions must be met:

• The minimum withdrawal amount is CHF 20,000
• Withdrawals are allowed only once every 5 years
• For insured persons over the age of 50, the withdrawal amount is limited to either half of the vested benefits or the amount available at age 50, whichever is higher

The funds may be used for various purposes: acquisition or construction of a home, repayment of a mortgage loan, financing major renovations, or acquisition of co-ownership shares. However, it is essential to note that the property must be used as a primary residence, whether in Switzerland or abroad

If you are married or in a registered partnership, written consent from your spouse is mandatory before any withdrawal. Additionally, if you sell your home, you must reimburse the withdrawn amount, unless you reinvest in a new primary residence within two years.

FINMA regulations also require a minimum of 10% in personal equity, originating from traditional savings or a 3rd pillar account, for example. These funds cannot come from the 2nd pillar and must cover additional acquisition costs such as property transfer taxes and notary fees.

Essential Conditions for Each Type of Withdrawal

Proper preparation and adherence to deadlines are crucial for a successful 2nd pillar withdrawal.

Required Documents

• Recent civil status certificate (under 3 months old)
• Copy of your ID with signature
• For married/partnered individuals: copy of the spouse’s ID with signature

Official documents must be translated by a sworn translator into German, French, Italian or English. For self-employment withdrawals: commercial register entry or AVS documentation required

Deadlines

At retirement:

• Notification deadlines vary (up to 3 years)
• Once declared, the choice is usually irrevocable

For self-employment:

• Payout must occur within 12 months of starting the activity
• No LPP buy-ins in the past 3 years

For real estate:

• Withdrawal must be made at least 3 years before pension entitlements begin
• At least 5 years must pass between two withdrawals

Each pension fund has its own specific rules. Contact your pension institution for precise details. Processing times can vary from a few days to 3 months.

Tax Impact Based on Withdrawal Timing

The tax implications of your 2nd pillar withdrawal should be carefully considered, as they directly impact your net benefit.

Taxation in Switzerland

For residents, the withdrawal is subject to a flat tax calculated at 1/5 of the standard income tax scale. The canton of residence levies this tax, and rates vary depending on the canton and withdrawal amount.

Tax Optimization Strategies

• Staggered withdrawals: Spreading withdrawals across different tax years can reduce the marginal tax rate. For example, spreading over 3 years can yield significant savings.
• Choosing your tax domicile: The difference between cantons can double the tax bill for large amounts. But beware: relocating must involve a genuine shift in your life’s center to be accepted for tax purposes.

Also note:

• Withdrawals made in the same year (including your spouse's) are combined for tax calculation
• If you’ve made pension buy-ins, a 3-year waiting period applies before a tax-advantaged lump-sum withdrawal

How to Plan Your Withdrawal Wisely

A careful plan is key to making the most of your 2nd pillar withdrawal. Here’s a step-by-step guide:

Assess Your Personal Situation

Start by evaluating your overall financial standing:

• Request your individual AVS account statement (1st pillar)
• Search for LPP assets via the 2nd Pillar Central Office
• Review 3rd pillar assets with banks/insurers

Also, prepare a detailed budget including:

• Fixed expenses (mortgage, insurance)
• Social contributions if you’re not working
• Life goals, hobbies, family situation

Consult with Experts

Consulting with occupational pension experts is highly recommended. Many offer free guidance sessions covering:

• 2nd pillar rules and withdrawal options
• Benefits of a vested benefits account
• Searching for lost LPP assets
• Transfers and investment of pension assets

Start planning as early as age 50, and reassess regularly from age 45. This will help:

• Define your ideal retirement date
• Choose between lump sum, pension, or mixed solutions
• Assess tax implications
• Optimize wealth management

Remember, the best choice depends on your personal situation: risk profile, family, housing, and health. Don’t rush the process—take the time to reflect carefully.

Conclusion

Withdrawing your 2nd pillar assets is one of the most significant financial decisions of your life. While options like lump sums or pensions are available, each choice has long-term consequences.

Success lies in thorough preparation. Evaluate your needs, analyze tax impact, and involve experts. Starting at age 50 gives you the best chances of optimizing your retirement transition.

Ultimately, the best time to withdraw depends on you. Take the time to explore each option, consult with specialists, and design a strategy aligned with your retirement goals.