Generally, you save for old age with the pension fund. Only between the ages of 58 and 70 can you withdraw your savings in the form of capital and/or have a pension paid out. If you have deposited your pension fund assets with a vested benefits foundation, you can withdraw the assets no earlier than five years before and no later than five years after the normal retirement age.
But there are exceptions. In the following cases, pension funds and vested benefit assets can be paid out early: If you buy a residential property, become self-employed or emigrate.
Early withdrawal of pension fund money
To finance home ownership (own funds)
Residential ownership is limited, a roof over one’s head a basic need. It is therefore not surprising that many people want to own their own home and at the same time see it as a good provision for old age. Legislators also recognise this need and therefore encourage it:
- the acquisition of residential property,
- the construction of a house,
- the participation in housing cooperatives and
- the repayment of mortgage loans
by allowing pension funds and vested benefit assets to be withdrawn or pledged before retirement. Condition: The person must live in the apartment; at least partially, if it is an apartment building. We will summarize further information on early withdrawal for residential property in a separate article.
For taking up self-employment
In addition to home ownership, the state also encourages self-employment. A person is self-employed if he/she runs a business for his/her own account (sole proprietorship) and is not affiliated to a pension fund. The main income must come from this self-employment. The advance withdrawal of pension fund assets must be made no later than one year after taking up self-employment. Later withdrawals are no longer possible.
If you are definitely leaving Switzerland, you can also withdraw your pension fund money in advance. However, if the destination country is in the EU/EFTA, the payment is limited to the extra-mandatory part; the mandatory part cannot usually be paid out. Only if you are not subject to compulsory insurance for the risks of old age, death and disability at your new place of residence, you can withdraw the money from the compulsory pot. Otherwise, it must be deposited in a vested benefits account, or you can invest it in securities through a vested benefits foundation.
Since you give up your residence in Switzerland when you emigrate, there is no tax domicile for offsetting the capital withdrawal tax. For this reason, tax is levied at source, in other words at the domicile of the pension fund. The vested benefits institution must deduct the tax from the vested benefits credit before payment and deliver it to the state.
“Geringfügigkeit“or receipt of a full disability pension
In addition, pension fund benefits can be drawn if, at the time of withdrawal, they are lower than a full annual contribution (“Geringfügigkeit”) or if a full disability pension is drawn.
Consent of the spouse
If you are married or in a registered partnership, you must obtain your partner’s consent for the advance withdrawal. The law requires written consent. The Swiss Pension Fund Association ASIP recommends that the signature be notarized.
Consequences of the advance withdrawal
The capital must be taxed when making an advance withdrawal. The reduced capital withdrawal tax applies. If you live abroad at the time of the withdrawal (emigration), the tax is levied at source.
Furthermore, the advance withdrawal can reduce the pension benefits for the risks of death and disability. If you wish to maintain the level of your previous pension protection despite the advance withdrawal, you can take out supplementary insurance. Ask your pension institution whether it offers such supplementary coverage. If not, they may be able to arrange one for you.
Repayment of the advance withdrawal
It is possible to repay the advance withdrawal for residential property into the pension fund. Repayment can be made up to three years before retirement. The capital withdrawal tax paid can then be reclaimed. However, the refund must be claimed within three years. A later reclaim is not possible.