buy property swiss pension fund pillar 3a guide
Loans & Mortgages

How to Use Swiss Retirement Savings to Buy a Home

December 6, 2022 - Daniel Dreier

Swiss pension fund benefits and pillar 3a retirement savings can be withdrawn early to buy or maintain your own home. Find answers to the most important questions in this guide.

Switzerland’s laws aimed at promoting home ownership (German: Wohneigentümsförderung, French: Accession à la propriété du logement) allow you to withdraw tax-privileged Swiss retirement savings early in order to buy your own home. Here, moneyland.ch answers the most important questions about using Swiss retirement savings to buy a home.

What can Swiss retirement savings be used for with regards to home ownership?

You can make early withdrawals from your pension fund and/or pillar 3a savings for these purposes:

  • To buy one single-family home or apartment which will be your primary residence

  • To make a down payment for a mortgage on your primary residence

  • To pay off a mortgage on your primary residence

  • To renovate your primary residence in order to maintain its value

  • To make improvements to your primary residence in order to increase its value

  • To buy shares in a housing cooperative from which you will rent your primary residence

  • To buy shares in a renter-owned housing corporation (French: Société Immobilière Actionnaire Locataire, German: Mieter-Aktiengesellschaft) from which you will rent your primary residence

  • To grant a profit-participation loan to a non-profit housing development company (French: organisme de construction d'utilité publique,German: gemeinnützigen Wohnbauträger) from which you will obtain the use of your primary residence

In the case of home ownership, the property in question can be either a freehold or a leasehold property.

Apart from home ownership, there are some other situations in which you can withdraw pillar 3a savings early. You can learn about those in the guide to early pillar 3a withdrawals.

Which kinds of retirement savings can I use to buy a home?

Both benefits from your Swiss occupational pension fund (including vested benefits) and tax-privileged Swiss retirement savings (pillar 3a) can be withdrawn before you reach standard retirement age, if the money will be used to finance a home. But rules and limitations for pension fund withdrawals are different from those which apply to the pillar 3a.

Overview of the home ownership withdrawal rules for Swiss pension fund benefits and pillar 3a retirement savings:

  Occupational pension fund and vested benefits
(pillar 2)
Voluntary retirement savings
(pillar 3a)
Age limits Withdrawing all of your benefits for home ownership
is only possible until the age of 50. After that,
withdrawals are limited to either:
  • The benefits accumulated up until the age of 50
  • Half of total pension fund benefits
After you reach retirement age, you can no longer
make withdrawals for home ownership. But
depending on your pension fund, you may be able
to withdraw benefits as a lump sum.

Withdrawals for home ownership are
possible up until 5 years before the
standard OASI retirement age.

After that, you are legally entitled to
withdraw pillar 3a savings for retirement,
but you can only cash out each pillar 3a
account in full.

Withdrawals The minimum withdrawal you can make is 20,000
francs. It is possible to withdraw just part of your
pension benefits or vested benefits account balance.

There is no minimum for pillar 3a

withdrawals. It is possible to withdraw

just part of the balance of a pillar 3a

account.

Frequency of
withdrawals
You can make one withdrawal every five years.

You can make one withdrawal every five

years.

Taxes for
withdrawals
  • Capital withdrawal tax: If you live in Switzerland, you pay a retirement capital withdrawal tax on the
    amount withdrawn. Capital withdrawal taxes are levied at your place of residence, and vary between
    cantons. You can reclaim this tax when you make repayments (more on this below).
  • Withholding tax: If you live outside of Switzerland, the vested benefits foundation (pillar 2) or
    retirement foundation (pillar 3a) keeps a withholding tax. Withholding taxes are levied by the canton
    which the foundation is domiciled in. You can reclaim the Swiss withholding tax if the country you
    live in has an eligible double taxation agreement with Switzerland.
Notary entries Early withdrawals of pension benefits for home
ownership are recorded in the land registry.
Early Pillar 3a withdrawals for home
ownership are not recorded in the land
registry.
Repayments

You can make voluntary repayments to your pension
fund or vested benefits foundation (minimum 10,000
francs per repayment) to reimburse money which you
withdraw for home ownership.

The capital withdrawal tax paid when you withdrew
the money is refunded as you repay it. Repayments
are not tax-deductible.

You can only repay home ownership withdrawals
until you reach retirement age.

You cannot repay pillar 3a benefits once
withdrawn for home ownership. Because
of this, you cannot reclaim the capital
withdrawal tax.
Down payments

You can use pension fund benefits for up to half of
the 20-percent down payment required when you
mortgage a property. The other half must be
covered by other assets.

The limit may deviate from this standard if the down
payment is higher than 20 percent or if the property’s
market value is lower than its purchase price.

There is no limitation on what portion of
a down payment can be covered by pillar 3a
savings.

Pillar 3a savings can be used to cover the
portion of a down payment which cannot
be covered by pension fund benefits.

Co-owned properties

Pension fund benefits and pillar 3a savings can only be used for a jointly-owned property if
the co-owner is your spouse or registered civil partner.

Withdrawals can be used to finance an apartment in a condominium, as long as you are the
sole owner of the co-ownership share corresponding to your apartment (or you and your
spouse/registered partner jointly). The same applies to shares in a housing cooperative.

Which rules apply to homes financed with Swiss retirement savings?

If you withdraw pillar 2 or pillar 3a savings before retirement in order to buy, renovate, or modify a home, that home will be subject to certain rules. It is important to understand these rules before deciding whether or not to use Swiss retirement savings for home ownership.

Overview of the rules which apply to homes financed with Swiss pension fund benefits and pillar 3a savings:

  Occupational pension fund and vested benefits
(pillar 2)
Voluntary retirement savings
(pillar 3a)
Renting out the
property

A primary requirement for making a withdrawal is
that the property is or will be used as your primary
residence.

You may temporarily rent out the property at a
later point in time if you can prove that
circumstances prevent you from living there
yourself.

There are no limitations on
renting out the property at
other points in time.

There are no limitations on
renting out the property at
other points in time.

Selling the property

If you sell the property, you must repay all the
benefits which you withdrew for the ownership
of that home. The money must be paid into
your current occupational pension fund or
vested benefits foundation. The capital
withdrawal tax is refunded to you after the
withdrawn money has been returned to your
pension fund benefits.

If you plan to buy a different property in the
near future, you can transfer the money to a
vested benefits foundation and hold it there
for up to two years. It can be withdrawn from
the vested benefits foundation to finance a
new primary residence.

These limitations only apply until you reach
retirement age.

There are no limitations on
selling a property financed with
pillar 3a assets. It is not possible
to return money to the pillar 3a.

Inheriting and gifting
the property

Properties financed using withdrawn pension
benefits can be transferred to certain heirs
without having to return benefits to your
pension fund or vested benefits foundation.
The primary requirement is that the heir in
question meets the requirements for inheriting
pension fund benefits.

If your heir sells the property to a third party
who is not themselves an eligible heir, then
you have to return the withdrawn pension
benefits to your pension fund or vested
benefits foundation.

You also have to repay the withdrawn
pension benefits if your heir loses their
eligibility to inherit your pension fund benefits
(due to age, for example).

There are no special limitations
on inheriting or gifting properties
financed with pillar 3a assets.


What does withdrawing Swiss retirement savings for home ownership cost?

Swiss pension funds and vested benefits foundations generally charge a fee when you withdraw money to buy a home. This fee typically ranges between 200 and 400 francs per withdrawal. You can find the exact fees for early withdrawals to buy property on the product details pages in the vested benefits account comparison on moneyland.ch.

Many pillar 3a savings accounts, pillar 3a asset management services, and pillar 3a permanent life insurance offers have fees for early withdrawals for home ownership. Fees charged by retirement accounts are shown in the “Advance withdrawal – property” field on the details pages of offers in the pillar 3a retirement account comparison on moneyland.ch.

Can I use Swiss retirement savings for a home outside of Switzerland?

Yes. As long as the property in question will be or is being used as your primary residence, you can withdraw Swiss pension fund benefits to finance a home purchase, mortgage payments, and renovations or alterations.

The rules vary depending on your situation and on which country you live in and which kinds of Swiss retirement savings you want to withdraw.

  • Pillar 3a and voluntary pension fund benefits

    If you live outside of Switzerland, you are generally entitled to withdraw Swiss pillar 3a savings and the portion of your Swiss vested benefits made up of voluntary contributions to your pension fund simply on account of living outside of Switzerland. You do not need to make special early withdrawals for home ownership, and there are no limitations on how you can use the money or properties purchased with it.

  • Compulsory pension fund benefits in EFTA and EU countries

    If you live in a country which is a member of EFTA or the EU, you are not generally entitled to withdraw the portion of your Swiss pension fund benefits made up of compulsory contributions just on account of not living in Switzerland. However, you can make early withdrawals for home ownership, just as you would if you lived in Switzerland. The rules for properties in EFTA or EU countries are identical to those for properties in Switzerland. The difference is that limitations and repayment obligations only apply to the compulsory portion of pension fund benefits.
     

  • Compulsory pension fund benefits outside of EFTA and the EU

    If you live in a country which is not in EFTA or the EU, you can withdraw your Swiss compulsory pension fund benefits simply on account of living outside of EFTA and the EU. You do not have to make a special early withdrawal for home ownership, and there are no special limitations for properties financed with compulsory Swiss pension fund benefits.

  • Cross-border workers

    If you are a cross-border worker who works in Switzerland but lives in a neighboring country, you cannot withdraw benefits on account of not living in Switzerland. However, you can make early withdrawals from your Swiss pension fund benefits and pillar 3a savings for home ownership. The rules are identical to those for properties in Switzerland.

Important: Withdrawing your vested benefits and/or pillar 3a savings may have tax implications for you in your home country. Make sure to look into your country’s tax rules governing withdrawals of foreign retirement savings and possible tax deductions or exemptions for home ownership.

What should we pay attention to when buying property as a couple?

If you are married or in a registered partnership, then your spouse has to give their consent before you can withdraw pension fund benefits or pillar 3a savings for home ownership.

The five-year limit for home ownership withdrawals applies to each spouse individually. So you and your spouse can each make one withdrawal from your separate retirement savings every five years.

If you end up divorcing before you become eligible to claim a pension (at retirement age, for example), pension benefits and pillar 3a savings which you accumulate during your marriage are split between you. Benefits withdrawn for home ownership are accounted for when dividing assets.

 

Can I pledge Swiss retirement savings instead of withdrawing them?

Yes. Pension fund benefits (including vested benefits) and pillar 3a savings can be pledged as collateral towards home ownership financing. The rules are identical to those governing home ownership withdrawals. However, the five-year limit for withdrawals does not apply to pledging. Pledges can be made on a one-off basis (towards a down-payment, for example), or on an ongoing basis (for indirect amortization, for example).

More on this topic:
Indirect amortization of mortgages explained
Guide to withdrawing pillar 3a retirement savings early
Compare Swiss mortgages now
Compare Swiss pillar 3a retirement accounts now
Compare Swiss vested benefits accounts now
Compare Swiss retirement funds now

Editor Daniel Dreier
Daniel Dreier is editor and personal finance expert at moneyland.ch.
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