Pillar 2 Payout

HelIo,

I seem to be in a pickle and very confused. I have troweled the internet and I just don't seem to be getting very far. 

I have recently left Zurich and I was wanting to get my Pillar 2 paid out. I have moved back to the UK. I was under the impression that I would be able to have the money transfered to my UK bank account. 

I have called, and spoken to a lady today, who informed me that this was not possible. That the UK was in an agreement with CH that did not allow me to have my money paid out into my bank. 

I do not have another pension to move it too, so she said that it would have to stay in CH until I reach retirement age. Is that correct?

Is there no way I am able to get that paid out?

Any help and advice would be greatly appreciated

Thanks

Heidi

Good day Heidi,

Yes, I'm afraid that the good lady was absolutely correct. The situation is like this:

Switzerland has a social security agreement with the European Union. This agreement forbids you from withdrawing your Swiss pension fund benefits when you leave Switzerland and move to a European Union country. The money has to stay locked up in a Swiss vested benefits foundation until you reach retirement age. You cannot transfer it to your new home country (not even to a pension fund).

Now I know that the UK is no longer part of the European Union, but until further notice, the previous agreement still applies. However, there are a few things you should know:

• The rule only applies to the part of your pension fund benefits which came to be because of compulsory pension fund contributions. If you or your employer made extra, voluntary contributions, then the benefits resulting from those can be withdrawn when you leave Switzerland.
• There are situations in which you can withdraw Swiss pension fund benefits early. The two most important are: When you will use the money to finance a property which you use as your primary residence; when you become self-employed.

It is, of course, perfectly possible that the UK will establish a new agreement with Switzerland and you will be freed from the European Union rule. But for the present, your benefits must stay in Switzerland.

The only way you could withdraw them immediately is if you would move to a different country that is not and has not been part of the European Union. Fancy the Seychelles?

Anyway. since that money may sit here in Switzerland for some time, I highly recommend that you choose your Swiss vested benefits solution carefully. In addition to savings accounts for vested benefits, you can also use retirement funds or asset managers.

When you do eventually withdraw your benefits, whether early for home ownership or when you eventually retire, you will pay a Swiss withholding tax in the canton where the vested benefits foundation is registered. According to the double taxation agreement between the UK and Switzerland, you only pay tax on Swiss pension fund benefits in Switzerland, not in the UK. Some cantons have much higher taxes than others, so you should choose a vested benefits foundation in a low-tax canton.

I hope this helps, and I hope you come right.

Good evening,

Wow, thank you so much for your reply and for making it all quite clear. I am a resident in the UK, my bank accounts are in the UK, but I have dual nationality, South African, and we spend a lot of our time there. I don't have a lease agreement as we rent from my in-laws and as I said, all banking etc is UK based. 

Is it possible to get my money paid into a UK company, but reside in South Africa? We don't want to keep out money etc in SA as it is so unstable, but love living between both countries.

I would have no idea about vested accounts or if any extra contributions were paid. I only know that it was pillar 1 and pillar 2, not pillar 3

Thank you so much for your help.

If you ever move your primary residence to South Africa, then you can withdraw your Swiss vested benefits immediately. The prohibition on withdrawals only applies to residents of countries in the European Union or the European Free Trade Association.

In that case, it would be important to consider that South Africa and Switzerland do not have a double taxation agreement which covers pension benefits. So you would pay the Swiss withholding tax, plus possible taxes in South Africa. If you would ever decide on this course of action, this is the office and form for withdrawing benefits: https://sfbvg.ch/en/tasks/cash-payment-procedure

Here's a footnote about pillar 1 Swiss government pensions (OASI/AHV/AVS):

Citizens of countries with which Switzerland does not have a social security agreement can have their total OASI contributions reimbursed when they leave Switzerland. That means as a South African, you can get reimbursed.

The part I am not sure of, though, is whether that applies to people with dual-citizenship, where one country (the UK) has a social security agreement. You will have to contact the Swiss Compensation Office to find out what applies in your case. You can find the contact information here:

https://www.zas.admin.ch/zas/en/home/particuliers/demander-une-rente-de-vieillesse/nationalite-d_un-autre-pays-.html

Hello Harold,

Please could you let me know if Assura Card with my policy number on (including dates etc) is my AVH card that is being requested by the pension authorities?

thanks

I will assume you mean "AHV" card. Your OASI (AHV) number is printed on your health insurance card. This may be all that they need. However, an AHV card is a visiting-card-sized, non-digital card which has your name and OASI number on it. You get that card (butterflied, with the two sides not yet stuck together) along with your OASI registration form when you first get residence in Switzerland.