Second pillar

Hi!

I was working for 3 years in Switzerland, and left about a year ago, leaving my second pillar part in the vested benefits account. Now I am thinking of buying a property (not in Switzerland) so I was wondering what is my best option to use this money? Can I avoid early withdrawal fees and what is the general process to access the money? Many Thanks. 

Alex.

Hi Alex,

You can simply contact the vested benefits foundation which holds your benefits and request a "Wohneigentümsförderung" or "WEF" form to request a withdrawal for the purpose of buying a primary residence. Some foundations let you download this form from their websites. You must then complete the form and submit it to the vested benefits foundation.

If your current vested benefits foundation charges very high WEF withdrawal fees, you could consider transferring your benefits to a different vested benefits foundation with low or no WEF fees before making the withdrawal. Before doing this, check whether your vested benefits foundation charges a penalty fee for transferring to a different foundation. Both WEF fees and transfer fees are shown on the product information pages in the vested benefits account comparison.

More information about withdrawing Swiss vested benefits

If you live in an EU country you have these options:

• You can withdraw benefits made up of the compulsory contributions you paid during your employment in Switzerland (pillar 2a) for the purpose of buying a primary residence.
• If you made any voluntary contributions to your Swiss pension fund while employed here (pillar 2b), you can withdraw the resulting benefits at any time.

If you live in a country which is not part of the EU or EFTA:

• You can withdraw your total benefits (both compulsory and voluntary) at any time.

In every case, a Swiss withholding tax will be deducted from the amount being withdrawn. The withholding tax is levied by the canton in which the vested benefits foundation is located.

If the country you live in has a relevant bilateral tax treaty with Switzerland, you can reclaim the Swiss withholding tax by providing proof of tax residence in that country.

If your country of residence does not have a relevant tax treaty, you cannot reclaim the Swiss withholding tax. In this case, transferring your vested benefits to a vested benefits foundation in a low-tax canton (like Schwyz) before withdrawing them can reduce the withholding tax you pay.

If your benefits are divided between two vested benefits accounts, withdrawing vested benefits over two separate tax years can also reduce withholding taxes (or taxes levied by your country of residence). The reason is that vested benefits accounts must be cashed out in full. Unfortunately, you cannot retroactively divide vested benefits which are already in a single account.

Best regards from Moneyguru