Lump-sum withdrawals are popular: Some pension funds have amended their regulations so that a partial lump sum withdrawal of the capital is required. Studies show that more and more people of retirement age would like to withdraw at least part of their capital.
The advantage of a capital withdrawal
In contrast to a lifetime pension, lump sum payments are taxed at a lower rate. The lump sum is taxed once, and it varies depending on the amount and the place you live: For example, the tax on a lump sum payment of 300,000 francs is 25,862 in Basel, 19,773 in Bern and only 16,478 in Zug.
Your checklist for a lump sum payment of your retirement money
Planning your retirement early let’s you benefit from a lower tax bill if you receive staggered payments:
- Find out what the notice periods are for lump sum payments.
- Some pension funds allow for partial lump sum payments if the employment level is gradually reduced.
- Depending on the pension fund regulations, a portion must be taken either as a pension or lump-sum payment.
- If you made voluntary contributions to your pension fund, no capital may be withdrawn for the next three years.
- The money in your Pillar 3a accounts may be withdrawn at age 59 for women and age 60 for men. If you have more than one Pillar 3a account, you can stagger your withdrawals.
- A partial withdrawal of a 3a account /vested benefits account is not possible. An exception is made for so-called EHO contributions (encouragement of home ownership). This includes, for example, capital withdrawals for buying an owner-occupied home or for paying down your mortgage before the age of 59/60.
- If you continue to work, you can pay into your Pillar 3a account until age 69 for women and age 70 for men.
- The withdrawal from vested benefits accounts can be deferred until age 69 for women and age 70 for men, regardless of whether you work or not.