Capital withdrawals Here's how to start receiving your pension fund benefits

It’s good to plan your Pillar 2 pension fund withdrawals so you can avoid any surprises

by UBS Insights 16 Feb 2017

Bild: iStock

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  • If you made voluntary contributions to your pension fund, no capital may be withdrawn for the next three years.
  • The money in your Pillar 3a accounts may be withdrawn at age 59 for women and age 60 for men.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.

2016 tax rates for federal, cantonal and municipal taxes

Tax on withdrawals from pension fund savings

Married and no religious affiliation; all information in CHF

 

 

Withdrawal

300,000

Withdrawal

300,000

 

600,000

 

600,000

 

1,000,000

 

1,000,000

 

Bern

Withdrawal

300,000

19,773

 

600,000

49,111

 

1,000,000

93,032

 

Basel

Withdrawal

300,000

25,862

 

600,000

57,662

 

1,000,000

99,750

 

Geneva

Withdrawal

300,000

18,864

 

600,000

44,699

 

1,000,000

80,553

 

Lausanne

Withdrawal

300,000

29,560

 

600,000

71,862

 

1,000,000

130,207

 

Zug

Withdrawal

300,000

16,478

 

600,000

37,910

 

1,000,000

66,174

 

Zurich

Withdrawal

300,000

18,252

 

600,000

57,141

 

1,000,000

130,003