The EPL withdrawal - Or withdraw your 2nd pillar to buy your home in 2023

Updated on November, 21st 2023.

There are several reasons to withdraw your pillar 2 but at the moment the one we are looking at is very special and can drastically increase your chances of becoming a home owner. 

If, just like me, you are not the best at irreprochably saving money with the ultimate goal of being able to afford buying your own home, remember it is highly likely that the biggest part of your savings is in your pillar 2 thanks to your contributions and those of your employer. 

The icing on the cake is that the savings can be used for this purchase. 

Let’s have a look at this in greater detail!

Who can withdraw their pillar 2 to by their home property?

If you have a 2nd pillar or if you have contributed to the 2nd pillar in the past, then you can withdraw it in order to partially finance your future home.

Let’s take Zoé as an example. She wants to purchase a villa on the outskirts of the Canton de Vaud capital city. the property is valued at precisely 1 million. She has to finance 20% of the sum with individual funds, that is 200,000 CHF.

For the past 15 years, her and her employer have been paying a percentage of her salary every month on her occupational pension account. 

She therefore meets their requirements to withdraw her pillar 2. 

You will find the available amount for this withdrawal in the box: vested benefits assets on your pension certificate.

For what kind of housing can I withdraw my pillar 2?

You want to take out a mortgage loan for a rental property? Bad news: you cannot count on your pillar 2.

Same thing for a secondary residence. No little chalet at the top of a mountain thanks to your LPP assets. Unless you decide to go live at the top of one of our beautiful full snowy peaks. 

Your pillar 2 can only be used to finance or reimburse your mortgage on your primary home in Switzerland or abroad. 

What part of my property can be financed by an EPL withdrawal?

For your real estate property purchase, your banker will ask you for a minimum of 20% of individual funds.

Your 2nd pillar contribution may still represent between 10% and 90% of the total price, in other words: the 2nd pillar may finance a large part of your home, but by no means all of it.
At least 10% of the price must come from sources other than the 2nd pillar.

To better understand this, let us take an example:

We have found a charming house in the heights of Lausanne worth 1,000,000 CHF. Of this selling price, the bank will finance 80% (800,000 CHF) and we will have to provide 200,000 CHF from our pocket.

If Zoé has 150,000 CHF available on her LPP account, she will be allowed to use only 100,000 CHF, corresponding to 10% of the amount of her property because, as explained above, at least 10% must be financed by other means.

And for the remaining 10%? Zoé has several options: 

• Using her assets on her bank account.
• Withdrawing her pillar 3 or putting up a life insurance as a guarantee
• Asking for a donation or an advance on her inheritance
• Borrowing the sun or part of it to a friend or a relative

Are you wondering about your capacity to borrow? Calculate it here.

When can I withdraw my pillar 2? The 50-year rule

You can access your LPP assets in full at any time over the course of your professional life… Almost.

If you are older than 50 years old, you can withdraw either the amount which was available when you turned 50 years old, either half of your current available assets. 

If you are less than 50 years old, there is no maximal withdrawal.

However, there is a minimal withdrawal imposed at every age range, it is fixed at 20,000 CHF.

finally, withdrawals must be at least five years apart. 

Since Zoé just turned 37 years old, she can have free access to her pillar 2, as long as the amount is higher than 20,000 CHF.

But if Zoé’s mom, who is 62 years old, wanted to purchase the same property, the situation would be different. She would not be able to benefit from the LPP contributions she made between her 51^st and 62^nd year of life, but only those she made up until she turned 50 years old. Or else, she could decide to withdraw half of her current assets.

Should I reimburse the withdrawn assets?

Reimbursing money you duly earned over the years? What a strange idea! And yet…

It is important to know that if you apply for a withdrawal from the 2nd pillar (EPL withdrawal) in order to finance your home, the land registry in your canton will have to make an annotation stating that you have used pension funds to enable you to buy this home.

If later you resell or transfer your property, like everything was noted, your pension fund will ask you for the withdrawn amount back.

Landmark example

A pension fund lost a case against an insured person who decided to rent out her home financed by her 2nd pillar. She had lived there for a long time and, after 13 years, decided to rent it out. Until then, the fact that she wanted to rent out her home was synonymous with reimbursement in the same way as selling the property, since the insured person was no longer using it as her main home. However, she was able to demonstrate that after having occupied her property for a relatively long period of time, generating an annuity from the rent received did not in any way contradict the wishes of the law on occupational pensions. This law should protect the insured and ensure their retirement. After a long procedure, the court ruled in favour of the insuree. Here is the link to the full article, from the Tribune de Genève.

Generally speaking, if you live in your property, you will not need to reimbursed the amount withdrawn.

And if you sell your property in view of purchasing a new one in the near future, put the amount on a policy or a vested benefits account. Here’s a good way of keeping it warm and, who knows, perhaps yielding profit well you look for your dream home. 

To sum up, as long as Zoé lives in her cozy nest, she will not need to reimburse the 100,000 CHF coming from her LPP savings.

What if she wants to reimburse it anyway? The idea is worth considering for the three following reasons: 

1. Zoé will recover the taxes she paid on the withdral. 
2. She can repurchase her contribution years, deductible from the taxable income as soon as she reimbursed what she had taken out in full
3. Her pension fund’s services will go back to normal.  

In short, taking out your pillar 2 to finance your property, is… good. But… 

There is always a but… but you are in luck, I also took the time to prepare an article explaining in detail all of the consequences of this withdrawal.