Withdrawing your 2nd Pillar to become self-employed: The complete guide

Introduction

A warm welcome to all our loyal readers and a heartfelt hello to those discovering our site for the first time! Today, we’re tackling a crucial topic: withdrawing your 2nd pillar for those who have recently become self-employed. Why do we emphasize the word “recently”? Don’t worry, you’ll soon find out why this detail is so important.

In this article, we’ll answer all your questions to help you start your new business with peace of mind. Whether you’re still in the decision-making phase or already up and running, this information will prove invaluable.

Difference between being self-employed and being an employee of your own company

The distinction between being self-employed and being an employee of your own company may seem obvious, but it is often misunderstood. Many people think that by creating a company (SA or Sàrl) and investing their 2nd pillar funds into it, they automatically become self-employed. This is a misconception. In reality, this approach is simply not possible.

Creating a company, such as an SA or Sàrl, equates to changing employers, not your status. Previously, your boss gave you instructions; now, you are the one in charge, but your status remains that of an employee. Legal self-employment requires a completely different framework and does not require the creation of a legal entity.

What is the legal form of a self-employed individual?

To be recognized as self-employed, it is essential to choose an appropriate legal form:

• Sole proprietorship: Perfect for individuals who wish to work alone.
• Partnership: Ideal for projects involving multiple partners.

These structures allow for official recognition as self-employed and make it possible to withdraw funds from the 2nd pillar, under certain conditions.

How to become self-employed?

Becoming self-employed may seem complex, but it can be summarized in a few simple steps. We have detailed this process in our article dedicated to creating a sole proprietorship, but here is a summary:

• Find clients who are willing to work with you.
• Provide paid work for these clients.
• Register with social insurance, especially with the 1st pillar (AVS).
• Register with the relevant tax authorities.

The purpose of this article is not to elaborate on these steps, so let’s focus directly on what interests us: withdrawing funds from the 2nd pillar as a self-employed person.

Conditions and procedures to request a withdrawal as a self-employed person

To be eligible for the withdrawal of your 2nd pillar, the first condition is to be officially recognized as self-employed. This involves making a declaration to the AVS and receiving a certificate confirming your self-employed status, starting from a specific date, such as 01.01.2025.

Without this certificate, no withdrawal request is possible. Once you have this key document, here are the steps to follow:

Step 1: Request the withdrawal form from your financial institution

Your 2nd pillar may be managed by different institutions:

• Your previous pension fund (if you were employed before).
• A vested benefits account or policy.
• The supplementary institutional foundation, if neither of the above applies.

You will need to request a withdrawal form from each relevant institution. This form must be completed carefully:

• Personal information: name, surname, address, email, etc.
• Details of your self-employed activity: name of your sole proprietorship, date of creation, etc.
• Marital status: married or single.
• Payment details: IBAN of your bank account or postal account number.
• Signature: don’t forget to sign the form.

Step 2: Attach other necessary documents and supporting evidence

In addition to the completed form, several supporting documents must be added to your file:

• Family booklet: in case of marriage, written consent from your spouse is required.
• Identification document: a valid copy.
• AVS certificate: this document officially confirms your self-employed status.

Once the file is complete, you simply need to send it to your institution or pension fund. Within a few weeks, the full amount of your 2nd pillar, including the mandatory supplementary portion, will be transferred directly to your bank account.

Legal deadlines for requesting the withdrawal of your 2nd pillar as a self-employed person

The rules regarding the withdrawal of the 2nd pillar as a self-employed person are strict and leave no room for error. If you have already been self-employed for a long time without making this request, be aware that the withdrawal will no longer be possible.

Indeed, the legislation requires that the withdrawal request be made within a maximum period of 365 days after receiving your AVS certificate confirming your self-employed status.

After this deadline, your request will be automatically rejected, regardless of the reasons provided. Therefore, it is crucial to prepare your file promptly once you receive this certificate in order not to lose your rights.

What taxes will you have to pay after requesting a withdrawal?

While obtaining the AVS certificate is likely the most complex part of this process, it is crucial to fully understand the tax implications of withdrawing your 2nd pillar to avoid any unpleasant surprises.

We have explained in detail how taxation works for 2nd pillar withdrawals for Swiss residents in a dedicated article, including concrete examples. However, here are the key points to remember:

1. Receipt of the Gross Capital
   As long as you reside in Switzerland, you will receive the full (100%) capital directly into your bank account.
2. Payment of Taxes on the Withdrawal
   After a certain period, which may vary depending on the canton, you will receive a tax notice indicating the amount to be paid. These taxes are always calculated separately from other income, usually at a more favorable rate than ordinary taxation.

Practical tips

Before investing the entirety of your withdrawn capital into your new sole proprietorship, make sure you have paid your taxes, or at the very least, carefully calculate the amount you need to set aside for this purpose. This will help you avoid financial complications later on.

Only the AVS will be left to secure your retirement

While some activities may require substantial funds, making the withdrawal of the 2nd pillar essential for completing a project, it is crucial to keep one reality in mind: once the capital is withdrawn, you will only be able to rely on the 1st pillar (AVS) to fund your retirement.

The AVS offers modest pensions, often insufficient to ensure financial comfort. This means that you will need to take responsibility for planning your future retirement. Think carefully before withdrawing your 2nd pillar and evaluate all your options.

Financing your activity with your 2nd pillar

In some cases, withdrawing your 2nd pillar might seem unnecessary. For example, if you become a consultant, financial advisor, or lawyer, the funds needed to start your business are usually low, and this withdrawal might not make sense.

However, for other types of activities, the need for significant capital might be imperative, especially if:

• You need to acquire large inventories.
• You need expensive machines or equipment.
• You need to invest in real estate for your business.
• You require a significant marketing or development budget.

In these situations, withdrawing your 2nd pillar could be a crucial lever to finance the launch or growth of your business.

Investing your 2nd pillar to generate returns

Withdrawing your 2nd pillar does not necessarily mean you need to spend it immediately. Once transferred to your account, you have complete freedom on how to use it: buying a car, traveling, donating, etc. But nothing forces you to spend this capital.

You might choose to withdraw it with the intention of investing it strategically to generate returns and create a lifelong pension for yourself.

Investing these funds wisely can be a solution to compensate for the absence of a 2nd pillar in the future, while also offering you the necessary flexibility to finance your business or other projects.

How long does it take to withdraw your 2nd pillar to become self-employed?

This is a common question, as the launch of a business often depends on obtaining funds from the 2nd pillar. To answer this question, let’s break the process into two distinct stages:

If you first need to register as self-employed

This step is often the longest and depends on your situation:

Case 1: Everything is already in place, your business has already started

If your business is already well-defined with clients, clear revenues, and expenses, the process can be quick. The AVS will validate your file in just a few days, as your independence is clear and your activity is profitable.

Case 2: You are still in the preparation phase

If your business is not yet operational, the validation of your status will take longer. You will need to provide detailed information on:

• The purpose of your activity.Your target clientele.Your mode of remuneration.Steps to find your first clients.

In this scenario, the process can take anywhere from a few weeks to several months, depending on the quality and maturity of your project.

If you are already recognized as self-employed by the AVS

In this case, things become much simpler and quicker!

• Gather the necessary documents for the withdrawal request.
• Have these documents validated by your financial institution.
• Send the complete file by mail.

The timeframe will depend on the responsiveness of your pension fund and the complexity of the processing, but it generally takes a few days to a few weeks.

Is it possible to re-affiliate to the 2nd pillar after a withdrawal?

Once your self-employed activity is established, you may consider re-affiliating to a 2nd pillar. But is it possible after a withdrawal?

The answer is yes, in principle. Withdrawals made for self-employment are considered final (just like those made for retirement or moving abroad). This means:

• No repayment is required.
• Your balance resets to zero.

You can then request voluntary re-affiliation by informing them of the amount withdrawn. This will allow for recalculating your contributions and any potential LPP buyback options, if desired.

Is it possible to request a withdrawal for self-employment abroad?

No, in principle.

Current rules state that a 2nd pillar withdrawal is only possible for self-employment carried out in Switzerland. However, we use the term “in principle” because there may still be atypical cases. Some individuals claim to have encountered exceptions, but they remain rare and not in line with general legislation.

In summary, if you want to start a self-employed activity abroad, it is advisable to consult specialists to avoid any misunderstandings or administrative blockages.

How can FBKConseils help you with your 2nd pillar withdrawal to become self-employed?

At FBKConseils, we understand that withdrawing your 2nd pillar to become self-employed can be a complex step. That’s why we offer a range of services tailored to your needs:

Initial consultation

Dreaming of independence? We offer a free 20-minute consultation, either via video call or at our offices, to answer your initial questions. This time is the perfect opportunity to clarify any doubts and outline the main aspects of your project.

In-depth advisory meeting

Sometimes, 20 minutes isn’t enough. If you need more time to explore your situation, ask complex questions, or conduct personalized simulations, we offer a meeting tailored to your needs.

Guidance to become self-employed

If you are unsure about the steps to take or if your project lacks clarity, we are here to guide you from start to finish.

• Validation of your file with the AVS.
• Structuring your entrepreneurial project.
• Advice on the necessary steps to obtain your self-employed status.

Handling administrative processes

If you lack time or find the processes too complicated, FBKConseils takes care of everything!

We manage:

• The preparation and submission of your withdrawal file.
• Correspondence with your pension fund or financial institution.
• Follow-up until your 2nd pillar funds are transferred.

With FBKConseils, you benefit from personalized support to turn your dream of independence into a reality, while avoiding administrative pitfalls.

Ready to take the next step? Contact us today!