Pillar 2 withdraw: the consequences of an EPL withdrawal

Updated on January, 8th 2024.

As you have probably read in our article explaining how the EPL withdrawal functions (or withdrawal under the homeownership promotion scheme), withdrawing your pillar 2 can truly help you boost your individual funds but at what cost? 

You are taxed on your withdrawal

When you withdraw your pillar 2, you have to pay taxes on the amount received, regardless of the reason: moving abroad, retirement or withdrawal to start your own business.

But how much does it amount to? Don’t worry, it is below the standards taxes, on average, it amounts to 1/5 of what you would have paid if this money had been income.

Not quite clear? Before giving you some examples, here is some additional information.
If you have to pay CHF 23,300 (income tax) on 100,000 of income, then you have to pay 1/5 of CHF 23,300 on CHF 100,000 of capital withdrawals (LPP), i.e. CHF 4,660. Is that clearer? I hope so.
Here is a list of examples for the cantons of Vaud, Valais and Geneva.

The tax rates vary depending on the amount withdrawn but also from a commune or canton to another.

Therefore, Zoé who lives in Lausanne and withdraws 100,000 CHF must pay 17,552 CHF in taxes. If she lived in Sion, she only would have had to pay a little above 14,400 CHF.

In her first calculations, she had forgotten to take the taxes into account. 

By taking out 100,000 CHF, she will not receive the entire sum but only 94,000 CHF. In order to pay 100,000 CHF to her bank, she thus has to withdraw 106,400 CHF.

Your future pensions decrease

Your future retirement pensions as well as your risk covers (death and invalidity) are calculated based on your total assets. If you decrease the value of your pillar 2, your pensions will most likely be lessened in proportion.

Withdrawing your pillar two is just as seducing as it is efficient to become a property owner. But the decision should not be taken lightly.

Do you know what would happen to your pensions after withdrawing? Do not hesitate, I am here, as usual.