Why should you be making a withdrawal of your 3rd pillar pension assets?
The answer is quite obvious: Because you’re about to retire!
Sure. But that’s not all!
There are some extra rights to cash in your 3rd pillar account thanks to its private nature.
The legislation allows for 5 ways of applying for an anticipated transfer of your entire 3A account.
The answer is quite obvious: Because you’re about to retire!
Sure. But that’s not all!
There are some extra rights to cash in your 3rd pillar account thanks to its private nature.
The legislation allows for 5 ways of applying for an anticipated transfer of your entire 3A account.
1. 3rd pillar withdrawal for early retirement
You have the right to request the transfer of your 3rd pillar if you want to retire slightly earlier. That “earlier” part is however not up to you; it’s up to 5 years before the Swiss legal retirement age – which is 59 for women and 60 for men.
2. 3rd pillar withdrawal to buy a home
In Switzerland, the amount of equity you need to provide if you want to buy your own property represents 20% of the sale price – and that can be pretty colossal. Hence why it’s possible to withdraw your 3rd pillar to help get to that required 20%.
However, please be careful! It’s your main residence we’re talking about. The 3rd pillar withdrawal won’t work out if you want to buy a secondary or third residence, or even more houses.
3. 3rd pillar withdrawal for self-employment
If you wish to become self-employed but lack the required funds, etc., then you are fully within your rights to withdraw your 3rd pillar savings to achieve this goal.
4. 3rd pillar withdrawal in case of disability
Hopefully you won’t have to withdraw your 3rd pillar for that very reason, however, you should be aware of the possibility of doing so in the event of disability.
5. 3rd pillar withdrawal in case of departure from Switzerland
Are you dreaming of the waves crashing against the Mediterranean shores? Or are the great Canadian forests more your thing? How lovely it must be over there...
In short, if you decide to leave Switzerland for good, you can “pack” all your 3rd pillar savings inside your suitcases.
How can one withdraw money from their 3rd pillar account?
If you are in any of the above situations or if you are about to retire, you can naturally withdraw your 3rd pillar pension, but how do you go about it?
Well, that’s a good question. Moreover, there are a few details that need to be taken into consideration regarding your 3rd pillar contract. Here is a short list of the best practices to be remembered!
If you are in any of the above situations or if you are about to retire, you can naturally withdraw your 3rd pillar pension, but how do you go about it?
Well, that’s a good question. Moreover, there are a few details that need to be taken into consideration regarding your 3rd pillar contract. Here is a short list of the best practices to be remembered!
Verify the surrender values
Have you signed a 3rd pillar insurance contract? You haven’t? Then go directly to the next paragraph – 3rd pillar bank contracts are not affected by surrender values.
But what’s a surrender value? Well, it’s the development in time of the sum you are entitled to withdraw, and it does not equate the amount you’ve invested into your 3rd pillar insurance. So, if you want to withdraw your 3rd pillar assets (and you have a valid reason to do so), you’re going to lose a lot of money in the first few years of your contract because the amount you can withdraw will not be the same as the one you saved.
Nowadays, many people sign contracts without being properly informed of what these contracts entail.
At FBK we promise you will never walk out of our office without being told all the relevant terms and conditions regarding your contract.
So, make sure you are aware of these infamous surrender values to ensure no unpleasant surprises. Especially given that there are alternative solutions for withdrawing your 3rd pillar savings without losing money.
Stagger your withdrawals from your different 3rd pillars
Although the amount you can invest in your 3rd pillar is fixed, the number of 3rd pillars you can subscribe to is not. You need to be organized if you want to avoid paying more than the authorized amount for all your 3rd pillars.
By doing so, you can spread out withdrawals from these individual accounts, and this in turn minimizes the tax burden associated with withdrawals. The taxes associated with them are huge, so staggered withdrawals over several years will save you money.
Estimate the tax liability of your 3rd pillar withdrawal
You know you’ll have to pay taxes upon withdrawal no matter what... But while we’re at it, we might just want to get a better idea of how much tax you’ll have to pay in order to make sure you’re financially prepared for your withdrawal project, right? For example, in the case of a real estate purchase or even the launch of an independent activity.
Withdrawing from the 3rd pillar with FBKConseils: How to proceed
1. The first date!
We always organize a first appointment that’s free of engagement so we can better grasp your needs and see how we can help you withdraw your individual insurance scheme.
2.The file and docs creation!
Should we be able to help you out, we’ll set up your case file so we can kick off by asking you for all the stuff we need to come down with the withdrawal process – or plan it according to your plans.
3. Tax optimization!
It’s always mandatory to pay a tax you withdraw. Our goal is to find the combination that will minimize it.
4. The results!
We will present you the different solutions we have found.
5. Let’s set it all up together!
We’ll show you the steps you’ll need to follow to implement the chosen solution – if no adjustments are needed.
How long does this procedure take and how much does it cost ?
Withdrawing one's 3rd pillar implies a valid reason and it is this reason that will determine the time and complexity required to do so.
Either we are in the case where your situation gives you the right to ask for the withdrawal of your 3rd pillar, or on the contrary it will be necessary to seek a way to place you in one of these conditions.
During the first meeting (free of charge) we will be able to answer your questions and see to what extent we will be able to support you in this process.
After this meeting we’ll provide you with a detailed offer.
- No, you cannot. You will have to withdraw the entirety of your 3rd pillar. The alternative is to create multiple 3rd pillar accounts. There’s one exception to that withdrawal: If you want to purchase a property. If the amount of equity required is surpassed by taking out the 3rd pillar, then you will only have the right to take out the amount you really need.
- It' s the value of your contract during a given year, which represents the amount you will receive upon withdrawal. The surrender value is determined within the 3rd pillar contract and does not represent the savings transferred to that account.
- There are 5 possibilities provided by law which allow you to withdraw your 3rd pillar A:
o Leaving Switzerland permanently.
o Starting a self-employed activity.
o Buying your own home as your main residence.
o Retirement (you can withdraw it at the earliest 5 years before).
o In the event of disability.
- A typical 3rd pillar withdrawal is made when the contract expires, i.e. when you reach retirement age. Retirement age for men is 65 and for women 64. It should be pointed out that a standard withdrawal can also take place 5 years before or after the legal retirement age.
