Can I recover my second pillar (LPP) before retirement?

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Updated on December 1st, 2023.

Apart from at the time of retirement, we can claim our second pillar in three specific situations (sorry to disappoint, buying the brand-new iPhone is not one of them!). 

First reason: I can recover my second pillar if I leave Switzerland  

This condition is well-known but unfortunately not always well-understood! While it is true that you can recover your second pillar assets upon final departure from Switzerland, the question is (and that’s where it gets tricky) under what terms? 

To keep things simple, you have to distinguish two scenarios:

Departure from Switzerland to a country outside the European Union or which does not have bilateral agreements with Switzerland: 

In this case, you may, after showing proof of your immediate and definitive departure, ask for your second pillar to be paid to you in-full (the compulsory part and the over-compulsory part, see our article on this subject).

Being able to withdraw your 2nd pillar does not necessarily mean that it is a good idea… When you leave Switzerland for a country outside the EU/EFTA, a number of tax rules will apply, and in some cases the tax on the withdrawal could be very high. We advise you thoroughly to study the issue before taking any action.

Departure from Switzerland to a country which has bilateral agreements with Switzerland: 

In this case, you will most likely not be allowed to recover your entire assets but only the supplementary part of your occupational insurance. Why? For the simple reason that this money is meant for your retirement… Actually, there is ONE reason which would allow you to derogate from this rule: you will have to prove to Switzerland that you will not be obliged to join a pension scheme in your new country of residence, in other words, that you will be considered as retired already. 

 Be careful: The tax treatment of this kind of withdrawal can prove to be complex and will usually follow two steps: 

  1. First, Switzerland will impose taxes in proportion to the amount 
  2. Second, you must inform your new taxation authority the revenue collected, which will then be taxed as well (according to their own rules of course). 

Bilateral agreements between Switzerland and your host country protect you from being taxed twice and thus allows you to seek reimbursement of the taxes paid in Switzerland within three years. 

However, it is important to pay great attention to how to proceed for your withdrawals and to timing! That’s right, because there can be different ways to consider a second pillar capital withdrawal in your host country (as it is the case in France for instance). 

Always the same advice: before you start the process, take the time to fully understand who will tax your withdrawal, what the tax rate will be, can I do better? Once you have answered these questions, you can apply to withdraw your BVG capital.

Second reason: I can recover my second pillar if I start an independent activity 

Raise your hand if you’ve never had sweet dreams about starting a business! Daring to open a micro-brewery, a digital marketing agency or a smoothie bar? To turn your passion in to a livelihood?

Picture showing Noé leaning at a bar and happy to have been able to start his new self-employed activity thanks to his 2nd pillar.

If you decide to take the plunge, then you can withdraw your LPP contributions, under the following conditions: 

  • Fill in the OASI form in order to prove you are self-employed, which can only occur by registering for sole proprietorship
  • In case you are married, the signed consent of your spouse will be required 

 Be careful: becoming independent and being employed in one’s own company are not to be confused! If you wish to start a business (Ltd. or LLC) your pension fund will not allow you to withdraw your assets. 

Third option: I can withdraw my 2nd pillar to buy a home as my main residence

The other day, I wanted to withdraw my retirement assets to invest in real estate but I was quickly slowed down. According to the law, I can use my second pillar before retiring only to purchase a primary residence or to reimburse the mortage debt of my personal use housing or finance renovation work on my own home.

In fact, if I sell my house in the heart of Lavaux which I purchased with my second pillar, I have to reimburse the amount I received. 

You came across your dream house and wish to recover your second pillar to finance it? You are wondering what the requirements for withdrawal are? And what the consequences will be? Please do not hesitate to get in touch, we are here to help you! Or else, if you prefer, we also have an article dedicated to withdrawals under the homeownership promotion scheme (EPL). 

Fourth reason: I can recover my second pillar five years before the legal retirement age  

Yeah, finally some good news! Unlike the first pillar, Switzerland authorises pre-retirement and allows anyone to assert their desire to quit before the end of their professional life, starting from 59 years of age onwards. 

Once you reach this golden age, you can request that your pension fund repays your second pillar as a pension or as capital. 

BE CAREFULL: All pension funds are not governed by the same rules, whether it be in terms of the second pillar percentage that can be taken out as capital, or in terms of early retirement modalities for example. 

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