How do I withdraw funds from my Pillar 3a?

Opting for a personal pension plan allows you to save for the long term, to prepare for the future and to enjoy a comfortable retirement. However, it's not unusual for certain life situations or projects to require money. At such times, it's reassuring to know that your personal pension provision can eventually be recovered. But how exactly do you go about withdrawing money from your Pillar 3A? The answer can be found in this article.

There's no better way to improve the income you receive from your old-age and survivors' insurance and occupational pension schemes than by opening a private individual pension account. The money you save in your 3rd pillar 3A account is blocked until you retire. You can then receive your retirement capital, plus interest, in the form of a lump-sum payment or a lifelong annuity, depending on your preferences. The legal retirement age in Switzerland is 64 for women and 65 for men. However, Pillar 3A - also known as tied personal pension provision - can be withdrawn 5 years before or up to 5 years after this date. The condition for this to be valid is that you continue to be gainfully employed, and it seems important to point out that in the last year before retirement, the pension capital can no longer be partially recovered, but only in full.

Outside retirement, you can withdraw funds from your 3rd pillar 3A early, depending on certain reasons. Nevertheless, be aware that if you are married or have a registered partner, you will need to obtain their agreement in writing before you can reclaim your pension savings.

One of the conditions that gives you the right to withdraw your linked 3rd pillar savings without being retired is if you decide to leave Switzerland permanently. If you move, your funds will be paid out as soon as you can provide notice of your departure from your commune in Switzerland. This early withdrawal also works if you intend to work in another European country, which is not the case with the 2nd pillar, for example.

Starting up your own business requires funds. That's why it's a good idea to withdraw your retirement savings to set up your own business. You can also withdraw them if you were already self-employed, but decide to change activity. To do this, you need to provide proof of your status in the form of a certificate from the Swiss old-age and survivors' insurance scheme - otherwise known as the Swiss 1st pillar. It will then be possible for the pension fund to which you contributed to transfer the money to your bank account. However, you will have to wait at least one year after becoming self-employed before you can request withdrawal of the 3rd pillar, which will have to be recovered in full.

This is an excellent reason to request early withdrawal of your 3rd pillar 3A, since your pension savings can be used as a personal downpayment - also known as an equity contribution - when buying property or building your main residence. It is also possible to use all or part of the tied 3rd pillar as collateral with the bank, to repay a mortgage or to purchase a share in a property. To do so, you must be able to present a deed of sale or notarial deed stipulating the purchase of the property. Furthermore, early withdrawal in this situation can only take place every 5 years. Also, it will not be possible to reinvest the funds used to finance the property in your 3rd pillar, i.e. to redeem the withdrawals. Finally, you are not obliged to recover all your savings.

You may need to withdraw your funds to switch to a 3rd pillar. Indeed, you may be offered more attractive conditions with another bank account or insurance contract. In this case, you can transfer your entire savings by showing proof of your new pension scheme. Of course, this change of individual pension plan does not entail any loss or additional taxation.

It is also likely that you are missing years of contributions to your occupational pension plan, which is none other than the Swiss 2nd pillar. To remedy this problem, you can use the funds in your 3rd pillar 3A, in part or in full, in order to have the maximum amount available for retirement. The transfer does not give rise to any particular tax implications. However, this solution does not work if the pension shortfall is due to a withdrawal for home ownership. Pillar 3A funds can only be paid into your pension fund, and not into a vested benefits account.

An early withdrawal from your Pillar 3A may also be accepted on condition that you receive a full Pillar 1 disability pension. However, the latter must not be included in your individual private pension contract. This is no easy task, given that the vast majority of insurance companies cover disability. In any case, this is also one of the ways of recovering pension funds before retirement age.

To sum up, Pillar 3A withdrawals can be made either when you retire, or in advance under one of the conditions mentioned above. Proof will be required from the pension fund, whether a bank or an insurance company, to justify your situation. If you need any further advice or information, please do not hesitate to contact your financial advisor.