What is the 2nd pillar?
The 2nd pillar is mandatory for employees whose annual income exceeds a minimum threshold (CHF 22,680 from 2025). Contributions are shared between the employee and the employer, and paid into a pension fund (pension fund). This savings system is based on the principle of capitalization: the contributions paid in are invested and generate personal assets.
Situations giving right to a withdrawal
Your BVG capital can be withdrawn under several conditions:
- Ordinary withdrawal on retirement (1/4 of minimum compulsory assets)
- Early retirement
- Withdrawal for the purchase of a home as a principal residence
- Definitive departure from Switzerland
- Starting a self-employed business
1. Ordinary retirement
The most common situation is withdrawal at the time of retirement. At the legal age (65 years for both men and women), the insured person can receive their assets in the form of a lifetime pension, a lump-sum payment, or a mix of both if allowed by their pension fund’s regulations. The insured is entitled to withdraw at least 25% of their capital.
The choice to receive all or part of the capital instead of a pension must be made in writing within a deadline set by the pension fund (often 1 to 3 years before retirement). Once this choice is made, it is irrevocable.
2. Early retirement
Most pension funds allow early retirement from 58 years old. In this case, the insured may request an early annuity (with a lower conversion rate), or a lump-sum payment in accordance with the terms of his or her regulations.
Some institutions impose a proportional reduction in benefits for each year of early retirement. In general, early retirement can reduce the conversion rate between 0.10 and 0.30% per year of anticipation.
3. Withdrawal for the purchase of a home as a principal residence
The Swiss Vested Benefits Act (LFLP) allows the use of 2nd pillar funds under the home ownership promotion scheme (EPL), meaning for the purchase, renovation, or repayment of the mortgage on your primary residence. Two options are possible:
- Early withdrawal: part or all of the equity can be used to finance the purchase, construction or mortgage repayment of a home for own use.
- Pledging: the capital remains in the pension fund but is pledged to the bank to increase borrowing capacity.
The property must be used as principal residence (and not as a second home or investment property). Withdrawals are subject to a one-off capital gains tax at a reduced rate.
4. Final departure from Switzerland
If the insured moves to a country outside the European Union or EFTA, they may withdraw their entire LPP assets (both mandatory and supplementary parts). However, if moving to an EU or EFTA country, only the supplementary assets can be withdrawn. The mandatory assets are transferred to a vested benefits account.
Proof of new residence abroad is required (certificate of residence, deregistration from the commune, etc.).
5. Starting a self-employed business
When a person leaves salaried employment to become self-employed, they can request the payment of their pension assets. This withdrawal is only possible within one year after the start of the self-employment activity and provided that this activity is not secondary.
Concrete evidence is required (AHV registration , tax status, etc.).
Taxation of capital withdrawals
The withdrawal of an LPP capital is taxed separately from income, at a progressive preferential rate, calculated according to the canton and the amount withdrawn. The higher the capital, the higher the tax rate. To optimize taxes, it is common to plan a staggered withdrawal, especially for insured persons with multiple vested benefits accounts.
Frequently asked questions
Withdrawal from the 2nd pillar is possible in 5 cases:
- retirement (ordinary or early),
- purchase or construction of a principal residence / repayment of a mortgage,
- definitive departure from Switzerland,
- setting up a self-employed business,
- or, in some cases, a disability pension.
You must submit a written request to your pension fund or the vested benefits institution holding your assets. The request must be accompanied by the required supporting documents (proof of property purchase, certificate of independence, certificate of departure, etc.).
If you suspect that your vested benefits have been lost, you must submit a request to asset search to the Centrale du 2ème pilier.
The lump-sum withdrawal is taxed separately from your income, at a reduced and progressive rate. The rate depends on the canton, the amount withdrawn, and your marital status. Staggering withdrawals over several years or accounts can help optimize taxation.
Yes, but the withdrawn capital cannot be reintegrated into the pension fund. If you return to Switzerland, you will start contributing again based on your new income, like any new insured person, while having the option to make buybacks.
No. Withdrawal is allowed only for your primary residence — the one you personally live in. Secondary residences, rental properties, or investment assets are excluded.
You can usually apply for early withdrawal from the age of 58, depending on your pension fund regulations. Please note: this will permanently reduce your benefits, as the conversion rate falls for each year of early withdrawal.
In this case, only the supplementary portion of your BVG/LPP credit can be withdrawn. The compulsory portion is transferred to a vested benefits account in Switzerland, until you retire.
Yes, most pension funds allow a mixed withdrawal: one part in capital, the other in annuity. This choice must be announced in writing within the set timeframe (often 1 to 3 years before retirement).
