Key Points at a Glance
- Standard withdrawal period: accessible from age 60 (5 years before OASI age) and extendable up to age 70 in the event of continued gainful employment.
- Reasons for early withdrawal: permitted only for the purchase of a primary residence, the transition to self-employed status, a final departure from Switzerland, total disability, or a second-pillar pension buyback.
- Staggered optimization: prohibition of partially closing an account, making the opening of multiple 3a accounts essential to stagger withdrawals and lower taxes.
- Tax rules: capital taxed separately from income at a reduced rate, with aggregation of withdrawals by the married couple in the same year and withholding tax in the event of departure from Switzerland.
- Transmission in the event of death: The asset is paid directly to the beneficiaries according to a legal priority order (spouse/partner first), outside of the traditional estate.
How Do I Withdraw My Pillar 3a?
The 3a pillar is one of the key components of retirement provision in Switzerland. Designed to supplement the pensions provided by AHV (1st pillar) and occupational pension plans (2nd pillar), it allows you to build up retirement savings while also benefiting from attractive tax advantages.
However, these savings are tied to specific conditions and cannot be withdrawn freely at any time. Certain rules govern withdrawals, whether you are accessing your funds early or at the standard retirement age. In this article, we explain in detail when you can withdraw your pillar 3a savings and what you need to know before doing so.
Situations That Give You the Right to Withdraw
A withdrawal from your 3rd pillar A is possible in the following 6 scenarios:
1. Buying a Home for Personal Use
You can withdraw the funds from Pillar 3a to finance the purchase, the construction or renovation of your primary residence. This also includes the repayment of a mortgage.
A withdrawal is also possible for the acquisition of shares in a home in which you will live (e.g. cooperative shares).
2. Starting or Switching to Self-Employed Activity
You can withdraw your Pillar 3a assets if you permanently give up salaried employment to become self-employed. This withdrawal is only permitted when you set up or take over your self-employed activity, and must coincide with your official registration with AVS/OASI as self-employed.
This right applies only once, and only if you're no longer contributing to a pension fund tied to salaried employment. It isn't possible to withdraw these funds if you carry out self-employed activity alongside a salaried job.
3. Permanently Leaving Switzerland
- Close your pillar 3a and have the funds transferred to an account in your name, regardless of the destination country or the institution where your assets are held (bank or insurance company).
- Keep your credit and postpone withdrawal until retirement age.
4. Complete Disability According to the Disability Insurance (AI)
5. LPP Buy-Ins Using Pillar 3a Assets
It's possible to transfer funds from your Pillar 3a to your pension fund to fill a shortfall in your 2nd pillar coverage, up until the legal retirement age (and even up to 5 years later, if you continue working). That said, several conditions and precautions apply:
- The transfer is only possible if the pension fund has a buyout potential.
- If your 3a account balance is inferior to the redemption amount, you must transfer the’entirety to have it.
- If the balance is superior, only the amount equivalent is transferred upon redemption; the remainder may remain in the 3a account.
It should also be noted that:
- This transfer is tax-neutral : It does not qualify for any tax deduction, because your retirement savings remain the same—they are simply transferred from one pillar to another.
- You cannot refund a EPL withdrawal (encouragement of home ownership) using funds from the 3rd pillar a.
- A transfer to a vested benefits account isn't possible, since these accounts don't accept buy-ins.
6. Ordinary Withdrawal at Retirement
Except in cases of early withdrawal, you naturally gain access to your 3rd pillar A savings as you approach the legal retirement age. The law offers a great deal of flexibility regarding the withdrawal schedule:
- From 5 years before AVS/OASI age: You may withdraw the entire balance of your 3a account at any time starting at age 60, regardless of gender, without having to provide any justification or specific reason.
- Up to 5 years after AVS/OASI age: If you continue to engage in gainful employment beyond the official retirement age, you have the right to defer the payment of your assets and continue to contribute to them until the age of 70 at the latest.
Optimizing Your Withdrawal With a Multi-Account Strategy
- Open multiple 3a accounts: Instead of depositing all of your savings into a single account, spread your annual deposits across 3 to 5 separate accounts over the years.
- Stagger withdrawals over time: this will allow you to close one account per year over a period of 3 to 5 years (between the ages of 60 and 65, for example).
- Reduce tax progressivity: Since the capital gains tax is progressive, spreading the payments over several tax years can save several thousand francs compared to a single withdrawal.
Pillar 3a vs. Pillar 3b: Don't Confuse Tied and Unrestricted Pension Plans
It is important to note that these strict withdrawal conditions apply only to pillar 3a (tied pension), which in return offers an annual tax deduction on your income.
If you hold a Pillar 3b (voluntary retirement savings) :
- Withdrawals are allowed at any time: You do not need any supporting reason (housing, departure from Switzerland, etc.) to withdraw your capital.
- No federal tax deduction: Contributions are not tax-deductible (with the exception of very specific cantonal rules, such as those in Geneva or Fribourg), but the capital withdrawn is not subject to tax on lump-sum payments.
What Happens to the Capital in the Event of Death?
How Is Pillar 3a Capital Taxed?
- Combined withdrawals for spouses and registered partners: Withdrawals from the 3rd pillar made by both spouses during the same calendar year are added together. To avoid being placed in a higher tax bracket, it is strongly recommended that the couple stagger the years in which they make withdrawals.
- Departure from Switzerland and withholding tax: If you leave Switzerland, the withdrawn funds are subject to a withholding tax levied in the canton where the pension foundation is headquartered. By first transferring your assets to a foundation located in a canton with favorable tax conditions (such as Schwyz), you can significantly reduce this tax.
- Refund of the tax on housing withdrawals (EPL): If you withdraw funds to purchase your primary residence, you will pay tax at the time of the withdrawal. However, if you later repay that amount to your retirement account, the tax withheld at the time of the withdrawal will be refunded in full (without interest) upon request within the legally prescribed three-year period.