The essentials
- A savings account is expensive: at an average return of 0.11%, CHF 600,000 with CHF 3,000 withdrawn monthly runs out at age 81. At 3%, the same capital lasts to 88.
- The period to cover: 23.2 years for a woman aged 65, 20.7 years for a man, and until the death of the second spouse for a couple.
- The sustainable withdrawal: over 25 years, CHF 600,000 allows CHF 2,270 per month at 1%, CHF 2,871 at 3% and CHF 3,911 at 6%.
- Two questions to separate: where the income comes from (guaranteed rate, markets, rent, pooling) and in what wrapper the capital is held (direct, Swiss insurance, international insurance).
- The timing trap: at the same average return, declines early in retirement exhaust the capital in 18 years instead of preserving it.
- An irrevocable decision: the choice is made before requesting the capital from the fund, not after it has been paid.
Capital of CHF 600,000 left in a Swiss savings account paying an average of 0.11% per year, from which you withdraw CHF 3,000 per month, runs out during your seventeenth year of retirement, at around age 81. The same capital invested under a 3% assumption lasts until 88, seven years longer.
Once the 2nd pillar has been taken as capital, the fund pays no further pension and organising the income falls to the beneficiary. This page sets out the period the capital has to cover, the amount that can be withdrawn from it, and the solutions available to turn it into a monthly income.
Why idle capital loses value
Three effects apply to capital left in a savings account. None of them appears on the bank statement.
- A near-zero return: a Swiss savings account returns an average of 0.11% per year, or CHF 660 on CHF 600,000.
- Inflation: at 1% per year, CHF 600,000 loses around CHF 97,000 in purchasing power over twenty years. The figure on the statement does not move; what it buys shrinks.
- Wealth tax: the capital enters taxable wealth as soon as it leaves the pension fund. As an illustration, a rate of 0.5% means CHF 3,000 per year on CHF 600,000.
| Return assumption | Capital runs out after | At age |
|---|---|---|
| 0.11% (savings account) | 17 years | 81 |
| 1% (defensive profile) | 19 years | 83 |
| 3% (balanced profile) | 24 years | 88 |
| 6% (income-producing real estate) | does not run out | capital preserved |
Illustrative example. Retirement at 65 with CHF 600,000, withdrawal of CHF 3,000 per month without indexation. The rates are calculation assumptions and not forecasts: actual returns may be lower, or negative, and a risk of capital loss exists. Average savings account return according to Moneyland.
Why this choice is made before the withdrawal, not after
A lump-sum withdrawal is irrevocable. Once the pension fund has paid the benefit, returning to a pension is no longer possible. How that capital will produce an income is therefore decided before the request is signed.
Three timing constraints come on top of that.
- The notice period: fund regulations generally require a request several months before the retirement date, and sometimes up to three years for the extra-mandatory portion.
- Recent buy-ins: a buy-in made in the three years before the withdrawal blocks the lump-sum payment.
- Spreading for tax: the tax on the payment is progressive, so staggering withdrawals across several tax years changes the amount due.
The choice between the two forms of benefit, with the 6.8% minimum conversion rate applicable to the mandatory portion, is covered in our comparison of a 2nd pillar pension or lump sum. This page starts from the case where the lump sum has been chosen.
How long does your capital need to last?
At 65, a woman lives on average another 23.2 years and a man 20.7 years, according to the Federal Statistical Office.
| At age 65 | Women | Men |
|---|---|---|
| Years remaining on average | 23.2 years | 20.7 years |
| Average age reached | 88.2 | 85.7 |
Source: Federal Statistical Office, provisional 2025 figures. These are averages: half of all 65-year-olds will live longer.
Two points follow. Sizing capital on the average means accepting a one-in-two chance of living longer than planned. And for a couple, the period runs to the death of the second spouse, not the first.
The capital does not fund everything: in 2027 the maximum AHV pension is CHF 2,560 per month for a single person and CHF 3,840 for a married couple. The capital covers the gap between those pensions and your actual budget.
How much can you withdraw each month?
There is no universal withdrawal rate. The amount depends on four things: the capital, the period to cover, the return achieved and inflation.
| Period | 1% assumption | 3% assumption | 6% assumption |
|---|---|---|---|
| 20 years | CHF 2,771 | CHF 3,361 | CHF 4,359 |
| 25 years | CHF 2,270 | CHF 2,871 | CHF 3,911 |
| 30 years | CHF 1,937 | CHF 2,551 | CHF 3,632 |
Monthly amounts, capital of CHF 600,000 fully consumed at the end of the period shown, without indexation. Calculation assumptions and not forecasts: actual returns may be lower, or negative, and a risk of capital loss exists.
Two useful readings. Over 25 years, achieving 3% instead of 1% adds around CHF 600 per month, but that extra return has to be actually achieved, with the risk that entails. And at the same 3% return, covering 30 years instead of 20 removes around CHF 810 per month.
Allow for inflation too. An income of CHF 3,000 that never changes over twenty years will buy only the equivalent of CHF 2,459, or 18% less, under an assumption of 1% annual price increases.
Which solutions turn this capital into income?
An income solution is described by two elements: the source of the income, and the wrapper in which the capital is held.
These two elements are independent. An insurance wrapper can hold funds, and rent can be received directly or through a contract. The solutions available on the market combine both.
Where does the income come from?
The income can come from four sources. Each has its own risk profile and its own behaviour against inflation.
| Source of income | Income | Risk of loss | Against inflation |
|---|---|---|---|
| A guaranteed rate on secured capital | Predictable | None on the guaranteed portion | Little protection |
| Markets, equities and bonds | Variable | Yes, value fluctuates | Protection over the long run |
| Rent from income-producing real estate | Regular, variable | Yes, value and rent | Partial protection |
| Pooling of longevity risk | Guaranteed for life | None on the amount | None, annuity not indexed |
Pooling is the mechanism behind the life annuity: the insurer pays an income for life in exchange for the capital, and the payment period is pooled across all policyholders. The other three sources leave the capital in your hands.
In what wrapper is the capital held?
The wrapper does not produce a return of its own. It determines who receives the capital on death, how the income is taxed, and what protection applies if the institution fails.
- Directly, with a bank: an account, a securities account or property held in your own name. The capital forms part of the estate and follows ordinary tax rules. This is the simplest and most transparent structure.
- In a Swiss insurance wrapper (pillar 3b): you name the beneficiaries freely, and they receive the residual value without going through the division of the estate. The contract sets the term, the payment schedule and the options. The life insurance contract is the vehicle for this wrapper.
- In an international insurance wrapper (Luxembourg, France): useful mainly in cross-border situations, for a cross-border worker holding a Permit G, a dual national, or anyone who may change country of residence. It allows the same structure to be kept across moves, with income taxed in the country of residence at the time. Luxembourg law also ranks the policyholder as a first-priority creditor over the assets should the insurer fail.
Note: an international wrapper does not replace a source of income. It holds the same funds or the same property as direct ownership, and the income comes from scheduled withdrawals on the contract.
The common combinations
The solutions offered on the Swiss market are assemblies of these two dimensions. The table below shows what each one is made of.
| Solution | Source of income | Wrapper | Capital recoverable | On death |
|---|---|---|---|---|
| Income plan | Guaranteed rate + markets | Swiss insurance, pillar 3b | Yes, at any time | Named beneficiaries |
| Funds with scheduled withdrawals | Markets | Direct or insurance | Yes, at any time | Estate or beneficiaries |
| Income-producing real estate | Rent | Direct or insurance | Yes, with notice | Estate or beneficiaries |
| Fixed-term annuity | Guaranteed rate | Insurance | Balance per the contract | Balance per the contract |
| Life annuity | Pooling | Insurance | No | Ends, unless optioned |
| Savings account | None, 0.11% | Direct | Yes, immediately | Estate |
Each of these solutions can sit inside an international wrapper where the situation is cross-border, without changing the source of the income. None is better on every criterion: a guaranteed income is obtained by giving up availability and transferability, and the reverse is equally true. The choice depends on your budget, your other income, your family situation and your tax residence.
Many retirees split their budget in two. Fixed costs such as rent, insurance and food are covered by a guaranteed source. The rest, travel, leisure, helping children, comes from a portion exposed to markets or to property. That split avoids having to choose between security and return across the whole capital.
Put figures on your own situation
The amounts on this page are generic. In a first meeting we assess your situation and see whether a pension analysis, with a projection of your income and assets, matches your objectives. In Vernier (Geneva) or by video call.
Book an appointment
Why the timing of bad years matters more than the average
On capital from which money is withdrawn every month, the order of good and bad years affects the outcome. A decline early in retirement leads to selling at the bottom, and the portion sold does not take part in the recovery that follows.
The table below compares two scenarios built from exactly the same annual returns, simply placed in the reverse order. The annualised return is identical in both cases: 3.83%.
| Scenario | After 3 years | After 10 years | After 20 years |
|---|---|---|---|
| The declines come first | CHF 335,070 | CHF 213,871 | exhausted at 82 |
| The declines come last | CHF 609,598 | CHF 640,483 | CHF 406,212 |
| The same returns, with no withdrawals | identical | identical | CHF 1,271,978 |
Illustrative example. Capital of CHF 600,000, withdrawal of CHF 3,000 per month over twenty years. The first two rows use the same annual returns, in reverse order, for an annualised return of 3.83% in both cases. The third row shows that with no withdrawals, the order has no effect. Series built for the demonstration, which do not represent expected market behaviour.
This is why an expected average return is not enough to validate a withdrawal plan. Three parameters reduce the exposure: holding a liquid reserve so you never have to sell during a downturn, being able to adjust the withdrawals, and limiting the portion exposed to markets in the first years of retirement.
How much should stay available?
A liquid reserve exists precisely so that you never sell at the wrong moment. In practice it is sized in years of day-to-day spending rather than as a percentage of the capital.
- A budget of CHF 3,000 per month: a reserve of two to three years means CHF 72,000 to CHF 108,000.
- A budget of CHF 4,000 per month: CHF 96,000 to CHF 144,000.
- A budget of CHF 5,000 per month: CHF 120,000 to CHF 180,000.
That reserve sits in something immediately available, where the near-zero return is the price of availability. The rest of the capital can then be invested over a longer horizon, without you being forced to touch it during a bad year.
How is your capital taxed?
Two separate taxes apply, at two different points.
At the time of payment, the capital is subject to a one-off tax, calculated separately from your other income and at a reduced rate. The scale, the differences between cantons and the effect of spreading withdrawals over several years are set out on our page about the tax on 2nd pillar withdrawals.
Every year afterwards, three rules apply to the invested capital.
- Wealth tax: the capital is added to your taxable wealth, which was not the case while it stayed in the pension fund.
- Income tax: interest and dividends are taxed as income in the year you receive them. Capital gains on private movable assets are in principle exempt.
- Life annuity: if the capital is converted into a private life annuity, only 40% of the annuity is taxable as income, the remaining 60% being treated as a return of capital.
This is a structural difference from the pension fund pension, taxed in full as income but with no wealth tax. Which of the two costs less depends on the canton, the level of wealth and the marginal rate.
What happens to the capital on your death?
Invested capital forms part of your estate and goes to your heirs. Most cantons, Geneva among them, in principle exempt the spouse and direct descendants; other beneficiaries are taxed according to their degree of kinship, with exceptions that make a case-by-case check worthwhile.
| Form chosen | What is transferred | To whom |
|---|---|---|
| Freely invested capital | The entire balance | To the heirs, under the estate |
| Income plan | The contract's residual value | To the named beneficiaries |
| Simple life annuity | Nothing | The annuity ends, unless a refund option applies |
| Pension fund pension | A spouse's pension | Surviving spouse, 60% of the pension |
Options for a refund of capital or a survivor's benefit reduce the life annuity amount in exchange for that protection. For a person with no spouse and no dependent children, the difference in transferability between these forms is particularly pronounced.
What to check before withdrawing your capital
These points are checked before the request is filed, since it cannot be corrected afterwards.
- Your fund's notice period: several months as a rule, up to three years for the extra-mandatory portion.
- Your buy-ins over the last three years: they block the lump-sum withdrawal.
- Your real budget as a retiree: it often differs from your current budget, in particular on housing, insurance and taxes.
- Your other income: AHV pensions, vested benefits, pillar 3a and rental income, to be added up before sizing the need covered by the capital.
- Your cantonal taxation: the tax on payment, the annual wealth tax, and the consequences of any change of residence.
- Your spouse's position: their own pension entitlements and the period to cover until their death.
A consolidated review of all three pillars is the starting point. Our page on retirement planning in Switzerland describes the approach, and the pension analysis sets out what it covers.
Frequently asked questions
What should you do with pension capital after an LPP withdrawal?
Leaving it in a savings account is the most expensive option: at an average return of 0.11%, capital of CHF 600,000 with CHF 3,000 withdrawn monthly runs out at age 81. The income can only come from four sources: a guaranteed rate, the markets, rent, or the pooling of longevity risk. The wrapper, direct or insurance, is a separate question.
How much can you withdraw each month from CHF 600,000?
Over 25 years, the monthly withdrawal is CHF 2,270 under a 1% return assumption, CHF 2,871 under 3% and CHF 3,911 under 6%. The capital is fully consumed at the end. These amounts are calculations, not forecasts.
How long does my capital need to last?
At 65, a woman lives on average another 23.2 years and a man 20.7 years. Since these are averages, half of all people live longer. For a couple, the capital must last until the death of the second spouse.
What does it cost to leave capital in a bank account?
A Swiss savings account returns an average of 0.11% per year. With inflation at 1%, capital of CHF 600,000 loses around CHF 97,000 in purchasing power over twenty years, on top of the annual wealth tax.
Why does the timing of bad years matter so much?
When you are withdrawing money, a decline early in retirement forces you to sell at the bottom, and the capital sold does not take part in the recovery. At an identical annualised return of 3.83%, capital runs out in 18 years if the declines come first, and retains CHF 406,212 if they come last.
Should you decide before or after the withdrawal?
Before. A lump-sum withdrawal is irrevocable: once the benefit has been paid, returning to a pension is no longer possible. Funds require notice several months in advance, and up to three years for the extra-mandatory portion.
Review the position before an irrevocable decision
A lump-sum withdrawal cannot be corrected. We assess your situation, your fund's deadlines and the options open to you, then provide a written offer if an analysis is warranted. In Vernier (Geneva) or by video call.
Book an appointmentSources: Federal Statistical Office, life expectancy, provisional 2025 figures; Federal Council, AHV pension adjustment of 2 October 2026; Federal Social Insurance Office, key occupational pension figures; Moneyland for the average return on Swiss savings accounts; Federal Act on Direct Federal Taxation (DBG), art. 22 and 38. Figures and calculations verified on 9 November 2026.