Pillar 3a partial withdrawal possible?

Last update: 23.09.2024 16:16

A pillar 3a partial withdrawal could revolutionize retirement provision for many people. Imagine being able to withdraw your pension assets flexibly and in stages, instead of just the whole 3a or vested benefits accounts at once. This possibility is currently being discussed in Swiss politics and could soon become a reality. Find out what is being discussed and what the advantages are for you.

If you are thinking about your pillar 3a, you may be wondering whether you can withdraw part of it. The legal situation here is clear: it is not possible to withdraw part of your pillar 3a assets. You can only withdraw your Pillar 3a account or custody account in full. It is also not possible to divide up pension assets at a later date.

You can withdraw your pillar 3a assets early and in full if one of these exceptional cases applies:

• Five years before the reference age at the earliest
• When taking up self-employment
• If you are moving abroad permanently from Switzerland
• For the purchase or amortization of owner-occupied residential property
• When drawing a full disability pension
  

An example: Max is 58 years old and lives in Zurich. He would like to withdraw part of his pillar 3a assets to go on a trip around the world. The legal situation does not allow this today. Max has to wait until he is 65 years old(reference age for men) to withdraw his pillar 3a assets.

Taxes are due on every withdrawal from pillar 3a. The pension fund reports the payment directly to the tax authorities.

Partial Pillar 3a withdrawals are not possible today because the ordinances on occupational benefits insurance (BVV) do not permit this. Pillar 3a is intended to secure retirement provision and can therefore only be withdrawn in full under strict conditions.

Full withdrawal of pillar 3a assets is therefore only permitted in the exceptional cases already mentioned. This rule is intended to ensure that the capital saved is actually used for retirement provision and not for short-term needs.

Many feel that the strict rules on Pillar 3a withdrawals are inflexible and no longer up to date. The Silberschmidt motion was therefore launched in order to amend the current provisions.

The Silberschmidt motion “24.3067 Enable partial withdrawal of pension assets” aims to introduce a partial withdrawal of pillar 3a assets.

Many people today want and plan to retire in stages. They no longer stop working from one day to the next, but reduce their workload year on year by around 20 %. This reduces their income. The motion therefore provides for you to be able to withdraw a pillar 3a account or credit balance in tranches in future, instead of only withdrawing it as a whole as before. This would allow you to offset your loss of income with savings from pillar 3a. Specifically, the motion proposes this:

• Allow partial withdrawal for funds from Pillar 3 and from vested benefits
• regulate the maximum number of withdrawals,
• minimum amount per withdrawal,
• Allow for a reference even when going independent.

A pillar 3a partial withdrawal would offer you more flexibility in structuring your retirement provision. You could reduce your tax burden on withdrawals and better adapt your assets to your individual needs in retirement.
Silberschmidt (FDP) emphasizes: “A staggered withdrawal of pillar 3a assets would give insured persons more flexibility and options for structuring their retirement provision.”

A pillar 3a partial withdrawal in tranches would offer you a number of advantages. One of the most important aspects is the possibility of tax optimization. By dividing the withdrawal into several tranches, you could spread your tax burden more evenly. As the payouts from pillar 3a are taxed as income, you could fall into lower tax brackets through staggered withdrawals and therefore pay less tax overall. This is probably one of the main reasons why the motion is being opposed by the political left.

Another significant advantage is the increased flexibility. A 3a withdrawal in tranches gives you more control over your money. You can better adapt your assets to your needs and circumstances. For example, you could use part of your assets for larger purchases or travel, while the rest remains available for retirement provision.

The non-partisan Silberschmidt motion “Enable partial withdrawal of pension assets” was submitted on February 29, 2024. It calls on the Federal Council to create the basis for more flexible Pillar 3a withdrawals. The Federal Council commented on the motion on May 8, 2024. It states that it considers a partial withdrawal option from pillar 3a and the vested benefits institution to be sensible from a pension law perspective, especially for the self-employed. However, he sees negative tax consequences. In order to limit these, the framework and conditions under which such partial withdrawals can be made must be clearly defined. Nevertheless, he recommends that the motion be adopted.

The further course depends on the deliberations in Parliament. Although the motion was opposed in the National Council in June 2024, it was adopted on September 12, 2024 by 130 votes to 59 with one abstention. The matter now goes to the Council of States. We are therefore waiting to see what happens next in Bern.

Even if you can’t split your pillar 3a today: There are three hacks to make it work. We have described them in another article:

• Hack 1: Reduce pillar 3a through early withdrawal for home ownership promotion
• Hack 2: Split pillar 3a assets by transferring them to the pension fund
• Hack 3: Splitting pillar 3a assets in the event of divorce

In a roundabout way, you can later achieve a division of a pillar 3a account.

A partial withdrawal of pillar 3a is not possible under current Swiss law. You can only withdraw your pillar 3a assets in full, and usually only when you reach retirement age. There are only exceptions for special cases. The Silberschmidt motion would like to change this and proposes the possibility of withdrawing in tranches for pillar 3a as well as for vested benefits.

The political debate on this proposal is ongoing. Supporters see it as a contemporary adaptation of retirement provision to modern living and working models. It remains to be seen how the deliberations in parliament will proceed and whether the law will actually be amended.

For you, this means that a pillar 3a partial withdrawal is an interesting prospect for the future, but is currently not possible. It is worth keeping an eye on political developments on this issue. Until then, the existing rules for withdrawing your pillar 3a assets apply.

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