Help! I want to split my pillar 3a assets, the account has become too large. I don’t want to pay so much tax later on. Is there any way I can still split my pillar 3a? We hear these questions all the time. Discover three hacks to reduce the size of your 3a account.
Principle: Existing 3a pension assets cannot be divided
It is neither possible nor permissible to subsequently divide the credit balance on a 3a account into several accounts. Once a credit balance has been posted to it, it is there. When making a regular withdrawal in old age, you can only withdraw an account as a whole, undivided. If there is a lot of money in the account, this is not ideal in terms of tax progression.
What you can do at any time: transfer a 3a credit balance from one provider to another. This is called a transfer. For example, you can switch from a 3a savings account to a 3a securities solution or switch from a 3a fund to a digital 3a provider.
However, it is not possible to transfer partial amounts from one account to another. Neither with the same provider nor with another provider. But what can you do if you want to split your pillar 3a assets so that you can break the tax progression later and withdraw your accounts in stages?
We’ll show you three workarounds.
Hack 1: Reduce pillar 3a through early withdrawal for home ownership promotion
If you wish to use your pillar 3a assets to purchase or build residential property, they may only be used for the purchase, renovation or refurbishment of owner-occupied residential property. If you make an advance withdrawal of pillar 3a funds for home ownership, you can only withdraw part of your assets; there is no minimum withdrawal amount. What many people don’t know is that you can also withdraw money from pillar 3a for renovations or refurbishments, for example, and thus reduce an account that is too large.
You can find more details and the differences between the WEF advance withdrawal in pillar 3a and the WEF advance withdrawal from the occupational pension plan in this article.
Hack 2: Split pillar 3a assets by transferring them to the pension fund
The transfer from pillar 3a to the pension fund is possible if you have a purchase gap in the pension fund. In this article, we describe how you can transfer pillar 3a assets to the pension fund. You can then use your capital to convert it into a lifelong pension and increase your death and disability benefits.
Splitting your 3a account works if your 3a balance is greater than the possible purchase amount. This is because the remaining amount remains in your 3a account. However, your purchase potential in the pension fund should generally be greater than your 3a assets. As a result, this option of subsequently splitting a pillar 3a credit balance is probably only available to a small number of people.
Hack 3: Splitting pillar 3a assets in the event of divorce
Sad but true: the frequency of divorce has increased in recent years. According to the Federal Statistical Office, two out of five married couples will divorce in the future if current divorce behavior does not change.
In the event of a divorce (or dissolution of a registered partnership), the pension entitlements accumulated during the marriage are generally divided equally if you have not agreed on the separation of property. Pillar 3a assets saved during the marriage are in principle part of the property settlement in the event of divorce. This means that the 50/50 division also applies to pillar 3a assets saved during the marriage. The actual credit balance is always divided – i.e. the actual (net) credit balance minus the future tax burden. 1
In several rulings, the Federal Supreme Court has confirmed that Pillar 3a entitlements are not covered by the pension equalization of pension fund assets, but that the proposed share is a monetary claim and not an entitlement to specific assets. You can therefore transfer either free assets or tied assets.
So if you are liable to pay your ex-partner in the event of a divorce or dissolution of the registered partnership, you can then divide your overly large pillar 3a account. Please note that the exact division of the capital in the pillar 3a account must be set out in a divorce agreement. In addition, your 3a provider can only carry out the division if there is a legally binding divorce decree – a draft divorce agreement is not sufficient. Furthermore, the funds must remain in the pension cycle, which is why your 3a provider will only transfer the funds to your ex-partner to a pillar 3a institution, occupational pension scheme or vested benefits foundation, provided there is no reason for a cash payout in accordance with Art. 3 BVV3 .
Summary: Splitting pillar 3a assets
You cannot normally divide a pillar 3a credit balance. The best way to avoid this is to open several accounts in accordance with the five-account rule for pillar 3a. However, there are three detours. Firstly, you can withdraw 3a funds for home ownership or renovation/refurbishment. Secondly, you can transfer 3a assets to the pension fund. And thirdly, in the event of a divorce, you can reduce the balance in your 3a account as the partner liable for payment without closing the account completely.
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Last update: 17.09.2024 08:36
