Go Back   English Forum Switzerland > Help & tips > Finance/banking/taxation
Reply
 
Thread Tools Display Modes
  #1  
Old 17.11.2015, 14:25
newtoswitz's Avatar
Forum Veteran
 
Join Date: Jan 2010
Location: Rapperswil
Posts: 1,158
Groaned at 15 Times in 13 Posts
Thanked 1,310 Times in 596 Posts
newtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond repute
Pillar 2 top-ups - deadline etc

Can anyone suggest problems with this theory / plan, from a tax and practicality viewpoint.

Background

* Pillar 2 returns suck

* ... but Pillar 2 (top-ups) get a nice tax benefit

* I want to invest in "Pillar 3b" funds of my choice, but get the tax benefit

So

* I invest in my choices now

* In the years before retirement, I cash in those funds and put them into the Pillar 2, thus saving the tax

I'm not interested in the risk / investment strategy side of things, that's a separate topic. I also know that doing it this way means the tax gain doesn't get the benefit of growth, but since the growth sucks that's not much of a worry.

Thanks in advance for any feedback.

Edit: one obvious issue - if I get good growth I may not have enough income to write off against the transfers into P2, but honestly if I have that problem I would (a) be happy (b) just start earlier

Last edited by newtoswitz; 17.11.2015 at 14:35.
Reply With Quote
  #2  
Old 26.11.2015, 18:11
newtoswitz's Avatar
Forum Veteran
 
Join Date: Jan 2010
Location: Rapperswil
Posts: 1,158
Groaned at 15 Times in 13 Posts
Thanked 1,310 Times in 596 Posts
newtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond repute
Re: Pillar 2 top-ups - deadline etc

Anybody have an opinion on this?

Another thought is by doing this I can also lock-in some of my investment value before I make a commitment to retire, avoiding the risk of a last minute crash at the cost of some growth.
Reply With Quote
  #3  
Old 26.11.2015, 19:31
Forum Veteran
 
Join Date: Nov 2010
Location: Zug
Posts: 656
Groaned at 24 Times in 20 Posts
Thanked 749 Times in 339 Posts
xkcd has a reputation beyond reputexkcd has a reputation beyond reputexkcd has a reputation beyond reputexkcd has a reputation beyond repute
Re: Pillar 2 top-ups - deadline etc

The tax authorities can decline to grant the tax benefit for investing in the second pillar in case you are withdrawing pillar 3 assets close to that date.
You may want to obtain a clear statement from your tax authority prior to pursuing this idea.
Looks like other people identified this tax optimization strategy in the past.
Reply With Quote
  #4  
Old 26.11.2015, 19:47
MrVertigo's Avatar
Forum Legend
 
Join Date: Feb 2010
Location: CH
Posts: 3,068
Groaned at 77 Times in 65 Posts
Thanked 5,294 Times in 2,060 Posts
MrVertigo has a reputation beyond reputeMrVertigo has a reputation beyond reputeMrVertigo has a reputation beyond reputeMrVertigo has a reputation beyond reputeMrVertigo has a reputation beyond reputeMrVertigo has a reputation beyond repute
Re: Pillar 2 top-ups - deadline etc

There are discussions to ban the possibility to withdraw the 2nd pillar in cash in the future and allowing only annuity payments. You have to take into account this scenario.
Reply With Quote
This user would like to thank MrVertigo for this useful post:
  #5  
Old 26.11.2015, 20:25
HIAO's Avatar
Forum Veteran
 
Join Date: Jun 2011
Location: Bellevue
Posts: 678
Groaned at 1 Time in 1 Post
Thanked 1,590 Times in 431 Posts
HIAO has a reputation beyond reputeHIAO has a reputation beyond reputeHIAO has a reputation beyond reputeHIAO has a reputation beyond reputeHIAO has a reputation beyond repute
Re: Pillar 2 top-ups - deadline etc

Quote:
View Post
There are discussions to ban the possibility to withdraw the 2nd pillar in cash in the future and allowing only annuity payments. You have to take into account this scenario.
Second pillar pension cash withdrawls to be banned
Reply With Quote
  #6  
Old 26.11.2015, 22:30
Forum Veteran
 
Join Date: Nov 2010
Location: Zug
Posts: 656
Groaned at 24 Times in 20 Posts
Thanked 749 Times in 339 Posts
xkcd has a reputation beyond reputexkcd has a reputation beyond reputexkcd has a reputation beyond reputexkcd has a reputation beyond repute
Re: Pillar 2 top-ups - deadline etc

Quote:
View Post
There are discussions to ban the possibility to withdraw the 2nd pillar in cash in the future and allowing only annuity payments. You have to take into account this scenario.
Funny. My pillar 2 makes it mandatory to withdraw in cash anything which exceeds a certain multiple of the maximum pillar 1 payments. This helps to reduce the longevity risk.
Reply With Quote
  #7  
Old 27.11.2015, 10:44
newtoswitz's Avatar
Forum Veteran
 
Join Date: Jan 2010
Location: Rapperswil
Posts: 1,158
Groaned at 15 Times in 13 Posts
Thanked 1,310 Times in 596 Posts
newtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond repute
Re: Pillar 2 top-ups - deadline etc

Quote:
View Post
The tax authorities can decline to grant the tax benefit for investing in the second pillar in case you are withdrawing pillar 3 assets close to that date.
You may want to obtain a clear statement from your tax authority prior to pursuing this idea.
Looks like other people identified this tax optimization strategy in the past.
Thanks. I'm not sure it would be "withdrawing" pillar 3 as such - "pillar 3b" is just a marketing name, it isn't actually defined as a pension. It makes sense for 3a, they don't want to give you the same tax relief twice.

Quote:
View Post
There are discussions to ban the possibility to withdraw the 2nd pillar in cash in the future and allowing only annuity payments. You have to take into account this scenario.
Ouch, that would probably not suit me. Actually all the more reason to leave it to the last few years before putting in any lump sums, when the chance of them moving the goalposts is less.
Reply With Quote
  #8  
Old 27.11.2015, 10:54
baboon's Avatar
Forum Veteran
 
Join Date: Apr 2007
Location: Rheintal
Posts: 2,468
Groaned at 73 Times in 64 Posts
Thanked 2,942 Times in 1,468 Posts
baboon has a reputation beyond reputebaboon has a reputation beyond reputebaboon has a reputation beyond reputebaboon has a reputation beyond reputebaboon has a reputation beyond repute
Re: Pillar 2 top-ups - deadline etc

Quote:
View Post
* In the years before retirement, I cash in those funds and put them into the Pillar 2, thus saving the tax
...needs to be in the Pillar 2 at least 3 years before you retire or you loose the tax benefit.


Also bear in mind you will want to pay in to the pillar 2 over a number of years to maximise the tax benefit. The tax deduction is strictly against that years' income.
Reply With Quote
This user would like to thank baboon for this useful post:
  #9  
Old 27.11.2015, 10:55
newtoswitz's Avatar
Forum Veteran
 
Join Date: Jan 2010
Location: Rapperswil
Posts: 1,158
Groaned at 15 Times in 13 Posts
Thanked 1,310 Times in 596 Posts
newtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond repute
Re: Pillar 2 top-ups - deadline etc

Quote:
View Post
...needs to be in the Pillar 2 at least 3 years before you retire or you loose the tax benefit.


Also bear in mind you will want to pay in to the pillar 2 over a number of years to maximise the tax benefit. The tax deduction is strictly against that years' income.
Thanks - the rules will probably change by the time I get there, but these basic limitations are what I'm trying to capture.
Reply With Quote
Reply




Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
3rd pillar pension top up while under WHT Denman Finance/banking/taxation 3 16.02.2014 19:37
Your opinion on SWICA's "top-ups" ontheroad Insurance 19 03.02.2014 20:09
Deducting transportations and stuff. 120k limit ? 3rd pillar deadline ? varioplus Finance/banking/taxation 8 14.03.2013 14:11
Pay into 2nd pillar whilst drawing on 3rd pillar jaudi Finance/banking/taxation 19 12.07.2011 10:05


All times are GMT +2. The time now is 10:06.


Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2016, Jelsoft Enterprises Ltd.
LinkBacks Enabled by vBSEO 3.1.0