Following the failure of the pension reforms vote on Sunday I got to considering whether to cash in my 2nd pillar or not when I retire (at 64,yay!).

The advantage of taking cash would be the freedom to manage the money, resistance to any future reduction of the conversion rate, freedom to leave the money to my heirs.


One disadvantage upon withdrawal would be 5% tax taken immediately, but how would the taxman hit me subsequently? Other disadvantages?


Thanks in advance for your opinions, in non-banker language please.

Well, if you draw a pension you will have that until you die no matter how long you live.

As a friend pointed out to me: If you die a few years after you retire the money is gone, you can not bequest it to anyone.

In a recent case, a man just before retirement age met a young woman (or more to the point he was targetted by her!) who was kind to him, and he to her. She stayed, went away, came back, told stories, painted dreams... with hindsight it turned out to be a pattern of deception aforethought, to make everything she said and did difficult to recontstruct.

She told him life would be so much better, for them together, if they were to go and live in her country of origin once he retired. He'd been lonely for far too long, and this felt like the possibility of emotional security, and a good opportunity to be able to contribute something to the world, and to stay young for some years yet before he grew old in the context of the promised family connections.

For this joint future, he cashed in his pension fund. Within a few months she had emptied his accounts and pockets, and disappeared without a trace.

He's here, having worked all his life, with no pension plan pension, and only the 1st pillar, i.e. the low AHV (state social security) old-age pension. And emotionally broken.

Foolish, yes! But a kind man who definitely meant well and who, when asked to pay for the children's school fees and the parents' operations, etc., etc., was simply too generous. This seems to be a case of the good guy, albeit very naive, who'd have been much better off had he not even had the option to cash in his pension fund.

Not only would he himself have been better off, but the Swiss coffers, too, (which means all of us). Why? Well, sooner or later, either the Sozialamt or the "top up" office to the old-age pension (Ergänzungsleistungen zur AHV) or both are probably going to have to keep his head above water.

In other words, Marsalfon, if you're a guy get a pension.
If you're female consider my post.

doropfiz: In your example the guy was the problem. Had it not been the pension it had been other things/money.
I'm not saying it's not tragic for the man but not really an argument to base a decision to the OP's question on, is it.

Thanks for your replies. My life expectancy, according to my doctor, is slightly lower than most. Cashing it in means they can do what they like to the conversion rates and I wont be affected, but I am wondering about the tax implications. Does anyone know?

Do you speak German? Here is a "Beobachter" article about this. Scroll down and they also give you examples how different the taxes are from canton to canton if you take the cash.

Many thanks for this, Curley. I realize that I’ll get taxed when I take the cash, and can deal with that, but I am wondering how much I will then be taxed annually on my new ‘fortune’. How much for each 100k?

Cash isn´t taxed high here, minimal amounts. If you leave for another country, completely different story

The rate is progressive.
In Geneva
100k = ~0.001%
200k = ~0.2%
500k = ~0.4%
1M = ~0.5%
2M = ~0.7%
5M = ~0.9%
10M = 1%
100M = 1%

Btw. Geneva is one of the canton with the highest wealth tax. In Zug and Schwyz the max rate is ~0.3%, Bern and Zurich ~0.6%.

aSwissintheUS beat me to it (how does he know OP lives in Geneva?)

By the way, if you take a pension you pay taxes too. Monthly.

PS: Hmm, I won't like that 1% when I get my 100M

ASwissInThe US, you dont by any chance have the Vaud figures, do you?Or can you let my know where to find them? Have searched without success.

Here: https://calculators.credit-suisse.co...tax.do?lang=en

Thanks so much, thats really helpful.

Crazy, with fake similar figures (100K income, married, no religion, 1 children) the tax in VD are 17k+ while in Baden only 12K. In Cham (Zug) it;s even less.
5K difference, along with higher salary, equal-if-not-cheaper rents, cheaper health insurance, etc...



The grass is greener!