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Old 11.06.2020, 12:08
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Using 2nd pillar savings as capital to become independent

Hi all,

Having run out of my chomage days, and having failed at getting my self a job that can keep my household (single dad + 2 kids) afloat, I am looking at the possibility of setting myself up as an 'independent' .

I had tranferred the savings in the Second Pillar (LPP) into a vested benefits account, hoping that I will have a job and these will be transferred to the new new employer. However, since that does not seem to be happening, I ws hoping to utilise these funds as capital for my new independent activity. I came across this link which says :

"You can withdraw your vested benefits if you are no longer subject to compulsory occupational benefit plans and take up self-employment in Switzerland, provided you can furnish proof that you are self-employed."

Also read somewhere else that this withdrawal is subject to tax, but cant find details on how much..

Any other EF members who have done this before? Would appreciate if you can share your experience.

Thanks all.

Last edited by sva; 11.06.2020 at 12:10. Reason: format
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Old 11.06.2020, 13:33
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Re: Using 2nd pillar savings as capital to become independent

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Hi all,

Having run out of my chomage days, and having failed at getting my self a job that can keep my household (single dad + 2 kids) afloat, I am looking at the possibility of setting myself up as an 'independent' .

I had tranferred the savings in the Second Pillar (LPP) into a vested benefits account, hoping that I will have a job and these will be transferred to the new new employer. However, since that does not seem to be happening, I ws hoping to utilise these funds as capital for my new independent activity. I came across this link which says :

"You can withdraw your vested benefits if you are no longer subject to compulsory occupational benefit plans and take up self-employment in Switzerland, provided you can furnish proof that you are self-employed."

Also read somewhere else that this withdrawal is subject to tax, but cant find details on how much..

Any other EF members who have done this before? Would appreciate if you can share your experience.

Thanks all.
The most important point to remember is it has to be done within the first 12 months of the business.
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Old 11.06.2020, 15:23
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Re: Using 2nd pillar savings as capital to become independent

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The most important point to remember is it has to be done within the first 12 months of the business.
Thanks FMF. Any other tips appreciated.

BTW i read that you have to have had your business operational for 12 months before you can ask for a payout...
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Old 11.06.2020, 15:43
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Re: Using 2nd pillar savings as capital to become independent

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Thanks FMF. Any other tips appreciated.

BTW i read that you have to have had your business operational for 12 months before you can ask for a payout...
I believe that is incorrect, a member got turned down as they were in the 15th month when applying.
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Old 11.06.2020, 17:57
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Re: Using 2nd pillar savings as capital to become independent

Having watched a close friend, sequence is something like this (it is not definitive and someone else may have 1st hand experience):

1. Establish your Einzelfirma or partnership. Helps to have credibility on this setup (company register entry, office rental, business card, website, clients, invoices etc etc. take your pick from the list, there is no set in stone rule).

2. Approach AHV office of your Kanton, apply to be recognised as Self-Employed.

3. AHV office will make an assesment taking point 1 into account. They may ask more questions. If they accept your request, they send a letter confirming you as Self Employed.

4. Approach yoour Vested Benefit foundation. They will have a form for payout on Self Employment with their requirements. The letter from point 3 is main requirement.

5. This apporach in point 4 has to be done within 1 year (of point 1 or point 3, I am not certain).

6. If the Vested Benefit foundation accepts your payout request, they will payout the cash to you (if you are still in CH, then Gross, otherwise after deducting witholding tax).

7. Vested Benefit foundation will also inform the Tax Office that SVA cashed out his pension.

8. Nice Taxman will send a demand for tax few months later. The tax rate is preferential rate for pension withdrawal (I think somewhere around 8% IIRC). You would have to pay that anyway even if you waited till 65 years.

9. In your next tax return you will have to declare that you cashed pension in a special section and Taxman will reconcile with your wealth.

10. Make your business thrive with this capital. Although I don't think they can really control too closely if you really invested all of it in your business.


Good luck

Last edited by DUTCH; 11.06.2020 at 20:23. Reason: removed AG and Gmbh from Point 1
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Old 11.06.2020, 19:14
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Re: Using 2nd pillar savings as capital to become independent

If you set up a GmbH or AG you will not be recognised as self-employed. Because you will not be. You can be an employee of your company. You may even be obliged to set up a 2nd pillar pension, depending how many hours you work for the company.

https://www.ubs.com/ch/en/help/pensi...t-account.html

If you become self-employed within a year and this is your main job, you can request that your pension assets be paid out. You must be self-employed in Switzerland and your business must either be a sole proprietorship or a partnership.
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Old 11.06.2020, 21:01
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Re: Using 2nd pillar savings as capital to become independent

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If you set up a GmbH or AG you will not be recognised as self-employed. Because you will not be. You can be an employee of your company. You may even be obliged to set up a 2nd pillar pension, depending how many hours you work for the company.

https://www.ubs.com/ch/en/help/pensi...t-account.html

If you become self-employed within a year and this is your main job, you can request that your pension assets be paid out. You must be self-employed in Switzerland and your business must either be a sole proprietorship or a partnership.
You can start as a self employed and then incorporate later.
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Old 12.06.2020, 10:15
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Re: Using 2nd pillar savings as capital to become independent

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Having watched a close friend, sequence is something like this (it is not definitive and someone else may have 1st hand experience):

1. Establish your Einzelfirma or partnership. Helps to have credibility on this setup (company register entry, office rental, business card, website, clients, invoices etc etc. take your pick from the list, there is no set in stone rule).

2. Approach AHV office of your Kanton, apply to be recognised as Self-Employed.

3. AHV office will make an assesment taking point 1 into account. They may ask more questions. If they accept your request, they send a letter confirming you as Self Employed.

4. Approach yoour Vested Benefit foundation. They will have a form for payout on Self Employment with their requirements. The letter from point 3 is main requirement.

5. This apporach in point 4 has to be done within 1 year (of point 1 or point 3, I am not certain).

6. If the Vested Benefit foundation accepts your payout request, they will payout the cash to you (if you are still in CH, then Gross, otherwise after deducting witholding tax).

7. Vested Benefit foundation will also inform the Tax Office that SVA cashed out his pension.

8. Nice Taxman will send a demand for tax few months later. The tax rate is preferential rate for pension withdrawal (I think somewhere around 8% IIRC). You would have to pay that anyway even if you waited till 65 years.

9. In your next tax return you will have to declare that you cashed pension in a special section and Taxman will reconcile with your wealth.

10. Make your business thrive with this capital. Although I don't think they can really control too closely if you really invested all of it in your business.


Good luck
Thanks DUTCH for the detailed reply. Would you happen to have a link / copy of the form you mention in point 4?
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Old 12.06.2020, 10:38
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Re: Using 2nd pillar savings as capital to become independent

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If you set up a GmbH or AG you will not be recognised as self-employed. Because you will not be. You can be an employee of your company. You may even be obliged to set up a 2nd pillar pension, depending how many hours you work for the company.

https://www.ubs.com/ch/en/help/pensi...t-account.html

If you become self-employed within a year and this is your main job, you can request that your pension assets be paid out. You must be self-employed in Switzerland and your business must either be a sole proprietorship or a partnership.
I understand. With any other form except sole proprietor i will be paying all social contibutions (AVS/AI/APG/AC/LAA/LPP) at full rate including second pillar, and the difference between the two is quite large. F.ex. for a salary of 3500/month from this activity, i would pay 10.88% as propreitor, but 24.2% as SA/GmbH. The big difference is ofcourse the LPP (second pillar) which works out at n early 7% of salary.
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Old 12.06.2020, 10:51
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Re: Using 2nd pillar savings as capital to become independent

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The most important point to remember is it has to be done within the first 12 months of the business.
I fanally go a copy of the form fcrom my LPP institurion, and the phrase is:

un versement n'est possible que durant l'année suivant le début de l’activité lucrative

So, yes. it is WITHIN the first year. Thanks again FMF.
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Old 12.06.2020, 23:09
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Re: Using 2nd pillar savings as capital to become independent

Perhaps talk to the chomage people. It's probably too late as you've already run out of chomage days, but I seem to remember that they support becoming self-employed (with up to 50k?) and asking never hurts.
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Old 13.06.2020, 07:35
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Re: Using 2nd pillar savings as capital to become independent

I found a contract for 3 months and need to register as self employed, have just started the process, sent you a PM.

On chômage, will be claiming gain intermédiaire, if I can/don't get shafted by a broken unemployment system...
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Old 13.06.2020, 11:21
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Re: Using 2nd pillar savings as capital to become independent

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Perhaps talk to the chomage people. It's probably too late as you've already run out of chomage days, but I seem to remember that they support becoming self-employed (with up to 50k?) and asking never hurts.
My days ran out on 15th Feb, and the extension is for those who had days on 1st March. Consellor refused to entertain any requests. So.... tough luck.
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Old 13.06.2020, 15:41
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Re: Using 2nd pillar savings as capital to become independent

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I found a contract for 3 months and need to register as self employed, have just started the process, sent you a PM.

On chômage, will be claiming gain intermédiaire, if I can/don't get shafted by a broken unemployment system...
You may wanto to make sure you don't lose your entitlement by registering as self employed. Personally, I'd want that in writing in the form of a "Verfügung", or shown the legal basis explicitly saying so, because I'm pretty sure self-employed people can't be insured by RAV/chomage.
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Old 13.06.2020, 15:42
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Re: Using 2nd pillar savings as capital to become independent

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You may wanto to make sure you don't lose your entitlement by registering as self employed. Personally, I'd want that in writing in the form of a "Verfügung", because I'm pretty sure self-employed people can't be insured by RAV/chomage.
That is correct, however the rahemnfrist can be doubled, although that won't help the OP
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Old 13.06.2020, 18:05
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Re: Using 2nd pillar savings as capital to become independent

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That is correct, however the rahemnfrist can be doubled, although that won't help the OP
In my case the 'temporary gain' (CHF amount) was divided by my RAV/ORP daily wage and the result was the number of days added to my 400 days.
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Old 13.06.2020, 20:15
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Re: Using 2nd pillar savings as capital to become independent

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In my case the 'temporary gain' (CHF amount) was divided by my RAV/ORP daily wage and the result was the number of days added to my 400 days.
Yes, it's nothing to do with days, but money paid out. I could work 5-6 days in a month & because there was no claim that month due to earnings above 70% the system decided I worked for 21.6 days that month, this enabled me to get multiple rahemnfrists in a row as I never used half of the money I was entitled to.
 

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