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Old 02.09.2020, 16:05
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Using pension to buy primary residence

Hi everyone,

I left Switzerland in 2018 after working for 8 years in Zurich. When I left I was told by my pension company (VSAO) to transfer it to a Freizügigkeitskonto. I still receive annual statements from them with the amount available for property purchase etc.

As mentioned I returned to the UK in 2018 for work (I am a UK citizen) and essentially I had three questions - I have searched on here but the results are quite confusing and sometimes contradictory.

1) Is it possible to use this money to put towards a deposit on a primary residence in the UK?
2) If it is possible, will this be affected by the end of the transition period on 31 Jan 2021?
3) After the UK becomes a non-EEA state, will it just be possible to get the money out as cash anyway?

Many thanks in advance!
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Old 02.09.2020, 16:15
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Re: Using pension to buy primary residence

1) Yes.
2) No.
3) Theoretically yes, unless UK and Switzerland come up with an agreement.

Note: You can already get the non-mandatory part unconditionally.
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Old 02.09.2020, 17:05
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Re: Using pension to buy primary residence

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3) After the UK becomes a non-EEA state, will it just be possible to get the money out as cash anyway?

Many thanks in advance!
It currently could be, it just depends on your employment status & any requirement for a pension.
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Old 27.09.2020, 11:22
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Re: Using pension to buy primary residence

I would also like to understand this better

What happens to pillar 2 pension in Jan 2021 - I d prefer my pillar 2 to be given in cash to me so that I can pay down the mortgage without early repayment charges and also control fx charges

In the worst case if they want to pay the mortgage directly that is not terrible.

What is the current position to taking the money in Jan 2021 if you have deregistered?
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Old 27.09.2020, 11:58
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Re: Using pension to buy primary residence

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I would also like to understand this better

What happens to pillar 2 pension in Jan 2021 - I d prefer my pillar 2 to be given in cash to me so that I can pay down the mortgage without early repayment charges and also control fx charges

In the worst case if they want to pay the mortgage directly that is not terrible.

What is the current position to taking the money in Jan 2021 if you have deregistered?
The current situation is as follows, I suspect it will be the same next year.

It depends on your status in your new country of residence. If you live in the UK after 6 months it can be paid as cash, assuming you are not subject to compulsory insurance. Since the workplace pension that would mean you need to be not working at that time. HMRC will be contacted to determine if you are subject to compulsory insurance or mot.

There is also the possibility to use pension funds to buy a primary residence or redeem the mortgage, however if the property is sold the pension money needs to be repaid.
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Old 27.09.2020, 12:58
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Re: Using pension to buy primary residence

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The current situation is as follows, I suspect it will be the same next year.

It depends on your status in your new country of residence. If you live in the UK after 6 months it can be paid as cash, assuming you are not subject to compulsory insurance. Since the workplace pension that would mean you need to be not working at that time. HMRC will be contacted to determine if you are subject to compulsory insurance or mot.
.
And after Brexit?

Once the transition period is over and the UK no longer has any ties to EU law, won’t an individual moving from CH to the UK have the right to take out the entirety of their 2 pillar / LPP, as they would if they were moving, for instance, to the States or Australia?
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Old 27.09.2020, 13:01
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Re: Using pension to buy primary residence

This is exactly what I was trying to understand.
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Old 27.09.2020, 13:04
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Re: Using pension to buy primary residence

Bis repetita.. @FMF wouldn’t what you’re saying only apply to the mandatory part of the 2 pillar?
(should there be a continuation of law as it is today)
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Old 28.09.2020, 14:37
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Re: Using pension to buy primary residence

Three possibilities regarding UK and pillar 2:

1) Similar social security agreement as with EU and EFTA:
- Non-mandatory part can be get w/o restrictions or conditions (save applicable tax)
- Mandatory part can be used to finance primary residence.
- Mandatory part can be get in case one is not subject to mandatory social security contributions.

2) Same rules as for all other contries.
- Non-mandatory and mandatory can be get w/o restrictions (save applicable tax)
- Condition: You must get all or nothing.

3) Something else, special for UK.

Last edited by aSwissInTheUS; 28.09.2020 at 15:10.
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Old 28.09.2020, 14:46
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Re: Using pension to buy primary residence

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Bis repetita.. @FMF wouldn’t what you’re saying only apply to the mandatory part of the 2 pillar?
(should there be a continuation of law as it is today)
Yes, non mandatory can be withdrawn when leaving CH although tax consequences in you new residence need to be understood.
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Old 03.10.2020, 12:42
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Re: Using pension to buy primary residence

Non mandatory meaning the pillar 2 per yes? No mention of pillar 1

What Uk tax consequence would there be
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Old 03.10.2020, 17:32
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Re: Using pension to buy primary residence

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Non mandatory meaning the pillar 2 per yes? No mention of pillar 1
Mandatory part and non-mandatory part are "pots" of pillar 2. The mandatory par is the legal required minimum. It covers the income part from ~21k up to ~85k. Non-mandatory is anything beyond this bare legal minimum.
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Old 08.06.2021, 14:01
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Re: Using pension to buy primary residence

I've been reading threads on primary residency, and have a related question.

We want to change our primary residence to a new place in Andermatt, while maintaining a second home (our current primary residence) near Rapperswil.

My pension fund confirms I can use funds towards the purchase of a primary residence, as long as bank/notary confirm it is a primary residence, copy of the contract, and the standard witnessed signatures.

My question is, aside from declaring it as such (above), what are the actual tests and who checks to ensure you meet the conditions for a primary residence?

I imagine the following are required:
- registration with new local Gemeinde
- de-registration with previous Gemeinde
- change of address with any employer, pension

Any further insights would be most welcome. Thank you!
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