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Old 05.06.2021, 14:48
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Pillar 2 pension tax

Hi, first a little about my situation;
- I Worked in canton of Zug from 2013 to 2016 and left Switzerland in October 2016 after working for 38 months.
- My employer paid 17.5% of my salary into a pillar 2 (?) pension fund.
Iím now retired in the uk and have not worked since 2017.

On return from Switzerland I was allowed to take I think it was 40% out of the pillar 2 fund and I invested it in the uk (purchased shares etc).
Between then and now I have had cancer , moved house , had Chemo and stem cell treatment and watched my brain go to jelly, however I can still do the maths questions on countdown 😂

I donít remember paying tax on the portion of pillar 2 pension I withdrew in 2017.
Last week I wrote (pension people in Switzerland donít accept emails &#128563 and informed of change of address 4 years ago and asked what process was to withdraw remaining funds now the uk was no longer in the EU.
In the returned paper work they mention if I withdraw now they will withhold tax.

1 - Any guesses on what the tax rate would be (Zug)?
2 - Letter mentions me hitting 60 and taking money out. Is the withdrawal then tax free?
Iím 18 months away from 60 and if thatís the case I will leave the money where it is.
Iím only looking at taking the funds to tidy things up in case Iím not about in 18 months , but if it means tax then I will wait or let wife deal with it in the future.

Thanks
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Old 05.06.2021, 15:22
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Re: Pillar 2 pension tax

PS Pension fund will not accept emails and with phone calls at £1.20 a minute inc vat , writing to them is only way and that has a 3 week turnaround Ögroan Ö
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Old 05.06.2021, 15:45
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Re: Pillar 2 pension tax

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Hi, first a little about my situation;
- I Worked in canton of Zug from 2013 to 2016 and left Switzerland in October 2016 after working for 38 months.
- My employer paid 17.5% of my salary into a pillar 2 (?) pension fund.
I’m now retired in the uk and have not worked since 2017.

On return from Switzerland I was allowed to take I think it was 40% out of the pillar 2 fund and I invested it in the uk (purchased shares etc).
Between then and now I have had cancer , moved house , had Chemo and stem cell treatment and watched my brain go to jelly, however I can still do the maths questions on countdown ��

I don’t remember paying tax on the portion of pillar 2 pension I withdrew in 2017.
Last week I wrote (pension people in Switzerland don’t accept emails ��) and informed of change of address 4 years ago and asked what process was to withdraw remaining funds now the uk was no longer in the EU.
In the returned paper work they mention if I withdraw now they will withhold tax.

1 - Any guesses on what the tax rate would be (Zug)?
2 - Letter mentions me hitting 60 and taking money out. Is the withdrawal then tax free?
I’m 18 months away from 60 and if that’s the case I will leave the money where it is.
I’m only looking at taking the funds to tidy things up in case I’m not about in 18 months , but if it means tax then I will wait or let wife deal with it in the future.

Thanks
I didn't even know it's possible to withdraw only a chunk of the pillar II. That's something new to me.
And how come you didn't pay any taxes?
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Old 05.06.2021, 16:00
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Re: Pillar 2 pension tax

From what I remember the pillar 2 was investment was in 2 chunks.
One lump I could withdraw when I left Switzerland in 2016 (well I took it out in January 2017 prior to closing UBS bank account having settled any Swiss tax due on salary ) and the other section I was told was locked until I reached age of 60. This was due to a law passed in 2007 saying anyone moving to a Eu country blah blah.
I can’t remember if I paid tax on the lump I was allowed to withdraw.

However letter I got today said I’m allowed to now withdraw second lump if I want (no longer locked) but they will withhold tax on it.
I happy with this , but if I wait until I’m 60 will this be tax free?
Ie wait 18 months to reach 60 …in which case I would wait.
If I make it to 60 that is.
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Old 05.06.2021, 16:04
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Re: Pillar 2 pension tax

No it will not be tax free with 60.
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Old 05.06.2021, 16:08
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Re: Pillar 2 pension tax

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From what I remember the pillar 2 was investment was in 2 chunks.
One lump I could withdraw when I left Switzerland in 2016 (well I took it out in January 2017 prior to closing UBS bank account having settled any Swiss tax due on salary ) and the other section I was told was locked until I reached age of 60. This was due to a law passed in 2007 saying anyone moving to a Eu country blah blah.
I can’t remember if I paid tax on the lump I was allowed to withdraw.

However letter I got today said I’m allowed to now withdraw second lump if I want (no longer locked) but they will withhold tax on it.
I happy with this , but if I wait until I’m 60 will this be tax free?
Ie wait 18 months to reach 60 …in which case I would wait.
If I make it to 60 that is.
Oh dear, let's hope you'll enjoy all of it. Stay strong.
I don't know anything about being tax exempt on pillar II after reaching 60. Honestly, never heard of it.
I guess it depends on what you want to do with the other lump of the pillar, maybe it's a better deal for your wife not to withdraw it, just in case.

Edit: @roegner, thank you, I thought so. I mean, there are cantonal differences but still...
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Old 05.06.2021, 16:37
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Re: Pillar 2 pension tax

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No it will not be tax free with 60.
On the other hand it's a presumably small amount given the short period here and it's presumably in Zug - the rate will be peanuts.
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Old 05.06.2021, 16:42
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I was on a good salary and remaining lump is worth 40,000CHF approx.
So if tax was say 20% that would be 8,000CHF in tax.

As a previous reply has said Ďitís tax free at 60í , then I will wait 18 months until then and save 8,000 CHF in potential tax (if thatís the rate).

I donít need the money , was just tidying up loose ends.

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Oh dear, let's hope you'll enjoy all of it. Stay strong.
I don't know anything about being tax exempt on pillar II after reaching 60. Honestly, never heard of it.
I guess it depends on what you want to do with the other lump of the pillar, maybe it's a better deal for your wife not to withdraw it, just in case.

Edit: @roegner, thank you, I thought so. I mean, there are cantonal differences but still...
Thanks.
As it appears it will be tax free in 18 months , I will wait until then.
We donít need the money and can wait. I was just looking at tidying up looses ends and this was one of them.
Amount is 40,000 CHF so tax at even 20% would be 8,000 CHF (if thatís the tax rate). So May as well wait

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No it will not be tax free with 60.
Excellent - In that case we will wait 18 months until Iím 60 and avoid paying the potential 8,000CHF in tax (if rate is 20% say) taking the money now.
Just wanted to tidy up loose ends, we can wait if it saves on tax.

Thanks for reply.

Last edited by roegner; 05.06.2021 at 17:09. Reason: Merging consecutive posts
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Old 05.06.2021, 16:54
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Re: Pillar 2 pension tax

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Excellent - In that case we will wait 18 months until I’m 60 and avoid paying the potential 8,000CHF in tax (if rate is 20% say) taking the money now.
Just wanted to tidy up loose ends, we can wait if it saves on tax.

Thanks for reply.
I don't think it'll be anything like 20%, more like 5.

Edit: not even that - c. 1.8%

See https://finpension.ch/en/capital-wit...-tax-compared/
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Old 05.06.2021, 17:08
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Re: Pillar 2 pension tax

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Excellent - In that case we will wait 18 months until Iím 60 and avoid paying the potential 8,000CHF in tax (if rate is 20% say) taking the money now.
Just wanted to tidy up loose ends, we can wait if it saves on tax.

Thanks for reply.
No it is NOT tax free when you are over 60 but the tax rate is low.
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Old 05.06.2021, 18:00
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Re: Pillar 2 pension tax

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No it is NOT tax free when you are over 60 but the tax rate is low.
I miss read your reply as Ďtax freeí Öwishful thinking on my behalf.

Thanks for the reply.

Tax rate will be 1.8% for Zug (where I worked and lived) that seems reasonable.
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Old 05.06.2021, 18:06
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Re: Pillar 2 pension tax

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I miss read your reply as ‘tax free’ …wishful thinking on my behalf.

Thanks for the reply.

Tax rate will be 1.8% for Zug (where I worked and lived) that seems reasonable.
And you don't need to wait until 60 as you've left the EU. Im pretty sure that c. 1.8% isn't age dependent.
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Old 05.06.2021, 18:36
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Re: Pillar 2 pension tax

any pay-up to 2a that is withdrawn or used within 24months be subjected to revision of your tax statement for last 2 years and would be added back retrospectively.

you need to wait 2+ years to do anything with the money you pay up to 2a - or it's assumed to be exactly that - tax evasion.
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Old 05.06.2021, 18:44
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Re: Pillar 2 pension tax

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any pay-up to 2a that is withdrawn or used within 24months be subjected to revision of your tax statement for last 2 years and would be added back retrospectively.

you need to wait 2+ years to do anything with the money you pay up to 2a - or it's assumed to be exactly that - tax evasion.
Last payment (company paid in 17.5%) was in September 2016.
Since then I have been in uk post deregistering with Canton and handing back permit B.
So I should be ok
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Old 05.06.2021, 18:49
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Re: Pillar 2 pension tax

company paid doesn't count the same way - so you are good from that side.
it's only when you pay from your salary to lower your income. Companies paying up to 2a do not work on your behalf to lower you tax 'on purpose' so it's not subjected to what I described .
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Old 05.06.2021, 18:51
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Re: Pillar 2 pension tax

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Last payment (company paid in 17.5%) was in September 2016.
Since then I have been in uk post deregistering with Canton and handing back permit B.
So I should be ok
You should check respective law on what happens to your AHV (1st pillar) and 2a - there is some agreements that some can't take it out and is just moved to similar system in destination country (which often means it's completely lost).

I do not know what is the UK agreements on that . I read here some folks purchased house in UK off 2A pension , not sure I heard anyone got cash/wire
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Old 05.06.2021, 19:09
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Re: Pillar 2 pension tax

The part that was locked was probably the obligatory pension part (BVG) which you can only withdraw once you reach (early) retirement age, i.e. 60.

As far as I know, with the double taxation agreement with the UK, on pension lump sum payments, you pay tax in the country in which the pension originates. In your case Switzerland.

Also, the tax rate is based on where (i.e. the canton) the institution that holds your money is based.

I used to have a list of capital withdrawal taxation rates for each canton for moves abroad, but I can't find it. Anyone else have a link?
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Old 06.06.2021, 00:23
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Re: Pillar 2 pension tax

Here's the official tax calculator
https://swisstaxcalculator.estv.admi...apital-payment

For canton Zug, withdrawing 40k from pillar 2 at the age 58 gives me ~500 CHF tax

but surprisingly for canton Geneve, which is one of the most tax-expensive, it gives me ~150 CHF

anyway, it's just peanuts compared to the 8k which you thought you would pay
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Old 07.06.2021, 08:13
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Re: Pillar 2 pension tax

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Here's the official tax calculator
https://swisstaxcalculator.estv.admi...apital-payment

For canton Zug, withdrawing 40k from pillar 2 at the age 58 gives me ~500 CHF tax

but surprisingly for canton Geneve, which is one of the most tax-expensive, it gives me ~150 CHF

anyway, it's just peanuts compared to the 8k which you thought you would pay
Thanks, that's a useful link, but isn't that for people who still live in Switzerland? The taxation at source for people who have already left the country is a different list and, as far as I recall, is a fat rate irregardless of the amount being withdrawn.

Anyone have a link to a list of those rates?
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Old 07.06.2021, 08:17
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Re: Pillar 2 pension tax

Found it!

Here is a link to a calculator saying how much tax at source you would pay by canton if you are living abroad and wish to withdraw your pension monies.

https://pensexpert.ch/en/our-solutio...a/expatriation

The calculator is a fair way down the page
 




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