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Old 02.07.2020, 13:08
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Impact of pension withdrawal for purchasing a house

Hi,
As everyone knows, one can take all of the pillar 2 contributions for financing a mortgage and this can be up to a maximum of 10% of the house value (the remaining 10% should be private equity includes cash,stock proceeds etc).


while I can imagine withdrawing certain amount from the pillar 2 contributions will reduce your overall pension amount after your retire,i do not know if such a withdrawal will affect the current benefits like death benefit, incapacity to work due to sickness
basically I would lie to know what it means for the current benefits of the pension fund if you do a partial withdrawal for purchasing a house.


cheers
happycreature
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Old 02.07.2020, 13:17
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Re: Impact of pension withdrawal for purchasing a house

I did it and it didn't affect anything other than my pension fund. The downsides are (I think) you'll have to pay it back in before drawing on your pension, you'll pay a tax 'fee' on taking it out, you cant get tax credits on paying more than you have to into your pension until you put back in what came out.. and you wont be able to rent out your property (because you cant withdraw from your pension and use it to generate a return on an investment)
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Old 02.07.2020, 13:25
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Re: Impact of pension withdrawal for purchasing a house

Normally death and disability are covered by an insurance (see your pillar 2 statement for Risikobeitrag). For more information ask you pension provider directly what the overall impact is.


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As everyone knows, one can take all of the pillar 2 contributions for financing a mortgage and this can be up to a maximum of 10% of the house value (the remaining 10% should be private equity includes cash,stock proceeds etc).
Actually that is not fully correct. The rule is:
At least 20% must be self financed.
At least 10% must be non-pillar 2 equity.
You are free to use more than 20% of your own assets including more than 10% pillar 2 money.

Considering the current mortgage interest rates it is better to keep the money in pillar 2. You can also pledge the pillar 2 money.
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Old 02.07.2020, 13:42
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Re: Impact of pension withdrawal for purchasing a house

It all depends on your pension plan:
- if your death and disability benefits are calculated on the basis of your insured salary, then taking out part of your pension will not affect these benefits.
- if your plan links such benefits to the saved pension amounts, they would be affected.
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Old 02.07.2020, 15:41
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Re: Impact of pension withdrawal for purchasing a house

I ended up raiding most of my 3P rather than using the 2P, so I put in 15% and my wife 15% (using some inheritance money), thus leaving us with an interest-only mortgage.

Tom
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Old 02.07.2020, 15:45
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Re: Impact of pension withdrawal for purchasing a house

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It all depends on your pension plan:
- if your death and disability benefits are calculated on the basis of your insured salary, then taking out part of your pension will not affect these benefits.
- if your plan links such benefits to the saved pension amounts, they would be affected.
I suspect the insurance premium is higher as they only insure the shortfall between death benefits & pension value each month.
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Old 03.07.2020, 09:36
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Re: Impact of pension withdrawal for purchasing a house

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I suspect the insurance premium is higher as they only insure the shortfall between death benefits & pension value each month.
I read somewhere that the insurance benefits would stay the same but once you move over to the "pension benefits" those would be calculated according to the accumulated pension amount. That would suck since if you have a drastic accident you would not be able to fill up the pension amount. So I am somewhat doubtful that it work like this. But it is certainly something to look into.
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Old 04.07.2020, 12:01
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Re: Impact of pension withdrawal for purchasing a house

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I read somewhere that the insurance benefits would stay the same but once you move over to the "pension benefits" those would be calculated according to the accumulated pension amount. That would suck since if you have a drastic accident you would not be able to fill up the pension amount. So I am somewhat doubtful that it work like this. But it is certainly something to look into.
If you have an accident & can't work I believe insurance will pay the missed pension contributions, assuming that cover is selected. Once you retire there would no longer be life insurance, as you can only spend money once will get less pension as the pension fund is reduced.
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Old 04.07.2020, 17:00
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Re: Impact of pension withdrawal for purchasing a house

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Hi,
As everyone knows, one can take all of the pillar 2 contributions for financing a mortgage and this can be up to a maximum of 10% of the house value (the remaining 10% should be private equity includes cash,stock proceeds etc).


while I can imagine withdrawing certain amount from the pillar 2 contributions will reduce your overall pension amount after your retire,i do not know if such a withdrawal will affect the current benefits like death benefit, incapacity to work due to sickness
basically I would lie to know what it means for the current benefits of the pension fund if you do a partial withdrawal for purchasing a house.


cheers
happycreature
ask them, not us. They should give you the best picture.

For my 2nd pillar, the withdrawal for the house was capped at the leaving benefits which is the smaller benefit. Death and pension are higher so they would just be reduced if you don't pay this back.
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