Having your pension fund paid out if you move abroad: Here’s what matters

Videos, Wealth & Pension Planning
21/09/2022 por Alexander Spillmann Tiempo de lectura: 3 minuto(s)
Parachute photographed from above: How to get your pension fund paid out even abroad

What options do you have? What needs to be considered when it comes to taxes?

Are you planning to leave Switzerland for a few years — or even permanently? If so, you may be able to have your entire pension fund paid out. If you want to optimize your tax obligations in this situation, you should be planning ahead. Here you’ll find out what points are important to know.

There can be many reasons for moving abroad: love, adventure, or the desire to climb the career ladder. Insurance and pension planning are hardly in the spotlight — but those who plan their move abroad carefully usually look to the future with fewer worries. Here we address the most important questions and provide some tax tips about your pension fund or, more precisely, about your second pillar vested benefits.


“From the age of 58 you can harmonize the demands of early retirement and emigration.”



Can you withdraw your entire pension fund?

That depends on where you are moving to. If you move to a non-EU/EFTA country, you can usually withdraw your entire pension assets. However, if you’re heading to an EU or EFTA country, however, only the non-mandatory part can usually be withdrawn. But there are exceptions.

Let's start with the normal case: The mandatory part of the pension assets usually remains in your vested benefits account until you retire. You can have paid out the rest, the so-called non-mandatory part. The amount of such a withdrawal is stated in your pension documentation. Or ask your pension fund or vested benefits foundation directly.

  • Three exceptions
    1. No compulsory social security in your destination country
      If you are not subject to social security contributions in your new country of domicile, you can sometimes withdraw all of your pension assets in advance. For example, if you will not be paying into the pension system in the new country. You can find out whether this applies to yo online via the Liaison Office of the Social Security Fund. Important: Your Swiss pension scheme will require confirmation that you do not have to pay any social security contributions at your new location.

    2. Promoting home ownership
      When you buy residential property in Switzerland to live in yourself, you can withdraw your vested benefits. This rule also applies if you move abroad and buy an owner-occupied residential property abroad.

    3. Age 58 or over
      Early retirement is only possible as from the age of 58. Only then can you normally withdraw the capital you have saved from your pension fund. This regulation applies regardless of whether you live in Switzerland or abroad. In Switzerland, you may withdraw retirement benefits from vested benefits no earlier than five years before normal retirement age, i.e. at the age of 59 or 60. The important difference to those who have moved away: Certain pension funds prohibit their insured members from withdrawing the entire retirement assets as a lump sum. Such restrictions do not apply to people who move away permanently.

    See Article 16, Paragraph 1 of the Ordinance on Vested Benefits (PDF in German)




What do you need to consider in terms of taxes to be paid?

Fundamentally, you will have to pay tax on the withdrawal of pension capital in Switzerland. But with clever planning, you can save on taxes, because your pension capital is taxed at a reduced rate — separately from your other income. You can take advantage of a few special features.

  • Details and example for the calculation

    Since you no longer have a domicile in Switzerland after moving out of the country, you will be taxed at source. The “source” is the domicile of the vested benefits foundation that will be paying out the assets. You can benefit from the fact that the withholding tax rate varies from canton to canton. In other words, taxes can be optimized by choosing a vested benefits foundation that is based in a canton with low taxes.

    Calculation example

    • Pension fund assets: CHF 1,000,000, currently with a pension fund in the canton of Zurich
    • Case 1: Immediate withdrawal. Withholding tax due: around CHF 83,000
    • Case 2: The assets are transferred to a vested benefits foundation in the canton of Schwyz before your move outside Switzerland. It will be withdrawn later. Withholding tax due: Around CHF 48,000.

    In this example, a person could save around CHF 35,000 by transferring their pension assets to the tax-friendly canton of Schwyz before emigrating.*

    * Taxation possibly due at the destination domicile has not been taken into account in this example and should definitely be clarified in advance with a tax advisor in the destination country.




Three important tips before moving abroad

  • Voluntary purchases of additional pension benefits
    If you buy additional pension benefits, you must wait at least three years before withdrawing this paid-in capital. Otherwise, the taxes saved will be due, along with any default interest. But even here there are exceptions, for example, if you are making these purchases to close a pension gap that arose as the result of a divorce.
  • Double taxation
    In most countries, taxes are due on the withdrawal of Swiss pension assets as well. If the country of destination and Switzerland have a double taxation agreement, you can usually reclaim the Swiss taxes. However, there are exceptions here, too.  For example, if the "right to tax" was assigned to Switzerland, as the technical term is known. It is best if you consult a local tax specialist in your new domicile who can tell you which principles apply in your case.
  • No obligation to withdraw
    Of course, moving away does not oblige you to withdraw pension assets at all. You can currently leave your vested benefits in the 2nd pillar up to your 70th birthday.*

* Please note: Discussions on this subject are currently taking place, and there will soon be a referendum on a revision of the law (AHV-Reform 21 in German), which will only allow freedom of movement after normal retirement age if you remain gainfully employed.


Do you have any questions?

Withdrawing pension assets when moving abroad is complex; many questions quickly arise. Your age, your destination country, and your financial situation are just some of the factors that will influence your planning. We would like to propose giving you some advice in an initial meeting, without any further obligation on your part. This way, you can plan your next steps with the knowledge of our experts.



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