What is the maximum amount you can withdraw from the 2nd pillar to buy?

Before age 50, you can withdraw the entirety of your vested benefits. From age 50 onwards, the amount is limited to the higher of: your balance at age 50 or half of your current balance. The minimum withdrawal amount is CHF 20,000.

How much tax do you pay on a 2nd pillar withdrawal?

The withdrawal is taxed separately from income at a reduced rate. The exact rate depends on the canton and the amount withdrawn. As a guideline, for a withdrawal of CHF 100,000, expect approximately CHF 5,000 to CHF 12,000 in tax depending on the canton of residence.

Can you withdraw the 2nd pillar to buy a second home?

No, the EPL withdrawal (Encouragement a la propriete du logement / Home Ownership Promotion) is reserved exclusively for financing a primary residence that you occupy personally. The purchase of a second home or investment property is not eligible.

Must you repay the 2nd pillar withdrawal if you sell the property?

Yes, if the property is sold, the withdrawn amount must be repaid to the pension fund. A sale restriction is registered at the land registry to guarantee this obligation. The repayment entitles you to a refund of the tax paid upon withdrawal.

Can you use both the 2nd pillar and pillar 3a at the same time?

Yes, you can combine withdrawals from the 2nd pillar and pillar 3a to assemble your equity. However, remember that the 2nd pillar does not count towards the 10% 'hard' equity requirement. Pillar 3a, on the other hand, is considered hard equity.

Using your 2nd pillar (LPP) to finance a property purchase

The early withdrawal of the 2nd pillar for purchasing a home is a right enshrined in the Federal Act on Occupational Retirement, Survivors' and Disability Pension Plans (LPP). This option, known as "Home Ownership Promotion" (EPL - Encouragement a la propriete du logement), allows you to mobilise part of your pension savings to become a homeowner. However, the consequences on retirement benefits merit careful analysis.

The legal framework: art. 30a-30g LPP

Home Ownership Promotion is governed by articles 30a to 30g of the Federal Act on Occupational Retirement (LPP) and the corresponding ordinance (OPP 2). Every insured person has the right to request early payment of their savings for:

Acquiring a home for personal use
Repaying a mortgage on that home
Acquiring shares in a housing cooperative
Value-adding renovation or transformation works on the home

Withdrawal conditions

Who can withdraw?

Any LPP-insured person can request an EPL withdrawal, whether employed or self-employed and affiliated with a pension fund. The conditions are:

The property must serve as a primary residence
The insured person must personally occupy the property (no full rental)
The minimum withdrawal amount is CHF 20,000
A withdrawal is only possible every 5 years
Written consent of the spouse or registered partner is mandatory

How much can you withdraw?

Age	Maximum withdrawal amount
Before age 50	Full vested benefits balance
From age 50	Higher of: balance at age 50 OR 50% of current balance

Example: an insured person aged 55 with a current balance of CHF 400,000, of which CHF 200,000 was accumulated by age 50, can withdraw a maximum of CHF 200,000 (50% of the current balance, which is higher than the balance at age 50).

The withdrawal procedure

The EPL withdrawal process involves several steps:

Written request to your pension fund with supporting documents (purchase agreement, notarial deed, or renovation quotes)
Spousal consent: signature certified by a notary or municipal authority
Verification by the pension fund (2 to 4 weeks)
Payment directly to the notary, bank, or seller (never to the insured person's personal account)
Registration of a sale restriction at the land registry

Total timeline: allow 4 to 8 weeks between the request and the effective payment. Factor this deadline into your planning.

Tax impact of the withdrawal

The EPL withdrawal is taxed separately from ordinary income, at a reduced rate that varies by canton and amount withdrawn. Withdrawals from the 2nd and 3rd pillars made in the same year are combined for the tax calculation.

Amount withdrawn	Approximate tax (single person)
CHF 50,000	CHF 2,500 - 6,000 depending on canton
CHF 100,000	CHF 5,000 - 12,000 depending on canton
CHF 200,000	CHF 12,000 - 25,000 depending on canton
CHF 300,000	CHF 20,000 - 40,000 depending on canton

Tip: stagger your 2nd and 3rd pillar withdrawals across different years to reduce the progressivity of the capital withdrawal tax.

Impact on pension benefits

Withdrawing from the 2nd pillar has direct consequences on three types of benefits:

Retirement pension

Every franc withdrawn reduces the retirement capital and, consequently, the future pension. The impact is greater when the withdrawal is made early, as the lost compound interest accumulates over time.

Example: a withdrawal of CHF 100,000 at age 35, with an average crediting rate of 2%, represents a loss of approximately CHF 180,000 by age 65 (capital + compound interest). With a conversion rate of 6.8%, this equates to an annual pension reduction of approximately CHF 12,200.

Disability and death benefits

Many pension funds calculate risk benefits (disability pension, spouse's pension) based on projected retirement savings. An EPL withdrawal can therefore reduce these benefits. Check with your pension fund and consider supplementary insurance if necessary.

Voluntary buy-back capacity

As long as the EPL withdrawal is not fully repaid, voluntary buy-backs into the 2nd pillar are not tax-deductible. This is an important restriction for high-income earners who typically use LPP buy-backs as a tax optimisation tool.

Withdrawal or pledging: which option to choose?

Criterion	EPL withdrawal	Pledging
Counts as equity	Yes (supplementary only)	No (not equity)
Reduces mortgage	Yes	No (higher mortgage)
Withdrawal tax	Yes	No
Impact on benefits	Yes (reduction)	No (as long as pledge is not realised)
Buy-back deductibility	Blocked until repaid	Not affected
Land registry restriction	Yes	Yes
Mortgage interest	Lower (smaller mortgage)	Higher (larger mortgage)

Pledging is generally preferable if your income is sufficient to support higher mortgage charges. It preserves your pension benefits and your capacity for tax-deductible buy-backs.

Repaying the EPL withdrawal

The EPL withdrawal can be repaid voluntarily at any time, with a minimum amount of CHF 20,000. Repayment is mandatory in the following cases:

Sale of the property
Granting of rights over the property economically equivalent to a sale
Death of the insured person (with certain exceptions for the surviving spouse)

Upon repayment, the tax paid at the time of withdrawal is refunded (without interest). The refund request must be made within 3 years of repayment. Repayment is no longer possible 3 years before the regulatory retirement age.

Practical case: should you use your 2nd pillar?

Consider a couple aged 38 wanting to buy a CHF 800,000 property:

Available savings: CHF 90,000
Pillar 3a: CHF 35,000
2nd pillar spouse 1: CHF 180,000
2nd pillar spouse 2: CHF 120,000

Equity required: CHF 160,000 (20%) of which CHF 80,000 from non-LPP sources.

Optimal solution: withdraw savings (CHF 90,000) + withdraw pillar 3a (CHF 35,000) = CHF 125,000 in hard equity. The remaining CHF 35,000 can be covered by a partial 2nd pillar withdrawal. The couple thus preserves the majority of their pension savings while meeting all requirements.

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