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Advance withdrawal or pledging of a pension fund?

Advance withdrawal or pledging of a pension fund?

If pension fund assets are used for home ownership, you can choose between an advance withdrawal or a pledge.

In the case of an early withdrawal from the pension fund, pension assets are used for higher equity and lower mortgages. Mortgage interest rates are lower, but there are pension gaps at retirement age. The amount drawn in advance from the pension fund is taxed at a reduced rate and separately from other income. These taxes may not be paid with the withdrawn capital. If you pay the money back to the pension fund at a later date, you can reclaim the taxes – but without interest.

It is usually more advantageous to pledge the pension fund assets. In this way, the money remains in the pension fund and would only be seized if the debtor becomes insolvent. The disadvantage is that the pledged capital is blocked and no cash payment is possible.

Advance withdrawals and pledges are generally permitted up to three years before normal retirement. However, pension funds may stipulate otherwise in their regulations.


Advance withdrawal PFPledging PF
  • Higher equity
  • Lower mortgage
  • Lower mortgage interest rates
  • No capital withdrawal tax
  • No loss of benefits if pledge is cancelled again
  • No capital withdrawal tax
  • Purchases into the pension fund remain possible
  • Withdrawn capital must be taxed
  • Lower retirement benefit
  • Repayment obligation if the property is sold
  • No purchases into the pension fund possible as long as the advance withdrawal is not repaid
  • Only possible if affordability is guaranteed with high interest rates
  • Risk of pledge realisation
  • Higher housing costs due to higher mortgage interest rates