Need for action on vested benefits

On 1.1.2024, the new law on the withdrawal of vested benefits (2nd pillar) will come into force. For all those shortly before retirement, there is a need for action now.

Until now, vested benefits could be left in the pension plan until age 70 without any further reservations. Vested benefits are pension assets that are deposited in a vested benefits account, for example, in the event of an interruption in employment or an early cessation of employment. Retirement benefits could be paid out at the earliest five years before and at the latest five years after reaching retirement age. In most cases, the payment was postponed for this long so that the payout could be staggered and thus less wealth and income tax was incurred.

With the new law, retirement benefits are due when the reference age is reached. Benefits can only be deferred for a maximum of five years after reaching the reference age for employed persons. The requirement for an employment is met if the insured person provides appropriate proof in the form of a wage statement or an employment contract.

If the Vested Benefits Ordinance is implemented as planned without a transitional period and without exceptions, the retirement benefit will be payable immediately for persons who have reached their normal retirement age. It will be paid out with the corresponding special taxation on lump-sum payments. This privileged taxation of pension capital is highly progressive in many cantons as well as at the federal level. If additional pension assets are paid out in the same calendar year, the tax burden increases disproportionately because the individual payments are added together for each calendar year. In addition, payouts by spouses are taxed jointly, which increases the tax burden.

It is therefore worth tackling future withdrawals from pillars 1 to 3 at an early stage.