Leaving Switzerland: what happens to your 2nd pillar?

The principle: a cash withdrawal when you leave

The law allows you to request a cash payment of your termination benefit when you leave Switzerland for good (Art. 5 para. 1 let. a FZG). Your pension fund or vested benefits foundation pays out the money on written request, with the supporting documents.

If you are married or in a registered partnership, a cash payment is only possible with the written consent of your spouse or partner (Art. 5 para. 2 FZG).

But this principle has important limits, depending on the country you move to.

Moving to an EU or EFTA country: an important restriction

Since 1 June 2007, if you settle in a European Union or EFTA country and are subject to compulsory old-age, disability and survivors’ insurance there, the mandatory part of your 2nd pillar (the BVG minimum) cannot be paid out in cash. This applies to most people who work there as employees.

• Extra-mandatory part (anything above the BVG minimum): it can be paid out in cash.
• Mandatory part: it stays in Switzerland, in a vested benefits account or policy in your name.
• It is paid out to you no earlier than five years before the AHV reference age, or at retirement age.

To find out whether you are subject to compulsory insurance in your new country, the LOB Guarantee Fund has your situation examined by the competent body in that country. There are forms for France (the French health insurance fund, in particular the CPAM, fills in part of it), Germany, Italy, Austria, Spain, Portugal, Poland and Slovenia. The examination generally takes place no earlier than three months after you leave. If you are not subject to compulsory insurance, all your assets can be paid out.

Moving to a country outside the EU and EFTA

If you move to the United States, Canada or Australia, for example, you can in principle withdraw all your assets in cash, including the mandatory part. No examination of your insurance by the LOB Guarantee Fund is needed.

What remains possible everywhere

• Withdrawing the extra-mandatory part, with no examination of your insurance.
• A lump-sum payment as an old-age benefit, from five years before the AHV reference age.
• Early withdrawal for home ownership, for a home you live in: it is not affected by the restriction.

Withholding tax on the capital

If you no longer live in Switzerland when the money is paid out, the capital is subject to withholding tax, levied in the canton where your pension fund or vested benefits foundation is based. Depending on the double taxation agreement between Switzerland and your new country, this tax may be refunded to you, usually if you declare the capital in your country of residence.

The rate depends on the canton: find out before you request the payment.

The steps to take, before and after you leave

1. Notify your municipality of your departure and ask for a certificate of departure.
2. Take stock of all your assets: your current pension fund, vested benefits accounts and policies, and any forgotten assets. The Central Office 2nd Pillar search is free.
3. If you are moving to the EU or EFTA, ask the LOB Guarantee Fund to examine your insurance situation in the destination country (forms).
4. Request the payment from each institution, with the certificate of departure, a copy of your ID document, your bank details and, if you are married, your spouse’s written consent.