Early Withdrawal of Pension Fund (2nd pillar)
In principle, the 2nd pillar, i.e. the pension fund, serves as a retirement provision. Under certain circumstances, however, it is possible to withdraw pension fund assets before reaching the regular retirement age.
The purchase of a home (acquisition of owner-occupied residential property), leaving Switzerland permanently (emigration) and becoming self-employed are reasons that make an early withdrawal of pension fund benefits possible.
Pension fund withdrawal due to self-employment
The balance from the 2nd pillar can be withdrawn by people who must not join the compulsory occupational pension scheme. On the one hand, this applies to owners of a sole proprietorship and to general partners.
The first step is to enter the company in the commercial register. Although the resistration of a sole proprietorship is only obligatory from a turnover of CHF 100,000 per year, it is recommended in any case in connection with the withdrawal of pension fund benefits. The commercial register entry can accelerate the recognition by the compensation fund. In addition to that, the transparency effect of the entry in the commercial register can leave a professional impression on contractual partners and customers.
The second step is to register with the compensation office in order to obtain recognition as a self-employed person. It is important that the documentation for the compensation office is comprehensive. Apart from the completed registration form, the compensation office must be provided with an excerpt from the commercial register and with at least three invoices sent to three different customers. Depending on the activity, further supporting documents may be required. It is therefore important to note that initial investments for the start of business cannot be financed from pension funds.
In a final step, one must then apply to the relevant provision institution (pension fund) to receive pension fund benefits and submit the confirmations from the first two steps. Depending on the pension fund, further requirements may be added (e.g. a business plan).
From a timing perspective, it should be noted that the advance withdrawal of capital must be made within one year of taking up self-employment.
No pension fund withdrawal with Plc or Ltd
On the other hand, it is not possible to withdraw pension fund benefits when founding a limited liability company (plc or Ltd.). The reason for this is that the founder of a corporation (plc or Ltd.) cannot be considered self-employed under social insurance law. Rather, he/she is considered an employee of his/her own company and is therefore subject to compulsory occupational pension insurance.
Conclusion
In order to claim pension fund benefits early, one must be recognised as a self-employed person by the responsible cantonal compensation office. This may include owners of sole proprietorships or general partners. To do so, one needs proof from the compensation office and, ideally, an entry in the commercial register.
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