Should I finance the purchase of my own home with the pension fund?

In Switzerland, anyone who wants to take out a mortgage for their own four walls must put up at least 20% of the purchase price of the property themselves. Given today's home prices, this is often not possible for average earners. 

In order to make the dream of owning a home come true, many people consider taking advantage of the so-called statutory home ownership subsidy (WEF) by means of their occupational pension capital. Under certain conditions, it is possible to draw funds from the second pillar for the purchase of a home. These funds can amount up to 10% of the purchase price of the property - which is half of the own funds that you have to raise for a mortgage. 

Possible? Yes... 

If you have second-pillar funds in either a pension fund or a collective foundation for occupational benefits (usually the case if employers do not run their own pension fund), you can withdraw a pension upon retirement, or funds in advance when you buy your own home. 

The amount of such an advance withdrawal must be at least CHF 20,000, may only be withdrawn every five years, and can only up to three years before retirement. 

But beware...

The maximum amount that can be used within the framework of a WEF withdrawal to finance an owner-occupied property is limited. Up to the age of 50, the entire pension capital in the second pillar may be used for the promotion of home ownership. From age 50, the amount of the WEF withdrawal is limited to the higher of the following two amounts: The savings capital at age 50 or half of the savings capital available at the time of withdrawal. The exact amount is stated on the pension fund certificate of most pension funds or can be requested from the relevant pension fund.

Safe? Only with good planning! 

When making an early withdrawal, you need to know that it will reduce your pension in old age. To prevent this, the contribution gaps must be filled before retirement. Therefore, caution is advised when making an early withdrawal from the second pillar and it is important to check various factors and to set up an individual, longer-term strategic plan. 

As a Caveo customer, we can help you check the relevant financing options. Get the app now and let us advise you easily and free of charge on the topic and all other pension matters via video call.