Can I use my pension fund to buy property?

Financing your own home: Your pension fund options

The purchase or construction of your own home is a major step that requires solid financing. Your saved assets from your occupational pension – often called a pension fund or OPA (Occupational Pensions Act) – can be a significant support. The Promotion of Home Ownership Act (WEF) allows you to use these funds for owner-occupied residential property. There are two main options available to you: early withdrawal and pledging.

Early withdrawal or pledge: Which is right for you?

The decision between an early withdrawal and a pledge depends heavily on your personal financial situation and your appetite for risk.

• An early withdrawal means you take a portion of your capital directly from your pension fund. This increases your equity, reduces the required mortgage, and thus lowers your monthly interest costs.
• A pledge, on the other hand, uses your assets as security for the bank, which often allows you to obtain a larger mortgage. Your pension capital remains untouched and continues to earn interest.

A practical example for comparison

Imagine you would like to buy a property for CHF 800,000. You need 20% equity (CHF 160,000). At least 10% of the purchase price (CHF 80,000) must come from “hard equity”, such as savings. You have saved CHF 80,000 and your pension fund assets amount to CHF 80,000.

• With an early withdrawal: You withdraw CHF 80,000 from your pension fund. Together with your savings, you have the required CHF 160,000. Your mortgage amounts to CHF 640,000. However, your pension fund assets decrease by CHF 80,000, which reduces your future pension.
• With a pledge: You use the CHF 80,000 as additional security. The bank therefore grants you a higher mortgage of, for example, 90% (CHF 720,000). Your pension fund assets remain fully intact and continue to earn interest, but your monthly interest burden is higher.

Here is a direct comparison to help you decide:

What are the requirements?

To use your pension fund assets for home ownership, several conditions must be met:

• Personal use: The property must be your main residence.
• Consent: If you are married or in a registered partnership, the written consent of your partner is required.
• Deadlines: An early withdrawal is possible every five years. The last withdrawal must be made at least three years before you reach the normal retirement age.
• Minimum amount: The minimum amount for an early withdrawal is CHF 20,000.
• Age limit: You can withdraw your entire available pension assets up to your 50th birthday. From age 50, the withdrawal is limited to the higher of the following two amounts: the assets you had at age 50, or half of your current pension assets.

Understanding the consequences of an early withdrawal

While an early withdrawal offers immediate advantages, it creates a gap in your pension provision. As your retirement assets decrease, your future old-age pension, as well as any disability or death benefits, will be lower. It is important to be aware of this gap and ideally cover it with private supplementary insurance or close it later through repayments.

Repayment: How to close the pension gap

An early withdrawal is not set in stone. You have the option to repay the withdrawn amount, in whole or in part, to your pension fund at any time.

• Voluntary repayment: You can repay the early withdrawal at any time (minimum amount CHF 10,000). This restores your original pension benefits. You can also reclaim the capital tax paid at the time of withdrawal.
• Sale of the property: If you sell your home, you are legally obliged to repay the withdrawn amount to the pension fund.

Your path to home ownership: It's this simple with Tellco

1. Check your eligibility: Start by checking your current insurance certificate in your ePlix portal. There you can see exactly what amount is available to you.
2. Prepare your application: Fill out the relevant form. Both the Application for early withdrawal (WEF) and the Application for pledge are available in our Download Center.
3. Submit your application: Send us the fully completed and signed application along with the required documents by post.

Are you ready for the next step? Clarify any open questions directly with our pension experts. We are happy to help you make the best decision for your future home. Arrange a consultation now via our contact form.