You’ll pay tax again when you withdraw it later (at the latest at retirement age)
That’s correct.
I think it only makes sense to pay back if:
- you plan on getting a pension at retirement and want to increase the amount
- you plan on fully repaying + doing extra buy-ins later
I’m not sure there there’s another scenario?
1 Like
Not really a “makes sense” scenario but you have to pay it back if you sell the house (and don’t buy another one) or cease using it as your primary residence.
It may make sense for some second pillar policies if the insurance coverage (disability/death) is linked to the amount of the 2nd pillar assets.
1 Like
Yes, this is what I meant. And putting things in VT would take about 10 years for the investments to catch up, by which time even the low pillar 2 returns will have moved the bar.
1 Like
You get a refund of a taxes paid when withdrawing and also the funds when within the pension are free of wealth tax and other taxes.
Keep in mind that your 2nd pillar gap may increase over time (e.g. due to increases in your comp). I’ve certainly experience (so has my wife) that you make an extra 2nd pillar contribution and you wind up still having a gap larger than you were expecting.
Regarding cases to pay in extra, a good possibility is a large payment into 2nd pillar if you’re terminated, receive a severance and don’t plan/expect to be employed again in the near future. In such a situation, you’d get the tax deduction + push your 2nd pillar to a Freizugigkeitskonto which has a lot more room to drive higher returns than a regular 2nd pillar.
2 Likes
Another consideration is to pay into 1e as soon as possible. I made the mistake of delaying this and then the 1e grew by itself to the maximum and i was not longer able to contribute and had to contribute only to the slow growing standard Pillar 2 instead.
4 Likes
Does anyone know if paying back what was withdrawn for buying a house, also blocks future withdrawals for 3 years?