2nd Pillar buyback. Free money?

@bamboo has already given a good explanation. I would summarize the core point again: You get the discretionary (low) interest, because you will get that positive interest no matter the actual returns from the funds’ assets. Even in crisis years, you are entitled to this return (except that at some point the fund will need remediation measures, which usually would be temporary higher contributions for the same benefits)

However, you are mentioning your fund is offering different plans. That sounds like the newer “1e plans”, in which case you are fully entitled to the market returns (and risk) with your “Überobligatorisches Sparguthaben” (which is also why your fund likely does not publish a formal discretionary interest rate).

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Thanks! There was something mentioned about 1e on the website. I will ask my boss. But the whole company has to take the same plan and I don’t believe I can convince my boss to take 50% stock. Only then the returns are at least not terrible.

@dom.swiss
May I ask where you found the info below. This is my case exactly and I can’t find any info on it. Much appreciated.

  1. If ever returning to work in Switzerland, you will have to transfer “obligatorisch” amount from the “Freizügigkeitsstiftung” into your pension fund and you can again make annual voluntary contributions to top it up (edited: this works also in e.g. UK). Save again on income tax, potentially not paying much of it until retirement age if you play this game in your mid 50s.

I learnt since that much is a question of discussion/negotiation with the pension fund. As we may be talking about a bucket size that’s larger than the mandatory part, the pension funds are at liberty to make their own rules, as long as the mandatory part is managed according to federal law(s). Tell them what you would like to do and document their reaction here (I have not yet taken up new work myself :slight_smile: )

The pension funds says buybacks are AOK. However, at the bottom it says that tax deductions depend on the (vaud) canton allowing it. I ve gotten three different answers form the canton. i) you need pay every thing you withdrew back (haha) ii) you can buy back up to 20% of your salary iii). It’s up to the pension. Problem is if the make a big buyback and it’s not accepted by tax authorities then you don’t get tax break and you can’t take the money out again until retirement or leaving CH ie hello 0.1% interest:)

Ahh, 3 opinions in 1 canton alone, 26 cantons in total… ZH tax department is quite relaxed in many regards but I will yet have to test them on substantial (50-100% of salary) successive annual pension fund buy-ins after age 50. Does anyone in this thread have practical experience with this?

It is.

Well, I actually had a lawyer to check this. There is nothing in legislation that says you cannot do the buybacks (of course the pension must approve first ). Tax authorities may try any say this is tax avoidance (manipulation, since you use the buybacks twice) in which case you may have try and negotiate and ultimately go back to a lawyer. But you should be able to do it. Lets see what happens in tax 2021!

Great thread. I am in the camp to buying into pillar 2a to lower taxes because 1) my time horizon to early retirement is 2-3 years, then travel and withdraw in tax friendly country and 2) yes pillar 2a is low return but also risk! I mentally view it as bonds ( which I deselected because tax advantage of pillar 2a)
One question to your sequence @swiss.com, why do you need to move to a foreign country right away once you quit your job? Could you not remain domiciled in CH, then once you have passed the 3 years lock-in you move to a foreign country that does not tax pension contributions? In fact, once you leave CH, does that not trigger automatic payot of the uberobligatorisch part of pillar 2a??

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