The map in this article may answer part of your friend‘s question 
The equally important question however is how the other country taxes the withdrawal.
2 Likes
So what’s the general consensus until the draft proposal is finalised?
I am thinking following -:
3a might still be okay as long as marginal rate is higher than expected lump sum rate for following reasons
- 3a benefit cannot be backfilled
- returns are similar to World ETF
- If staggered withdrawal would still be possible in future then the effective lumpsum rate wouldn’t be as high as for 2nd pillar
2nd pillar - hold off voluntary purchases for following reasons
- it’s not really possible to get 3a type returns with certainty
- Even with 1e , one needs to consider possible job changes
- This advantage can still be used as one near the retirement
- Since withdrawals would happen in one shot, effective lumpsum tax could be higher vs 3a
P.S -: I have to say this whole proposal (even not passed) has created a doubt in my mind about direction of policy in CH.
13 Likes
At this point in time, I’m pretty sure a very negative 3a reform can’t pass parliament, would be subject to referendum if it did and would not pass the popular vote in that case so I’m not reassessing my position vis-a-vis 3a at this point.
To be fair, I have the option to withdraw it early to repay part of my mortgage so I feel like I have an opt-out in case things get serious.
Edit: regarding 2nd pillar, I’m keeping my guidelines of withdrawing what I can when I can and buying back later on, either when I want bondlike investments or I’m near retirement/FIRE.
4 Likes
Tax increases are always negative . Doesn’t mean they do not get applied.
I believe this is a proposal and the end would be something else. But the direction is that capital withdrawal taxes will increase
Hopefully by not the proposed amount 
We need to wait and see what the actual proposal in parliament looks like (expected early 2025), as well what they actually conclude (expected late 2025). I think this has <20% chance to change anything, and basically zero chance to be adopted as proposed by Gaillard.
For 2024 my conclusion is similar to yours:
(a) Pillar 3a buy-in is still sensible in all cases (no limitations on tax rate, the lack of backfilling and free choice of your investment policy makes it a no-brainer)
(b) Pillar 2 buy-in is still undoubtfully beneficial if you have a 1e plan and are at marginal taxes anyway
(c) Pillar 2 buy-in is still reasonable if you have a 1e plan, even at lower tax rates. But, don’t overdo it and use up the full potential, just optimize your taxes in a sensible way.
(d) Pillar 2 buy-in is on hold if you do not have a 1e plan (return expectation is too low).
And then we will have to reassess in March 2025 or so.
6 Likes
Yes, a broad negative echo from most parties as well as experts. Especially with respect to breaking the „Vertrauensschutz“. Choice Quote:
Auch in der Mitte ist man sich der Brisanz des Vorschlags inzwischen bewusst geworden. Vor einem Monat hatte die Mitte das bundesrätliche Entlastungspaket noch als zu einseitig auf die Ausgabenseite fokussiert bezeichnet. Jetzt kritisiert der Mitte-Fraktionschef Philipp Matthias Bregy «die Regeländerung mitten im Spiel» und dass man den «sparenden, eigenverantwortlichen Mittelstand schröpfen» wolle – «na bravo!».
3 Likes
No change at all here. I’ll continue to add to both pillar 3a and 2.
I enjoy the discussion, but frankly don’t see the big issue. Wouldn’t be suprised if some of these proposals are intentionally over the top to leave room for negotiations.
Cause some public outcry, and eventually reduce a few tax privileges that people accept happily, since they expected worse?
Maybe play the ball back to political parties that like to complain about federal cost, but are not so happy if someone wants to lower the benefits of their voters?
I don’t like the idea to have pillar 2 taxed in the same progression as income, but it’s that not that absurd, the more I think of it. If you would receive for example 50k in regular pensions, instead of 1m capital, you pay federal tax on 50k each year. If you had another 140k of taxable income, you’d pay those taxes based on 190k, not 50 separately.
These poor guys can’t even levy wealth tax on it, afterwards. And how many people have those additional 140k upon retirement? You could still time this and other withdrawals, end of employement, AHV etc. to avoid a really high income year.
And for 3a, are you people’s withdrawal taxes that high? Currently, I’d pay some 5.7% on 250k, 6.2% for 500k and 8.3% for 1000k in a mid-level tax Canton, married scale. How much capital do you expect to have in your 3a?
Sure, a staggered withdrawal is beneficial, but none of these supposed changes would be game changer, either, whether your current marginal rate is 25% or 40%. Hopefully, could still take out some small bites in between to pay for mortgage or renovations.
8 Likes
The Federal Department has released a statement with regard to the proposed measure: Klarstellung
He’s basically saying that its still very much open how the measure will be implemented esp. with regard to 3a and its too early to draw conclusions
1 Like
Die Expertengruppe hat zudem festgestellt, dass Kapitalbezüge bisweilen zu sozialpolitisch unerwünschten Resultaten führen können. Dann nämlich, wenn die Beziehenden ihr Kapital zu rasch verzehren und aufgrund einer zu kleinen verbleibenden Rente auf Ergänzungsleistungen angewiesen sind, die ohne Kapitalbezug vermieden hätte werden können. Auch so entstehen dem Staat Kosten, die vermieden werden könnten.
Now we are arguing this angle I see…
Because other people are not smart with their money, I should be punished.
This is not the swiss way of self-accountability.
6 Likes
It would be too expensive/intrusive to find out whether you are someone who can be trusted with their money or who can’t, it’s more cost efficient to assume you aren’t (and that if you are, you are finding ways outside of the pension system to increase your wealth and derive benefits from it). Trusting people who can’t handle their money bears social costs born by the entire tax paying population so minimizing those costs bears some weight in the system optimization.
Looks like the Swiss way of balancing costs/effects while providing a basic safety net but not more to me. That’s the whole basis behind the current pillar 2.
The way of letting everybody swim in the same pond so that people are unrestrained, to the point of not caring if some weaker fishes get eaten by the sharks seems more like the US way to me.
3 Likes
Isn’t this more what pillar 1 is about? (“basic safety net”)
1 Like
I‘m just saying that the current status quo is fine and this is just a sleazy way to argue for the measures they propose, in my opinion.
It‘s pretty balanced the way it is right now.
I generally agree with you, there needs to be balance. But why the current balance is now somehow not sufficient anymore, is dubious.
1 Like
The change was probably appropriate in the context of the second pillar - as it dis-incentivizes taking out capital (which was desired) but its extremely unfair on the third pillar as there simply was no meaningful option to takenout an annuity.
Maybe they need to introduce different taxation among the second and the third pillar… or simply ban any taking out of second pillar money.
1 Like
One has to be politician to believe that the risk of the individual running out of money is lowered by government taxing away a much larger chunk before he/ she receives it…
(Epeon‘s rule of thumb: where the official reason doesn’t make sense, a more sinister rationale tends to be in play)
3 Likes
Heard that once: „Yeah, let‘s accept 13. AHV payment, but let‘s not discuss firstly, how we are going to finance it“.
Let‘s do it again 
4 Likes
Sorry, I got triggered by the mention of the swiss way of self-accountability, which I don’t think applies in this context (in the same way that it doesn’t apply when I’m prevented to borrow more than the law thinks I can handle, on the premice that I’d use it for consumption, even though I think I could use that money to great effect by buying diversified assets).
To be clear, I don’t support these reported changes. While I think it is healthy once in a while to take a hard look at federal spending and taxes, I don’t think that, in Switzerland, we have a systemic spending problem that is driving us to the edge on a macro level (many other countries would fall before us) so I’m not at all convinced that bringing in more taxes should be on the dashboard at all.
2 Likes
It’s both in my opinion. If I were trusted to handle my retirement assets, we wouldn’t need those pension fundations, chosen by my employer, whose boards have to design investing strategies without my input.
On a general basis, I think that, in Switzerland, we actually trust people with their money only after a certain point. There is some patronizing from the government, handling our money below that point in our stead to make sure we reach a minimal standard of living. As a society, I think it benefits us but it does make me cringe every time I get to experience a barrier that tells me I’m being protected from myself for my own good.
6 Likes
Thanks for sharing
It seems that this clarification is issued to avoid drama in the meantime.
I think 3a impacts many more people because there isn’t any annuity option.
I wouldn’t be surprised if rules will be different for 2nd and 3rd pillar
But it’s good to see politicians following up on news
1 Like
Seriously considering to withdraw 3a and part of 2 that I paid “in” to clear the SARON mortgage. Any thoughts? I am not over panicking but I lost trust in the political system.
3 Likes
No need to panic act. Just wait until it becomes more clear what will happen.
3 Likes