Should I consider my 2nd Pillar as part of my Net Worth?

Investing / Others
1

As the title suggests, I don’t know if I should consider the 2nd Pillar as part of my Net Worth calculation. Consequentially, if I should consider it in my FIRE calculation, too.

For context, I’m not Swiss, and I come from a country where the social system is no good, and that you shouldn’t rely on it for your retirement.
Now, I know Switzerland is a far better place and the social system works and all. But will it in 15/20 years time? I plan to stay for longer, especially because my children are growing up here.

I have around 70k in the mandatory part of the 2nd pillar, and about 10k in the over mandatory one. Likewise, I know the mandatory part can be used for several reasons, but the over mandatory will stay there until retirement.

I honestly don’t know what to do. Certainly, this will boost my numbers and make me feel more secure. But is it something I can rely on?

I’m seeking the community knowledge/opinion here.

  • Yes
  • No
0 voters
2

2nd pillar is part of your net worth …the only difference is that you need to pay lump sum taxes at time of withdrawal and you can only access at time of retirement

Other than that, it’s your money in your account

3 Likes
3

I will count it as well in my net worth as bond allocation during working years.
If you retire outside of Europe, you could cash it out as lump sum and invest it in shares. If you retire in Europe, you could also use it as capital investment in your Home reducing the housing cost in your budget plan.

At the time of retirement, you could count on it at your retirement age. So you could adjust your safe withdraw rate not counting on it until your retirement age. At your retirement age you could take the annuity and adjust the SWR.

NB: you should deduct the taxes applied to it for lump sum depending on your country of retirement. Guess it as 5-9% if you cannot project yourself.

1 Like
4

That sounds very unusual to me, are you sure?

Wouldn’t it be rather an analog of 1st pillar in Switzerland?

5

That sounds very unusual to me, are you sure?

Well, if I look into the pension certificate for the over mandatory part, I see “Early withdrawal and pledge” set to 0.-, and I’d like to point out that I never ever used this money (and I don’t plan to).

Wouldn’t it be rather an analog of 1st pillar in Switzerland?

In fact, I believe it would be foolish to add your state pension (1st pillar) into the Net Worth or for the FIRE calculation.

6

Yeah, the good old dilemma of getting it as a lump sum.

I hope that by when I retire, the system changes and allows you to take out the money without the need to “fake” move out of CH.

7

You don’t need to fake move out of CH to withdraw

1 Like
8

Taxes on 2nd pillar are quiet attractive in Switzerland.
Most of the sotry, you will read on this forumis foreigner returning to their home countries.
Also retiring early in Switzerland may require an higher annuel spending amount inflating your FIRE number with a suistainable withdrawal rate.
I have shared interesting links on these topics on my presentation.

9

The amount paid into 2nd pillar will be available for this after 3 years, I think. If you just started, the pension certificate will show correctly 0 available.

Could be something else, I don’t know. You can ask your pension fund for explanations.