I was told that if you retire and take an annuity from your 2 pillar (instead of a lump sum) the tax authorities capitalise the the annuity for wealth tax purposes
Can anyone confirm or share any resource ?
Example: 100k per year pension from 2P. 5% conversion rate
=> 2 M CHF is added to your taxable wealth
In addition if you are below retirement age then AVS would be payable on the 2M CHF
I wonder if similar applies to Pillar 1 pension or if that is excluded?
How could this even work over the years? The moment the annuity starts, you no longer have capital in the pension fund. I.e. there isnât any particular value you could declare each year.
This seems surprising and unlikely indeed. Could this be a simple confusion with the way AHV contributions are calculated when you retire early? Indeed, as you mentioned, if you retire before the AHV normal retirement age, you do have to continue paying contributions until then. Specifically, for determining your level of contribution, your assets are considered, but also your pension income multiplied by 20. See here (english version):
Indeed the person I spoke to was talking about wealth for AHV contributions. If you do the maths that results in ~5% of pension income going to AHV contributions in the event of Retiring Early which is significant.
In addition there may also have been a purchase of private annuity involved. In summary I may have put 2 + 2 together and come up with 3âŠ
Essentially calculate (assets + income x 20) and get yearly contribution to 1st pillar AHV out of the table at bottom of page 5. Afaik dividends do not count as income, but a 2nd pillar annuity would if you get this before 65 years old. 3rd pillar optimisation & exemption if you have a working spouse are still possible, you may also go for the Barista option and count as employed as long as you do at least a 50% part-time.
At least these contributions will count towards the later 1st pillar AHV entitlement.
Im quite sure, that itâs wrong. If you take the annuity/pension then you have no access to the capital anymore. So itâs not âyour capitalâ any more. You have rights on the annuity but not on the capital. If you die early then there ist no capital amount that goes to your heritance.
But your pension is taxed as income.
Also for the first pillar you donât have any capital taxation. Because also there you donât have any capital. But your pension is also taxed as income.
You have to pay this whenever youâre not working (or working less than 50%) while youâre 20-64/65 years old, if your net worth (+20x retirement income) is at least 300k.
haha! I forgot (from another thread) that youâre apparently not a big believer in social solidarity
But what would be the difference between paying contributions on money you have earned versus money you are earning? The latter is psychologically slightly more bearable?
Depending on your income and wealth you can actually avoid it even with less than 50%. In the detailed conditions it says that you only have to pay the wealth-based contributions if the contributions from work are less than half of what you would have to pay based on your wealth.
E.g. wealth-based contributions for 3 millions are about CHF 7â300 per year. This means that if your gross income is CHF 40â000 or higher, you donât pay any wealth-based contributions, even if you only work 20%.
Also note that you can deduct the income-based contributions from the wealth-based contributions you have to pay.
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