Withdrawing whole 2nd pillar or sticking with monthly rates?

So I’m in a bit of uncharted territory as I’m still in my 20s, but I’m wondering what you guys think of my mom’s possibilities at the moment.
She’s 55 and my dad just died at the age of 58. Since they were married, she can now apparently decide whether to withdraw their second pillar money either as monthly rates (this is probably the classic version) or withdraw the whole lot at once. We’re estimating the whole lot to be 700’000 CHF, if my dad retired at 60 as was planned, but we would have to check again to see if she would get all of that sum or what the rules are exactly.
I realize that she would be paying exhorbitant taxes the first year (she lives in TI) but assuming she could invest part of the money, maybe over time we could compensate the loss.
She does not want to waste the money my dad made. The biggest difference to me is that if she died in a year, I would inherit the withdrawn money, whereas if she chose to get the “rate pay” what would theoretically have been left is lost.
Have any of you been in this situation, or already planned such a scenario? Would love some tips or pointers to get educated on the topic as well, as I can’t seem to find much information online.

Sorry about your dad…

Maybe start by figuring out what is monthly rate, whether there would be other income sources during retirement, what the safe withdrawal rate would be for the lump sum version, etc.

Some of those pensions have fairly favorable terms for the annuity, and if you are a bit risk adverse (imagine a bad 10-20y in the stock market, and negative interests, this might easily start depleting the capital fairly quickly esp since at this point you’d likely expect low amount of equity in the portfolio) and expect a good life expectancy that might be hard to beat. You could always save/reinvest part of the annuity too.

But I’d start by modelling various scenarios (make sure to also take into account taxes).

The thing is we really can’t be sure of what the monthly rate will be until after the decision on whethter to withdraw all or go for the rates. We roughly estimated it to be around the 4000 CHF mark, but again, as we don’t know the rules of the game this could be totally wrong.

She is 55 and will probably live for another 30-35 years. Depending on the monthly rate it might be better than withdrawing it (paying 50k+ in taxes) and then managing it on its own. You need concrete numbers to make a good decision. What’s the exact payout? What’s the exact pension rate she would get?

And yeah, if she dies in 1 year, then it’s gone. If she lives till 90+ she would be glad for sure to have taken the monthly rate.


I can’t imagine you are right here. They have to give you the numbers so that you can decide.


It’s a form you have to fill, where you either choose the rate option or the whole payout.
If you choose the rate, they then go on to calculate how much you get, and I don’t think you can backtrack after hearing the numbers.
If you choose the payout, they then said they would go on to make an offer as to how much that would be (we’re considering just asking for the offer, but are a little pressed on time as some of their bank accounts are frozen due to his death).

If I’m on the phone with these people again I’ll ask for more clarifications.

Come on, that can’t be true. Ask for 2 numbers: Payout sum and monthly rate. They have to provide this!


If that’s actually 4k we’re talking about close to 7% per year, unless there’s other sources of income sounds like a good deal (if you take into account sequencing risk and that you’d want a somewhat conservative allocation, with a 3% avg return, after 15 years and withdrawing 4k per month, you’d have 200k left).


Maybe this is even included somewhat in the annual pension certificate.

It is actually. OP could post it without names etc.

Little correction on my part: 4k would be including the AHV payout, that’s my mistake. 2nd pillar alone, as we calculated roughly following the annual pension certificate, would be around 2.5k (30k / 12).
Very sorry, all these numbers are making me dizzy…

…and then’, she’d only receive a 100 CHF (one hundred Swiss francs) a month. Surprise, surprise?

They have to have regulations according to which it gets calculated. Find out about them. If in any doubt, and with the sums we’re talking (700k), I would - and recommend you to - pay a professional to find out and calculate it for you.

Personally, I’d find out whether you can split between receiving a capital payout and monthly pension. This is also most likely what I would choose and recommend, given your mother’s age.


It seems to me that you and your mother are handling an extremely important financial decision, that if made wrong can cost you in the 6 digits range, in a very unprofessional way.

That’s why you shouldn’t be asking in this forum if you don’t even have the basic skills to assess the quality of the advices received.
Just pay 300-500 CHF and seek professional help.

All you’ve written doesn’t make any sense. You should not consider Pillar 1 into account, you’re only taking a decision for Pillar 2. Pillar 2 conversion rate is explicit. It’s 6.8% for mandatory portion and “it depends, but it’s written in the contract” for extra mandatory. Call them. I don’t know if your mother is entitled to survival benefits or insurance payoff. Or if we’re discussing about a transfer to a VBA because she’s not 64 yet. Or maybe we’re talking about early withdrawal (starting from age 58 if I remember correctly), but then the penalty she’ll pay would be uncomfortable.

We know nothing because you’ve not been clear. I suspect you have no clue what are you asked to decide about.
I don’t mean to be rude, but please seek for real help.


…times 60% for a widow’s pension (mandatory part).

AFAIK the funds can’t simply be transferred to a vested benefits account in the case for death (and neither can the simply be transferred to her own account / pension fund).

59 for women, 60 for men. Again, it should not be relevant, I think, since this this no ordinary retirement payout.

It can’t hurt to gather information, comment and experience on an online forum.
However, this shouldn’t be the sole or main basis for decision in this case.

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Please everyone, I already apologized for the number faux-pas. I’m also going through grief and when dealing with complex financial choices one week after losing a loved one I admit I’m not 100% focused; nonetheless I also admit my knowledge of financial themes is limited in this area.

That said, I asked this question in search of someone that might have gone through the same scenario, not looking for a personalized coaching session. That is surely something my family will look into as soon as we know more numbers, when we’ll get to the right people to tell them to us.

I will update this thread as soon as I have more specific information, not necessarily to fish for solutions, but also to provide some documentation for someone that might go through the same situation sometime in the future.

I apologize for my n00bness and hope there’s still a place for non-experts on this forum.


Of course there is!
I didn’t mean to be rude or aggressive, sorry if I appeared to be as such :slight_smile:
Take your time to handle your emotional situation, it must not be easy. But don’t make inefficient financial decision because of that.
If you want to chat, feel free to reach me out.
A virtual hug.

Take your time and no need to apologize to anyone here. These things are challenging at the best of times let alone with everything else you have going on.

Agree with the advice on this thread of seeking a professional to give you an independent overview, pay a flat fee (… just don’t sign up for any products they offer) which will be worth its
value 10 fold in years to come.

Small steps.