WEF prepayment / pledging
What are my options?
Under certain conditions, insured persons up to the age of 62 / 63 (women / men) have the option of withdrawing employee benefits to finance residential property for own use or to pledge a part of their employee benefits.
Any prepayment of employee benefits received can be used to acquire or build owner-occupied residential property as a sole owner, co-owner or joint owner together with the spouse or registered partner. As a general rule, the funds received can only be used to finance one property at a time. The funds may not be used to finance several properties at the same time. It is not permitted to use funds from the employee benefits insurance for vacation homes or second homes or to acquire land on which the owner does not intend to construct any buildings.
In addition to the acquisition or construction of owner-occupied residential property, insured persons may use the funds from the employee benefits insurance to repay mortgage loans, to make value-increasing or value-preserving investments, or to buy shares in a co-operative housing association.
As a prepayment is classified as a lump-sum withdrawal, the prepaid amount is taxable once-off at a reduced tax rate at the time of payment. The Pension Fund is obliged to notify the prepayment to the competent tax office. For insured persons who are resident abroad, the tax at source is calculated in accordance with the legal requirements. This amount is deducted directly by the Pension Fund and transferred to the competent tax office. If the prepayment is repaid, insured persons who are resident and liable to pay tax in Switzerland can reclaim the previously paid tax within three years after the date of repayment.
Generally speaking, the prepayment can be repaid at any time.