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.

FAQs | frequently asked questions

What is the difference between a prepayment and a pledge?

With a prepayment or early withdrawal, the agreed amount is debited to your individual retirement savings and transferred either directly to the creditor or to a blocked account. The prepayment is directly debited to your retirement savings and therefore reduces your retirement savings and your retirement benefits.

With a pledge, the agreed amount (pledging of a specific amount or the full retirement savings at the time the pledge is realised) remains with your pension fund and continues to earn interest. For as long as the pledge is not realised, the retirement benefits are not reduced.

Are early withdrawals for home ownership taxable?

Yes, early withdrawals for home ownership are taxable.

Are there any other legal steps involved in making an early withdrawal for home ownership?

If an early withdrawal is made to finance home ownership, a sales restriction is registered with the Land Registry. This sales restriction is deleted when the insured person has repaid the early withdrawal for home ownership or this person takes retirement.

Can I make another early withdrawal after I have already received a prepayment?

An early withdrawal for home ownership can be made every five years. The last one can be made three years before retirement.

Can I reclaim the taxes incurred on the withdrawal?

Yes. In order to reclaim the tax accrued on the advance withdrawal, an application must be submitted within three years to the tax authority that originally levied the tax. The following certificates must be enclosed with the application:

  • Certificate for the repayment of the early withdrawal (form WEF-RZ)
  • Register extract from the Federal Tax Administration on the pension capital invested in residential property
  • Certificate of the tax amount paid on the basis of an advance withdrawal (federal, cantonal, communal)

Can I request a prepayment for home ownership (early withdrawal) from the pension fund or pledge my retirement savings? If yes, for what?

Yes, it is possible to request a prepayment or pledge pension assets to finance owner-occupied residential property. You can use your accrued retirement savings in accordance with the legal provisions to purchase, convert or renovate residential property, repay existing mortgage loans or acquire shares in a building cooperative.

Does the early withdrawal have to be repaid?

No, there is no general repayment obligation. However, if the owner-occupied residential property is sold, the prepayment must be repaid to the pension fund before approval is granted to delete the sales restriction.

Is there a minimum amount for repayment?

The minimum amount for repayment of an early withdrawal for home ownership is CHF 10,000.

Is there a minimum or maximum amount that must be or can be withdrawn?

The minimum amount for a prepayment to finance home ownership is CHF 20,000. This minimum amount does not apply for the acquisition of shares in building cooperatives or similar participations. The maximum amount that can be withdrawn is as follows:

  • Up to age 50: Amount of current termination benefit (vested benefits)
  • From age 50: The amount of the termination benefit at age 50 or half of the current termination benefit (if the latter amount is higher).

The maximum possible amount can be taken from the pension certificate.

What are the insurance consequences of an early withdrawal?

The retirement savings will be reduced by the amount of the prepayment or early withdrawal. The future retirement benefits will also be reduced by the amount of the early withdrawal, including the interest on this amount until retirement.

Where can I see that I have made an early withdrawal or a pledge?

This information is provided on page two of the current individual pension certificate.

Where must I send the documents?

You can send the complete dossier by e-mail (pensionskasse@lonza.com) or by post to the following address:

Lonza Pension Fund

Münchensteinerstrasse 38

4002 Basel

Who should I contact if I have questions about my pension certificate?

Please contact the pension fund employees directly if you have any questions about your pension certificate.

To do this, you can use the contact form or send us an email (pensionskasse@lonza.com).