No Tax Increase on Capital Withdrawals: What This Means for Pension Planning

Swiss Parliament rejects higher taxes on capital withdrawals from the second and third pillar

The Swiss Parliament has decided not to increase taxes on capital withdrawals from the second and third pillars, as previously proposed by the Federal Council.

This so-called Measure 56 was part of the 2027 relief package and was expected to generate approximately CHF 190 million in additional annual revenue for the federal government. Both the National Council and the Council of States have now eliminated this measure.

Reliable framework conditions are central for retirement planning

Reliable tax framework conditions are crucial for long-term retirement planning. The parliament’s decision prevents additional burdens for individuals who have built up their retirement capital over many years and have planned their retirement under the existing tax regulations. In particular, this decision provides additional planning security for households approaching retirement.

Lump-sum withdrawals are becoming increasingly important

The decision comes at a time when the behavior of new retirees is visibly changing. More and more people are choosing to withdraw their retirement savings in full or partially as a lump sum, instead of receiving a pension only.

According to data from the Federal Statistical Office, around 29% of new retirees withdrew their retirement assets entirely as a lump sum in 2015. By 2024, this proportion had risen to approximately 45%, which is already close to half of all retirements. Additionally, about a quarter of insured individuals opt for a mixed form, combining partial lump-sum withdrawal with a pension.

A sigh of relief – but the discussion is not over yet

The parliament’s decision to refrain from increasing the taxation of lump-sum withdrawals offers immediate relief and provides planning security for many individuals who have already prepared for retirement. However, this does not mean that the debate about adjustments to the pension system has come to an end.

As part of the upcoming AHV 2030 reform steps, measures that could further influence how individuals transition into retirement remain under discussion. In particular, there is talk of restricting today’s flexibility regarding early withdrawals of retirement benefits. For example, the minimum age for accessing these benefits may be raised, which would limit the ability to retire early.

At the same time, the question of taxing lump-sum withdrawals is unlikely to disappear for good. In future budget discussions and savings programs, lump-sum withdrawals from the second and third pillars could once again become a focal point, as they can be politically considered as a potential source of additional revenue relatively quickly.

Retirement needs careful planning

Today, those entering retirement still statistically have many years ahead of them. The average life expectancy after retirement is around 23 years for women and about 20 years for men. For many people, this means there is nearly a quarter of a century ahead after their working life ends.

This makes it all the more important to carefully and purposefully plan this stage of life. Decisions regarding lump-sum withdrawals or pensions, taxes, asset structure, and sources of income will shape your financial situation for many years. Thoughtful planning helps ensure financial security—so that you do not outlive your savings.

Take advantage of the opportunity to plan your retirement early and in a structured way with us. In a personal pension analysis, we will show you how the choice between a lump-sum withdrawal or a pension, taxes, and asset structure will specifically impact your financial situation.

You will receive a clear basis for decision-making: which withdrawal strategy makes sense, how taxes can be optimized, and how your assets can be structured to last throughout your retirement years.