In Switzerland, the pension system (Pillar 2 – BVG/LPP) allows you to use part of your occupational pension savings to help buy your own home. This is known as a WEF withdrawal (“Wohneigentumsförderung”).
Two ways to use your pension for housing
You can either:
1. Pledge your pension assets
You don’t actually withdraw the money. Instead, you use your pension balance as a guarantee for your mortgage. Pledge however doesn’t help with main pain-point for people trying to buy property in Switzerland – affordability/Tragbarkeit to stay within 33% because pledged amount still counts as mortgage.
- Pros: your pension savings stay intact, there’s no tax on the pledged amount, and you can still make voluntary buy-ins.
- Cons: your mortgage remains higher, so you’ll more interest on pledged amount
2. Make an advance withdrawal
You actually take out part of your pension money to pay for your main home or to reduce your mortgage.
- Pros: you need a smaller mortgage and pay less interest. You improve your affordability/Tragbarkeit.
- Cons: you pay tax on the withdrawal but at a preferential rate usually at 1/5 of your ordinary tax rate, your future pension benefits decrease, and you can’t make further voluntary buy-ins until you’ve repaid the withdrawal.
What kind of property qualifies
You can only use these options for your own main residence, not for a holiday home or rental property.
Eligible purposes include:
- Buying or building a home you’ll live in yourself
- Repaying your mortgage
- Renovations that increase the property’s value
- Buying shares in a cooperative housing association
The property can be in Switzerland or abroad (in specific cross-border cases) but must always be your primary residence.
Every Pension Fund has different rules and limits, here are examples of usual rules:
- Minimum withdrawal: for example CHF 20 000
- You can make a withdrawal only every 5 years. However some funds allow you to withdraw again if you repay initial withdrawal
- Up to age 50, you may withdraw or pledge your full pension assets; after 50, only 50 % or the amount available at age 50, whichever is higher
- The latest you can make a withdrawal is three years before retirement
- Married or registered partners need notarized written consent of the spouse
If you’ve made voluntary buy-ins within the last three years, you’ll lose the tax benefit if you withdraw funds during that period.
Tax treatment
An advance withdrawal is taxed separately from other income at a reduced capital rate.
Federal tax on lump-sum withdrawals is around 5 %, and each canton adds its own rate at around 1% of ordinary tax rate. The tax must be paid from your own funds — it isn’t deducted automatically.
If you later repay the withdrawn amount to your pension fund, you will receive back the tax you paid. However it doesn’t happen automatically, you should request tax refund of the amount previously paid (without interest). The refund request must be made within three years of repayment.
Check with your pension fund what happens in special cases, usual rules are:
- Disability: no withdrawal or pledge is possible once you draw a full disability pension.
- Divorce: the withdrawal is treated as part of the pension split and assessed by the court.
- Renting out your home later: if you’ve lived there first and rent it out later, you usually don’t have to repay the withdrawal.
- Selling your property: you must repay the withdrawn amount (up to the sale proceeds). If you reinvest in another main home within 2 years, you can transfer the withdrawal instead of repaying it.
Land-register entry
When you withdraw pension money, the Pension Fund informs the land registry to add a restriction on selling the property. This ensures the fund gets its money back if the property is sold. The restriction can be lifted once you retire, leave Switzerland with a cash payout, or repay the withdrawal.
In short:
A WEF withdrawal can help you afford your own home sooner, but it comes with trade-offs — taxes now and lower pension benefits later. A pledge keeps your retirement savings intact but doesn’t lower your mortgage. Always check the tax and pension impact carefully before deciding.
Want to see how to turn this rule into a tax-efficient mortgage strategy?
Read next: The Smart Mortgage Loop — Use Your 2nd Pillar to Repay Your Home More Efficiently