In Switzerland, your occupational pension (Pillar 2 – BVG/LPP) isn’t locked away forever. You’re actually allowed to tap into it to buy or build your own home. This mechanism is called WEF – Wohneigentumsförderung.
For many families, this is the difference between “we’ll buy someday” and “we can actually do this now.”
But how you use it matters — a lot.
In recent years, around 22,000 people per year have made a Pillar 2 WEF advance withdrawal (Vorbezug) to finance owner-occupied property. The average withdrawal in 2023 was roughly CHF 89,700. Pledges (Verpfändung) are harder to quantify in public statistics because no capital is paid out.
Two ways to use your pension for housing
There are only two doors you can walk through.
1. Pledging your pension (Verpfändung)
Here you don’t take any money out. Your pension assets simply sit in the background as extra security for the bank.
Sounds harmless. And in some ways, it is.
But here’s the catch:
a pledge doesn’t fix the real problem in Switzerland — affordability (Tragbarkeit).
Because the bank doesn’t treat this as your own capital. So when bank runs the famous 33% affordability test, the calculation looks the same.
Pros
- Your pension stays intact
- There’s no tax on the pledged amount
- You can still make voluntary buy-ins
Cons
- Your mortgage stays higher
- Which means… you pay more interest over time
2. Making an advance withdrawal (Vorbezug)
This time you actually take money out of your pension fund and use it for the purchase or to reduce your mortgage.
This is where affordability finally starts to improve.
Pros
- Smaller mortgage
- Lower interest burden
- Much better Tragbarkeit
Cons
- You pay a separate lump-sum tax (Kapitalauszahlungssteuer).
Federally it’s calculated at 1/5 of the normal income-tax tariff, and your canton and municipality add their part (still usually far below normal income tax). - Your future pension benefits go down
- You can’t make new voluntary buy-ins until you repay the withdrawal
What kind of property actually qualifies?
This isn’t for holiday homes or rental projects.
You can only use WEF for the place you actually live in.
Typical eligible uses
- Buying or building your main home
- Repaying your mortgage
- Renovations that genuinely increase the property’s value
- Buying shares in a cooperative housing association
In special cross-border situations, the property can even be abroad — but it must always be your primary residence.
The details that really matter
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.
How the tax actually works
An advance withdrawal is taxed separately from your normal income.
Your pension fund reports it to the tax office, and you usually receive a separate tax bill.
If you are living abroad at the time of withdrawal, the tax is normally withheld at source (Quellensteuer) by the pension fund.
If you later repay the amount, you can reclaim the tax you paid — but you must apply for the refund yourself, and there’s no interest. The deadline is typically three years from the repayment date.
A few special situations to know about
- 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.
Don’t forget Pillar 3a: the quiet partner to WEF
You can also use your Pillar 3a savings toward buying a property — it’s not technically part of the WEF program, but Swiss law allows you to withdraw or pledge 3a capital for your owner-occupied home, which helps increase your equity and reduce your mortgage just like a 2nd-pillar withdrawal.
Putting it all together
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.
Over the years, we’ve gone through this process ourselves more than once — using multiple WEFs, later repaying it, reclaiming the tax, and making Pillar 2 buy-ins along the way. We didn’t get everything right the first time, but step by step we learned how these pieces can work together when you’re trying to build a life (and a home) in Switzerland.
Curious how to turn these rules into a real, tax-efficient mortgage strategy?
Read next: Do You Want to Buy Your Home 28% Cheaper? Here’s Smart Mortgage Loop
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