2nd Pillar (LPP) — Leaving Switzerland

General information — Occupational pension

What Is the 2nd Pillar (LPP)?

The 2nd pillar (Federal Law on Occupational Pension, LPP/BVG) is the mandatory occupational pension system in Switzerland. Employer and employee contribute jointly. The accumulated capital is intended to supplement AVS (1st pillar) benefits to maintain the standard of living in retirement.

As a cross-border worker, you contribute to the 2nd pillar like any employee in Switzerland. The question arises when you leave your Swiss employment: what happens to your LPP capital?

Three Possible Scenarios

A — New Employment in Switzerland

If you start a new job in Switzerland, your LPP capital is transferred to the new employer's pension fund. This transfer is called a "vested benefits" (prestation de libre passage). No special action is required beyond providing the details of the new fund.

B — No New Job in Switzerland (Vested Benefits Account)

If you do not resume employment in Switzerland, your capital is transferred to a vested benefits account (or vested benefits policy) with a bank foundation or insurance company. It is paid at the earliest 5 years before the reference age, i.e. at 60 (OLP art. 16), except for the cash-payment cases below.

The capital continues to accrue interest
You can choose the vested benefits institution
On a vested-benefits account or policy, the assets are paid at the earliest 5 years before the reference age, i.e. at 60 (OLP art. 16); they fall due at 65. Married or in a registered partnership: payment as capital needs the spouse's written consent (OLP art. 16 al. 3).
The 58 floor only applies to a person still affiliated to a pension fund whose rules provide early retirement (OPP 2 art. 1i) — not to a vested benefits account.
Dormant assets: ten years after the reference age they pass to the guarantee fund, which pays them back on proof until the insured is (or would have been) 100 (LPP art. 41). The Centrale du 2e pilier records every insured's assets (LFLP art. 24a) — ask it, and your former employers.

C — Cash Withdrawal (Strict Conditions)

Early withdrawal of LPP capital is only possible in strictly defined cases:

Permanent departure from Switzerland to a non-EU/EFTA country (the mandatory portion can be withdrawn)
EU/EFTA country: the mandatory LPP part is not paid in cash if you remain compulsorily insured under an old-age scheme of that country (LFLP art. 25f); the supra-mandatory part can be.
Becoming self-employed (independent gainful activity)
Purchase of primary residence (home ownership)

If you remain compulsorily insured under an old-age scheme of an EU country (in France: as soon as you work there, employed or self-employed), the mandatory LPP part stays in a vested benefits account (LFLP art. 25f); otherwise it can be paid out. Married or in a registered partnership: cash payment needs the spouse's written consent (LFLP art. 5 al. 2). Cash payment presupposes leaving Switzerland for good (LFLP art. 5 al. 1 let. a): for a cross-border worker who never lived there, ask your fund or vested benefits foundation how it applies this.

Mandatory vs Supra-Mandatory

Mandatory (LPP minimum)

Minimum contributions required by law. It stays in a vested benefits account while you are compulsorily insured under an old-age scheme of an EU country (in France: as soon as you work there, employed or self-employed) — LFLP art. 25f; otherwise it can be paid in cash.

Supra-Mandatory (extra-LPP)

Additional contributions made by the employer above the legal minimum. This portion can be paid in cash when leaving Switzerland for good for an EU country; married or in a registered partnership: the spouse’s written consent (LFLP art. 5 al. 2).

The pension certificate (LPP statement) from your pension fund indicates the split between mandatory and supra-mandatory portions.

Tax on Withdrawal

When withdrawing LPP capital (including the supra-mandatory portion), a withholding tax is levied by the canton where the pension fund is domiciled.

A withholding tax is deducted in Switzerland at the time of payment.
Swiss 2nd-pillar pension or capital of a France resident (private-sector employee): taxable in France only (France–Switzerland convention, art. 20; BOFiP BOI-INT-CVB-CHE-10-20-60 § 110-120) — declare it in France. A Swiss withholding at source on a capital benefit (LIFD art. 96) is not set off against French tax: it is refunded on request by the tax administration of the canton where the pension institution has its seat, at the latest 3 years after the benefit fell due (BOFiP § 120).

Official Resources

Federal Social Insurance Office (FSIO) — Occupational pensions OAK BV — Occupational Pension Supervisory Commission

Vested benefit and withdrawal rules depend on the pension fund, canton, and your individual situation. Contact your pension fund for case-specific information.

AdminLanding does not provide financial or tax advice.

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