Save on taxes when you retire: The advantage of staggered lump-sum withdrawals
“Retirement isn’t a matter of luck, but of the right strategy.”
Retirement expert
published on
8. April 2026
Key Points at a Glance
For people aged 40 and older, retirement planning is one of the most important financial decisions they will make. A key aspect of this is determining how and when to withdraw the retirement savings accumulated in the pension fund, vested benefits accounts, and Pillar 3a. By strategically staggering these withdrawals over time, it is often possible to save several thousand francs in taxes.
Understanding the Principle of Progressive Taxation
The main reason for the potential savings lies in the progressive structure of the capital withdrawal tax in Switzerland. This means that the higher the amount withdrawn in a given year, the higher not only the absolute tax burden but also the effective tax rate.
Since tax authorities generally aggregate all capital withdrawals in a calendar year—including those of a spouse—simultaneous withdrawal of various pension funds results in a significantly higher tax burden. Spreading these withdrawals across different tax periods can mitigate this progression and reduce overall costs.
In this context, it is important to note that several cantons (e.g., SG, TG, GL, UR; please clarify the current situation in your canton) have already introduced a so-called proportional tax rate. This means that tax savings cannot be achieved through the progressive tax scale when withdrawing pension funds! The only remaining savings opportunity is at the federal level.
New Framework Conditions Due to the AHV 21 Reform
Since January 1, 2024, new rules have been in effect due to the “AHV 21” reform, which particularly affect the withdrawal of vested benefits. The reference age for men and women has been standardized.
Important for planning is that, as a general rule, vested benefits must now be withdrawn no later than upon reaching the reference age of 65. A deferral until age 70 at the latest is only permitted if there is verifiable evidence that gainful employment is continuing. For individuals who reach the reference age between 2024 and 2029 and are no longer working, there is a transition period: they may defer the payout until no later than the end of 2029.
Strategies for Pillar 3a and Vested Benefits Accounts
To benefit from staggered withdrawals, the right conditions must be established during the working phase.
- Multiple Pillar 3a accounts: A 3a account can legally only be closed in its entirety; partial withdrawals are not possible. Anyone wishing to withdraw funds in installments over several years must therefore establish multiple 3a accounts in parallel at an early stage. Withdrawals are possible no earlier than five years before the reference age.
- Pension Fund Splitting: Upon leaving a pension fund (e.g., when changing jobs or ceasing gainful employment), there is a one-time opportunity to split the balance between two different vested benefits foundations. This allows the two accounts to be closed in different years later on. However, a retroactive split of an existing vested benefits account is not permitted.
Practical examples of tax savings
Optimal retirement planning should ideally begin as early as possible before your planned retirement. Since many measures—such as opening multiple 3a accounts or splitting vested benefits—are only possible at specific times, proactive action is required.
Note, however, that tax authorities may view extreme staggering in individual cases as tax evasion. Additionally, in the event of early withdrawal, the impact on personal assets and the associated wealth tax burden should be taken into account.
Retirement Planning in Switzerland
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Frequently Asked Questions
Can I split my Pillar 3a account for withdrawal?
No, an existing Pillar 3a account cannot be split. You must always withdraw the balance in its entirety. To withdraw funds in installments, you must maintain multiple accounts with different providers or within a single foundation during the contribution phase.
When is the earliest I can withdraw my retirement savings?
Pillar 3a funds and vested benefits can be withdrawn no earlier than five years before reaching the standard retirement age. Early withdrawals are only possible in exceptional cases, such as home ownership promotion (WEF), starting self-employment, or permanently leaving Switzerland.
What happens if I continue working after age 65?
If you can prove that you are still gainfully employed and earn income subject to AHV contributions, you can defer the withdrawal of your Pillar 3a and vested benefits by a maximum of five years, i.e., until age 70.
Why are spouses’ withdrawals combined?
To determine the tax rate, most tax authorities add up all capital withdrawals that flow into a household within a calendar year. This increases the progressive nature of the tax system and leads to a higher percentage tax burden, which is why coordinating withdrawals between partners is particularly important. However, this does not apply to cantons that use a proportional tax rate for the withdrawal of pension funds.